HOUSTON (Dow Jones)
TransCanada Corporation (TRP, TRP.T) will voluntarily add extra safety features to a proposed oil sands pipeline expansion that is causing concern among environmentalists and U.S. officials, a company executive said.
The pipeline expansion, called the Keystone XL project, would dramatically increase the amount of Canadian crude flowing into the U.S. and is pending federal approval.
TransCanada Executive Vice President of Operations and Major Projects Donald Wishart said that the company agreed to 57 safety measures above and beyond what is required by law in a deal with the U.S. Pipeline and Hazardous Materials Safety Administration, or PHMSA, the agency charged with regulating pipelines.
"If we didn't agree to these 57, we might not be allowed to operate," Wishart said in a recent interview on the sidelines of the IHS Cambridge Energy Research Associates conference in Houston.
The safety additions, which will bolster the scrutiny of the line's building materials and increase the frequency of its inspection once in operation, come amid stiff resistance from environmentalists and some lawmakers worried about potential leaks into aquifers and other environmentally sensitive areas.
Wishart, however, said the agreement had little to do with pressure from environmental groups, however.
"It's just the continuing evolution of pipeline safety," Wishart said.
Upon completion, the 1,600-mile expansion project would more than double the Keystone system's capacity to 1.1 million barrels a day and extend its route to the Gulf Coast, the heart of the U.S. refining industry and the largest consumer of heavy crude oil in the world.
The pipeline's proponents argue that increased oil exports from Canada--already the largest source of U.S. crude oil imports--will lessen the need for imports from less stable foreign countries.
PHMSA asked TransCanada last year to add more safety measures than required for other pipelines when the company had applied for a special permit to use more pressure than normal in moving the oil through certain sections of the pipe.
TransCanada withdrew the permit application in August 2010 after deciding to keep pressure levels normal, but decided to implement PHMSA's extra safety requirements anyway to ensure the project receives U.S. regulators' approval, TransCanada spokesman Terry Cunha said.
It's not the first time TransCanada has gone above the standard requirements to get an approval for Keystone, Cunha said. In 2006, the company secured a permit for the initial phase of the pipeline after agreeing to 51 extra safety measures, Cunha said.
The company is still evaluating the cost of the new round of additional measures, Cunha said.
PHMSA declined to immediately comment, saying the Keystone expansion project is still pending review from the State Department, which is expected to issue its decision in the second half of this year.
A State Department representative was not immediately available for comment.
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