TransCanada Corp. to begin construction of Keystone pipeline

TransCanada Corp. said Monday it plans to begin building a major portion of the Keystone XL oil sands pipeline despite the Obama administration's decision to reject a key permit for the project.

The company told the State Department in a letter Monday that it will begin construction of a section of the pipeline that runs from Cushing, Okla., to refineries on the Gulf Coast. The stand-alone portion of the project, which TransCanada dubbed the Gulf Coast Project, will cost $2.3 billion and will be completed in mid-to-late 2013, according to the company. The project must still receive other regulatory approvals.

Separately, TransCanada said it would reapply "in the near future" for a permit that would allow the Keystone XL pipeline to cross from Alberta, Canada, into the United States.

The Oklahoma-to-Texas portion of the pipeline would carry crude oil pumped from land in the Midwest and surrounding areas to refineries in Texas. It would not carry Canadian oil sands.

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The White House said Monday that it supports TransCanada’s bid to build the Oklahoma-to-Texas portion of the pipeline, adding that the project will “will help address the bottleneck of oil in Cushing that has resulted in large part from increased domestic oil production, currently at an eight year high.”

“We look forward to working with TransCanada to ensure that it is built in a safe, responsible and timely manner, and we commit to take every step possible to expedite the necessary Federal permits,” Press Secretary Jay Carney said in a statement.

The White House also welcomed TransCanada’s decision to reapply for the cross-border Keystone permit.

“We will ensure any project receives the important assessment it deserves, and will base a decision to provide a permit on the completion of that review,” Carney said.

The administration said Obama's decision last month to reject the permit was made because of a 60-day, GOP-backed deadline included in a two-month extension of the payroll tax cut. 

TransCanada said it expects the new application for the cross-border permit to be dealt with quickly.

"The over three year environmental review for Keystone XL completed last summer was the most comprehensive process ever for a cross border pipeline," TransCanada President Russ Girling said in a statement. "Based on that work, we would expect our cross border permit should be processed expeditiously and a decision made once a new route in Nebraska is determined."

TransCanada said Monday that it would continue working with Nebraska officials to identify an alternative route for Keystone around the state's ecologically sensitive Sand Hill's region. The Obama administration had delayed a final decision on the project until 2013 in order to identify and analyze the alternative route. But the 60-day deadline forced the administration to weigh in on the project sooner.

Republicans have pummeled the White House for rejecting the pipeline, arguing that the president passed up an opportunity to create thousands of jobs and boost the economy.

But opponents of the pipeline say industry-backed jobs numbers are wildly inflated. And they raise concerns about increased greenhouse gas emissions from oil sands production, among other things.

"Even though this doesn't bring new oil in from the tar sands, we stand with our allies across the region who are fighting to keep giant multinational corporations from condemning their lands," 350.org founder Bill McKibben, a vocal opponent of the pipeline, said in a statement.

— This story was updated at 12:57 p.m.