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Saturday, May 1, 2010

TransCanada Pipelines Over Budget, Unnecessary

The fact that I think TransCanada's Keystone pipelines are a waste of money and land is no news. The fact that three U.S. oil refiners agree with me is. The Globe and Mail reports that Sinclair Oil, National Cooperative Refinery Association (a Midwest farmer-owned co-op), and Coffeyville Resources want out of their contracts:

The refiners argue that construction overruns have raised the cost of shipping on the Canadian portion of Keystone by 145 per cent while the U.S. portion has run 92 per cent over budget. They accuse TransCanada of misleading them when they signed shipping contracts in the summer of 2007. TransCanada nearly doubled its construction estimates in October, 2007, from $2.8-billion (U.S.) to $5.2-billion.

As a result, the three refiners are demanding to be released from their shipping contracts, which together form about a sixth of Keystone’s capacity.

If they fail in that bid, they want $950-million (U.S.) in damages, plus interest and expenses [Nathan Vanderklippe, "Pipeline Fees Revolt Widens," Globe and Mail, updated 2010.04.29].

The problem is that with demand and prices down, we may not need TransCanada's dirty tar sands oil for years. Paul Blackburn of Plains Justice tells Vanderklippe that the rush to build pipelines is creating overcapacity that may result in a net increase in gasoline prices. Oh wait, I thought TransCanada was supposed to be good for America and good for South Dakota....

Farmer and State Representative Jason Frerichs (D-1/Wilmot) sees a contradiction between TransCanada's dealings with our state government and with its customers:

I find this news very interesting because during this last Legislative Session when I pushed forward with an effort to repeal the tax breaks for oil pipelines we were told that it would be unfair to “change the rules of the game”. It looks like to me that TransCanada feels that they can “change the rules of the game” on their customers, but expect the State to lay out the red carpet for them to use our land with massive tax breaks [Jason Frerichs, "Oil Pipeline Company Changes the 'Rules of the Game' on Their Potential Customers," JasonFrerichs.com, 2010.04.30].

...kind of like how TransCanada wants to change the conditions the PUC has set for laying Keystone XL across West River....

Running over budget, facing lawsuits, footing partners and South Dakota with their costs... I'm still waiting for the upside of the Keystone pipelines....

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