05/31/2014
The Real Reason Keystone XL Might Fail
David McColl, an analyst with Morningstar who covers TransCanada, notes that defects aren’t uncommon in large projects like these, but says it would’ve been preferable that TransCanada had found them rather than federal safety inspectors. “The pipeline industry, and especially TransCanada, is waging a multiyear battle right now, so given the current environment, they really have no choice but to go along,” McColl says of the PHMSA’s provisions in the Jan. 31 report. Does he consider these “special conditions” excessive? Requiring a company like TransCanada to hire a third-party inspection company “does seem a bit unusual,” he says.
Eric Lee, an oil and gas analyst at Citigroup, says these revelations only add to the sizable amount of skepticism that already exists around the Keystone XL. “Given everything else, this is just another straw of hay on the camel’s back,” he says. “I’m not sure if it’s the one that breaks it.”
Maybe not. And maybe the PHMSA’s special conditions will work as intended, and, if Keystone XL is ever built, it will be safer for them. But if there is one community that’s not surprised by Lowy’s scoop, it’s homeowners in Oklahoma and northern Texas who witnessed the shoddy work on the Gulf Coast Pipeline as it happened on their property. (The Army Corps of Engineers used imminent domain to clear the way for TransCanada.) In a largely overlooked November 2013 Public Citizen report (PDF), a TransCanada whistle-blower and several property owners recorded many of the same problems as did the PHMSA.
“We’ve known about these issues for two years,” says Jane Kleeb, the director of Bold Nebraska, a nonprofit formed by ranchers and others to prevent the Keystone XL. “Landowners called and told us about all these sections of pipe that kept having to be pulled out of the ground and replaced.” She says the problems did not require an engineer’s eye to detect: pipes in trenches that were too shallow; pipes laid over visible rocks pressing against the metal tubes; faulty welds that didn’t seal. Having seen what they saw of the construction process, “several landowners I’ve spoken to live in fear that a major spill could happen any day.”
http://www.businessweek.com/articles/2014-05-30/the-real-reason-keystone-xl-might-fail
Widespread welding defects have been detected by U.S. regulators on another part of the Keystone project, the Gulf Coast Pipeline