Mont. OKs Keystone but federal approval uncertain

AP News
Posted: Dec 15, 2011 6:51 PM
Mont. OKs Keystone but federal approval uncertain

Montana officials on Thursday announced environmental approval for a major oil pipeline from Canada's tar sands to the Gulf Coast, but the proposal still needs approval from the federal government and Nebraska.

TransCanada's 1,700-mile Keystone XL pipeline would carry oil from western Canada to refineries in Texas, passing through Montana, South Dakota, Nebraska, Kansas and Oklahoma.

The project has been fiercely opposed by environmental groups and some landowners along the route, and the Obama administration last month said it was postponing its decision on Keystone XL until after the next election.

Republicans in Congress are trying to speed up a decision by linking approval to a measure renewing a payroll tax cut.

The $7 billion project would include a loading point for domestic crude as it passes through Montana near the booming Bakken oil field.

"Some people say this pipeline is just about the oil sands, it is not. It is also about Bakken oil in Montana," Gov. Brian Schweitzer said after announcing the approval. Schweitzer said the project would generate $60 million in property taxes annually in the state.

TransCanada would have to post a $100 million bond to cover any future problems with the line in Montana.

Montana's announcement that it intends to issue a permit to the project under the state's Major Facility Siting Act means the pipeline could proceed with construction under state law.

But TransCanada spokesman Shawn Howard said there were no immediate plans to begin work in Montana while federal approval is pending.

He said construction has started on a tank farm connected to the project in Hardisty, Alberta, but not on any sections of pipe. The company has asked the State Department if it can begin work on a section of Keystone XL from Oklahoma to the Gulf Coast, but Howard said no decision has been made.

"We don't have plans to construct other portions of the line at this time," he said.

The line already has approval from South Dakota under its major facilities act. Such approvals are not needed in Kansas, Oklahoma and Texas, Howard said, leaving only Nebraska and the federal government.

A law passed by the Nebraska lawmakers during a recent special session gave the state the authority to conduct an environmental review of a new pipeline route that TransCanada is now developing. The state wants the line to go around the environmentally sensitive Sandhills region in Nebraska.

Once TransCanada submits a new route plan, the state's review is expected to take six to nine months.