TransCanada is hoping a U.S. District Court Judge will clarify or amend a ruling earlier this month halting construction of the Keystone XL pipeline to allow some pre-construction activities to take place.
U.S. District Judge Brian Morris out of Great Falls, Montana, earlier this month ruled that TransCanada must halt all activities that further Keystone XL until certain, out-date portions of its application materials have been addressed.
Several portions of the Keystone XL pipeline have already been finished. The final phase, from Steele City, Nebraska, is to run through Montana on its way to Canada.
Keystone was to carry as much as 100,000 barrels of Bakken crude along with crude from Canada. Bakken crude has been bumping up against pipeline capacity, though price differentials so far have made shipping about 300,000 barrels to east and west coasts attractive.
Not allowing TransCanada to engage in activities such as finalizing shipping contracts, conducting land surveys, discussing federal permits, and purchasing materials with long lead times will cause financial injury to the company and its customers, TransCanada officials wrote in their court filings.
The company would lose as much as $949 million in lost revenues the first year alone, the company said. While that revenue might eventually be made up, there would be interest costs associated with the delay, which the company estimates would be around $708 million, assuming an 8 percent rate.
A delay in pre-construction activities would also force TransCanada to secure construction contracts later, when prices are likely to be higher.
Preconstruction activities represent nearly 700 direct American jobs, and support hundreds of other jobs at suppliers, manufacturers and vendors, according to Norrie Ramsey, senior Vice President of Technical Centre and Liquid Projects for TransCanada.
He said the company had planned to begin construction in the second half of 2019, at which time it would hire 6,600 workers, as well as spend $2.08 billion for the year.
TransCanada wanted to have the pipeline running by 2021. In its first year of operation, the company expects to spend an estimated $488 million for wages, services, power utilities, and taxes to state, county and municipal governments.
Customers of the Keystone XL line would also have to find alternate — and likely more expensive — transportation for their crude.
“A one-year delay in construction of the pipeline would result in substantial harm to TransCanada, as well as to United States workers, and to TransCanada’s customers relying on the current in-service date of the project,” Norrie wrote in court documents. “TransCanada has significant interest in being able to satisfy market demand for transportation service on Keystone XL Pipeline.”
Northern Plains, in its court filing, said it doesn’t oppose most of the preconstruction activities the company has listed. But it does oppose field work such as cultural and biological surveys, preparation of off-right-of-way pipeline storage and worker camps, mowing and patrolling area of right of way to discourage migratory bird nesting.
“Commencing those activities prior to agency decision would violate the prohibitions of the National Environmental Policy Act and Endangered Species Act,” the group wrote.