TransCanada mum on Keystone XL spur into BakkenTransCanada Corp. says it has enough contracts with oil shippers to proceed with a second Keystone pipeline that would move crude oil from Alberta to the U.S. Gulf Coast, though it is mum on the possibility of a spur into western North Dakota.
By: By Blake Nicholson, The Associated Press , The Jamestown Sun
BISMARCK — TransCanada Corp. says it has enough contracts with oil shippers to proceed with a second Keystone pipeline that would move crude oil from Alberta to the U.S. Gulf Coast, though it is mum on the possibility of a spur into western North Dakota.
The Keystone XL pipeline would enter the U.S. in Montana and run through South Dakota, Nebraska, Kansas and Oklahoma on its 1,980 mile route to Texas. It would not cross any part of North Dakota.
Robert Jones, a TransCanada vice president, told The Associated Press earlier this fall that the company would consider a connection to western North Dakota’s oil patch with the second pipeline if there was enough interest. The company is not saying if that still is a possibility.
Even without a direct North Dakota connection, the new pipeline still would benefit the state by adding to overall pipeline capacity in the region, a Keystone spokesman said.
“It provides another path to market for Canadian oil, which can help relieve capacity constraints that have historically plagued North Dakota producers,” Jeff Rauh said.
North Dakota officials say the increased distances to market and a shortage of pipeline capacity result in lower prices, with North Dakota sweet crude generally fetching about 10 percent less than a barrel produced elsewhere and sold on the New York Mercantile Exchange.
TransCanada’s third-quarter financial report says the Calgary-based company will start seeking regulatory approval in the U.S. and Canada for Keystone XL, after securing contracts for the new pipeline for 380,000 barrels of oil per day, for an average term of 17 years.
Rauh said the contracts are confidential, and he said TransCanada would have no comment on the subject of a possible spur into North Dakota’s Bakken shale formation.
“The discussion (on a spur) is speculative at this point,” he said. “No positive decision has been made. That doesn’t mean that any negative decision has been made.”
The second Keystone pipeline would not be completed until at least 2012.
TransCanada said the new pipeline would have the capacity to move 500,000 barrels of oil per day. Rauh said the 120,000 barrels of unreserved capacity might provide an opening for oil producers in North Dakota to continue to press for an extension into the Bakken.
Ron Ness, president of the North Dakota Petroleum Council, said the group had no way to measure the amount of interest in a North Dakota connection to the planned pipeline.
“If there’s a possibility that there’s an outlet for our growing oil production, I hope they can make it work,” he said. “We would welcome any venue, but it’s not as simple as it seems. (Shippers) would be putting sweet Bakken crude into a pipeline that is designed for heavy Canadian crude oil.”
The North Dakota Pipeline Authority is considering a study on whether a Keystone XL spur to the Bakken would make financial sense, director Justin Kringstad said.
The Bakken formation encompasses some 25,000 square miles in North Dakota, Montana, Saskatchewan and Manitoba, with about two-thirds of the acreage in western North Dakota.
The U.S. Geological Survey has estimated that up to 4.3 billion barrels of oil can be recovered from the formation using current technology, with more than half of that being recoverable in North Dakota. The agency has said the Bakken is the largest continuous oil accumulation it has ever assessed.
Ness said it was not logistically feasible for oil producers in the Bakken to tap into the Keystone pipeline under construction in the eastern part of the state. That pipeline eventually will move 590,000 barrels of Canadian crude daily to facilities in Illinois and Oklahoma.
TransCanada officials have said that the eastern Keystone pipeline would help North Dakota shippers anyway, by freeing up space in other pipelines.
On the Net:
N.D. Petroleum Council: www.ndoil.org