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Keystone XL expected to boost oil prices at Cushing

The Keystone XL pipeline is expected to lead to increased oil prices at Cushing's storage hub if the $7 billion project is approved by the Obama administration.
BY JAY F. MARKS jmarks@opubco.com Published: January 13, 2012
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Jones said company officials expected to earn a permit in about 18 months because TransCanada had won approval for the original Keystone pipeline in 24 months. TransCanada's application now has been pending for 41 months, thanks to continuing opposition from some environmental groups.

Jones said polls have shown most people support the project.

“The people who are opposed to this project are opposed to oil,” he said. “They just don't want us burning oil.”

The Oklahoma chapter of the Sierra Club said it opposes the project because it would give a foreign company the ability to use eminent domain to take land from property owners along the pipeline route, putting them at risk if there is an oil leak.

Chapter director David Ocamb urged Fallin to reconsider her support of the project and focus on realizing the state's own renewable and clean energy potential.

Decision looming

The Obama administration's decision on the project must come within 60 days of Obama's Dec. 23 signature on a bill that extended a payroll tax cut. The bill also put a deadline on the Keystone XL decision.

Jones said the pipeline is an important piece of infrastructure that will link the large crude oil basin in northern Alberta with U.S. refining centers on the Gulf Coast.

The pipeline could even move oil from the storage hub at Cushing, where a supply glut has reduced the price for oil produced in this region.

“We've offered an expansion of the system before it's even put in the ground to move more oil out of Oklahoma,” Jones said.

Cantrell hopes the southern portion of the pipeline will be built regardless of the administration's decision, although Jones said the project requires additional federal permits.

He said the new pipeline would be safer than older pipelines that already crisscross the nation.

“We're going to build the most sophisticated pipeline ever built, orders of magnitude safer than any other pipeline,” he said.

Jones said the 2,600-mile pipeline project is ready to proceed as soon as the administration signs off on it.

“We are absolutely ready to go,” he said.