Yellowstone spill could sour Montana on Keystone pipeline

CALGARY — An oil spill last weekend could sour Montana residents on a proposal to build a new crude pipeline through the state, a critic of TransCanada Corp.’s Keystone XL project said Monday.

CALGARY — An oil spill last weekend could sour Montana residents on a proposal to build a new crude pipeline through the state, a critic of TransCanada Corp.’s Keystone XL project said Monday.

“I think that Montana had in the past not really been too concerned about the Keystone XL pipeline, and I think this is really going to change that,” said Susan Casey-Lefkowitz, director of the Natural Resources Defense Council’s international program.

ExxonMobil Corp. (NYSE:XOM) estimates its pipeline spilled up to 1,000 barrels, or nearly 160,000 litres, of crude into the Yellowstone River late Friday night before the flow was stopped. The break near Laurel, Mont., has fouled kilometres of riverbank and forced municipalities and irrigation districts to close intakes across the eastern part of the state.

Keystone XL would transport Canadian oil to refineries on the U.S. Gulf Coast via Montana and five other states, and would be far bigger than the ExxonMobil line that leaked.

It, too, would traverse the Yellowstone River, and that ought to make Montana residents more concerned about the safety of their sources of drinking and irrigation water, Casey-Lefkowitz said.

“If they’re this impacted by the ExxonMobil spill, it will be even more by a spill that would happen from the Keystone XL pipeline.”

TransCanada (TSX:TRP) plans to bury its pipe at least 7.6 metres below the Yellowstone riverbed, said company spokesman James Millar. The ExxonMobil line sits at just a fraction of that depth.

“If you have a higher water flow, or a faster moving river — and I believe that’s the situation they’ve had in Montana this spring — you have more natural protection because your pipeline is buried a lot deeper,” Millar said.

And TransCanada plans to use thicker pipe in sensitive areas, including the Yellowstone River crossing. It has also voluntarily agreed to 57 conditions recommended by the U.S. pipeline regulator, such as placing shut-off valves closer together, inspecting the line more frequently and burying the pipeline at a deeper depth than industry norms.

It’s too soon to tell what sort of increased regulatory scrutiny may arise from the Montana spill, Millar said, though the issue has been high on the industry’s radar since a high-profile spill on an Enbridge Inc. (TSX:ENB) pipeline in Michigan last summer.

“As an industry we need to look at any incident and learn from all incidents to ensure that pipeline infrastructure is as safe as it can be,” he said.

The U.S. State Department is expected to decide by the end of the year on whether to allow Keystone XL to be built, but Casey-Lefkowitz said the studies so far have not been thorough enough.

“I think that this weekend’s spill in the Yellowstone River should really be a wake-up call for the State Department that they cannot continue to move forward with the permitting process for the Keystone XL pipeline without making sure that they have the safety measures in hand,” she said.

If it’s approved in December, Keystone XL would have been mired in the regulatory process for 40 months, nearly double what’s usual for the industry, said Millar.

NRDC, and other environmental groups say the oilsands crude Keystone XL would carry is more corrosive and emits far more carbon than oil from elsewhere. However, studies cited by TransCanada and other industry players say oilsands crude is no different from the Venezuelan or Mexican oil Texas refineries have been using for years.

“Why would we invest US$13 billion in a pipeline and then put a product in that pipeline that is going to harm or destroy it? It just doesn’t make sense,” Millar said.

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