Second Pipeline

Canadian Company Behind Keystone XL To Seek US Approval For Second Pipeline

By BLAKE NICHOLSON AND JAMES MacPHERSON

The Canadian company behind the long-delayed Keystone XL oil pipeline will seek U.S. government approval for another pipeline — this one going north.

Industry officials in North Dakota say the proposed Upland Pipeline could reduce reliance on the railroads to ship crude following recent concerns about safety.

TransCanada Corp.'s proposed $600 million Upland Pipeline would begin near the northwestern North Dakota oil hub of Williston and go north into Canada about 200 miles. At peak operation it would transport up to 300,000 barrels of oil daily, connecting with other pipelines including the Energy East pipeline across Canada.

"We expect Upland and Energy East to play a key role in providing sufficient pipeline capacity to improve supply security for eastern Canadian and U.S. refiners, and reduce the need for foreign imports," TransCanada said in a statement.

The company last year sought commitments from shippers and said in its quarterly earnings report last Friday that the effort was successful. TransCanada hopes to have the Upland Pipeline operating in 2018, pending approval from the U.S. State Department, North Dakota's Public Service Commission and Canada's National Energy Board. The company plans to submit an application to the State Department in the second quarter of this year.

TransCanada has been trying for years to get U.S. approval for the 1,179-mile Keystone XL, which would connect Canada's tar sands to refineries on the U.S. Gulf Coast but has sparked environmental objections. Congress last week approved construction but President Barack Obama has threatened to veto the measure.

TransCanada spokesman Davis Sheremata on Thursday said the company can't speculate on whether it might run into similar problems with Upland. Company President and CEO Russ Girling last week told analysts and reporters that he hopes the drawn-out Keystone XL process is "an anomaly."

"Obviously, the market isn't waiting for the regulators to catch up with their decisions — they're moving the oilnow," he said.

North Dakota Petroleum Council President Ron Ness on Thursday called the Upland proposal a needed project that would move the state's crude to "great markets" in eastern Canada and the northeastern U.S.

North Dakota, the nation's No. 2 oil state behind Texas, is producing about 1.2 million barrels of crude daily. Several pipeline projects are proposed to move the oil, 80 percent of which now is being hauled by rail, according to North Dakota Pipeline Authority Director Justin Kringstad.

The Keystone XL would move 830,000 barrels of oil a day from Canada south, as well as about 100,000 barrels of domestic oil daily from North Dakota's Bakken region. With Upland, a total of about 1 million barrels of oil could be moved by pipelines from North Dakota to markets across the U.S., Ness and Kringstad said.

That would help displace rail shipments of North Dakota oil. Trains hauling crude from the state's rich oil fields have been involved in major accidents in Virginia, West Virginia, North Dakota, Oklahoma and Alabama, as well as in Canada, where 47 people were killed by an explosive derailment in 2013 in Lac-Megantic, Quebec.

"Producers want to put oil on pipelines to get it to these key markets," said Ness, whose group represents more than 500 companies working in western North Dakota. "We've just got to get them permitted."