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The politics of pipe: Keystone's troubled route Add to ...

Now the pipeline industry is learning how to change with the times. Pipeliners need to “advocate for better environmental management regimes up-stream,” said Ed Whittingham, executive director of the Pembina Institute, a Calgary-based environmental advocate, In other words, they should push for cleaner oil sands.

Enbridge is considering a new social media effort for the public to “manage their way through the rhetoric to get to the real answers, so they can actually come to an informed decision,” said Ms. Holder, the Enbridge executive.

TransCanada, too, is figuring out what it needs to do. “It’s going to be a huge job for us as an industry,” said Mr. Girling, the TransCanada CEO.

“It’s an awareness campaign, working right from the grassroots, through education, through means we haven’t used before,” he said. “But we don’t have all the answers yet. We have to get the answers. And we have to get smarter at those.”

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KEYSTONE’S GENESIS

TransCanada’s Keystone project started with a phone call to the company’s headquarters in Calgary, forwarded to the general corporate voice mail box. It came from someone at the Canadian Association of Petroleum Producers.

The message: “Hey, we’d like to talk to somebody about converting one of your pipelines for crude oil service.”

That’s how Robert Jones remembers it. It was 2004 or 2005. Mr. Jones, an engineer, had come to TransCanada after spending a decade working at Enbridge Inc., a titan in moving oil by pipe. That made him the only person doing business development for TransCanada who had any oil pipeline experience.

Pipelines are a bit like gold mines. The vast majority of them don’t get built. People like Mr. Jones get paid to come up with ideas. They will whittle down a list of 100 potential new pipes down to 10. If they’re lucky, one will get built. The success rate isn’t high.

He spoke with people representing ConocoPhillips, Canadian Natural Resources Ltd. and another company. The oil sands were growing, they said, and they needed to get the crude to market. And they wanted someone other than Enbridge. Why not push oil through part of TransCanada’s network of six underused gas pipes across Canada and then send it south to U.S. refiners?

It was an intriguing idea for TransCanada.

“So we took it away and we thought: how can we be different from our competitors?” Mr. Jones said.

He assembled a stealth team, just a half-dozen people with a code name, which he had grabbed from Google. Knowing the pipe would cross Iowa, he popped the state’s name into an Internet image search. He discovered photos of a lot of arched bridges – the kind that appeared in Bridges of Madison County. He figured a pipeline was a bit like an energy bridge.

“And if you look at these archway bridges, the critical part of a bridge is the keystone,” he said.

Keystone was born. So was a major chapter in Mr. Jones’s career, which would become devoted to the project. It came in two parts: the first involved the gas pipeline conversion. It was designed, permitted, and built with little fuss. Its first barrels reached market on June 30, 2010. TransCanada, which had focused almost exclusively on natural gas, had been transformed into a vital mover of oil. And it was hungry for more.

Enter Keystone part two. Around 2007, fears about falling oil supplies from Venezuela set U.S. Gulf Coast refiners on a quest for a new crude source. Some refiners had contracts for Venezuelan oil that expired in 2012 and 2013. They were also watching their supplies from Mexico begin to diminish. They needed something to fill the gap. Canada’s oil sands crude shared much in common with what comes out of Mexico and Venezuela – they are heavy oils. And the oil sands were growing, fast.

It all seemed to fit.

So TransCanada began planning Keystone XL, so named because it would be an eXpress Line capable of rapidly delivering oil to markets.

Nathan VanderKlippe

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Follow on Twitter: @nvanderklippe

 
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