TransCanada eyes 'bridge' to Keystone XL pipeline approval

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Oil producers and Keystone XL developer TransCanada Corp. are exploring the option of transporting Canadian crude oil by railcar as a temporary solution until the pipeline is approved.

Still, crude-by-rail isn't a substitute for Keystone XL, Russ Girling, CEO of TransCanada, told The Hill on Thursday.

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"Our customers asked whether we would explore with them potentially building rail-car loading facilities at a place called Hardesty, which is the initiation point of the current Keystone XL project, and we've said we will do that, and we'll do it expeditiously," Girling said.

Producers like ExxonMobil, Chevron and ConocoPhillips want a temporary way to transport the oil while waiting for the U.S. to act on Keystone XL.

"We don't know how long this is going to take, and they want a solution that bridges them between now and whenever we get approval to build the pipeline," Girling said.

Despite opposition to Keystone and pressure on President Obama from his environmental base, Girling believes it will be approved, if not by Obama, then after his presidency.

The reason: Demand from producers to transport their crude oil isn't going away.

"Demand for Keystone is actually increasing, not decreasing," Girling said.

By the end of 2015, Girling expects 1.2 million barrels per day will be transported via rail by producers.

But "even if we build a rail solution, they would give up that in a heartbeat if they could put it in a pipeline," he said.

Opponents of the contentious pipeline have argued it would devastate the environment along its proposed route and that, if rejected, Canada wouldn't be able to transport the crude any other way.

Girling says that's just not the case, and TransCanada won't walk away unless its customers wake up one day and decide they don't need to transport the oil.

"We won't run backwards and say, 'Well, I think railing is the right option, so let's just shut down new modern infrastructure,' " Girling said.

Right now the State Department has frozen its interagency review of the pipeline to determine whether it's in the nation's best interest.

State wanted to allow agencies more time to look into a litigation issue in Nebraska, which has drawn the route of the pipeline into question. The administration wouldn't say if it would start the clock before a ruling is handed down in Nebraska, which would be 2015 at the earliest, or hold off indefinitely.

If the Obama administration ultimately rejects the project, TransCanada has no plans to give up.

"We would have to figure out another way to get it approved," Girling said.