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Keystone Pipeline gets Preliminary Nod from US State Department

Oil Pipeline Gets Preliminary Nod
By JAMES MacPHERSON 09.05.07, 5:40 PM ET

The U.S. State Department has given a preliminary nod to a $2 billion pipeline that would transport crude oil from Canada through seven states.

The Keystone pipeline, a project of TransCanada Corp. (nyse: TRP - news - people ) of Calgary, Alberta, is planned to stretch more than 1,800 miles from Hardisty, in east-central Alberta, to refineries in Illinois, with a spur to Oklahoma.

The pipeline, as proposed, "would result in limited adverse environmental impacts during both construction and operation, and would be an environmentally acceptable action," the State Department said in a draft environmental impact statement.

"The Keystone pipeline system would be designed, constructed, and maintained in a manner that meets or exceeds industry standards and regulatory requirements," the statement said.

The 800-page draft environmental impact statement took a year to craft, after comments from the public and federal and state agencies, said Elizabeth Orlando, the State Department's project manager working with the pipeline.

Orlando said her agency would make a final recommendation on the project in December, after gathering more public comment.

Public meetings on the draft environmental impact statement began on Tuesday in Missouri, with other meetings planned in states along the proposed route, Orlando said.

The proposed pipeline would carry crude oil across Saskatchewan and Manitoba, and through North Dakota, South Dakota, Nebraska, Kansas, Missouri, on the way to Patoka, Ill.

"There has not been any real opposition," Orlando said. "There is no known major group opposing it. Most of the concerns have been from individual landowners concerned about impacts to their properties."

Shela Shapiro, a spokeswoman for TransCanada, said the company is negotiating easements with U.S. landowners along the route.

Shapiro said the company hopes to start construction on the pipeline next spring, and complete it in 2009.

In North Dakota, the company proposes 218 miles of 30-inch pipeline in Cavalier, Pembina, Walsh, Nelson, Steele, Barnes, Ransom and Sargent counties.

The company estimates about 17,000 acres of farm and ranch land would be taken out of production during the pipeline's 18-month construction period. Keystone would compensate for agricultural losses, under the terms of the permit, the State Department said.

TransCanada will not comment on the State Department's preliminary assessment of the project, Shapiro said.

Orlando said the company still must get various state and federal permits before the pipeline is built. The State Department's review is the largest and most important in the process, she said.

The review of the project also was the largest in the agency's history, she said.

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