Keystone XL developer faces grilling at Nebraska hearing that will decide pipeline's fate

The developer of the Keystone XL pipeline and its allies will face a litany of tough questions in front of a Nebraska commission that will decide whether to approve the project's final leg through the state this week.

The Nebraska Public Service Commission hearing is the last major regulatory hurdle pipeline developer TransCanada must overcome in its nine-year quest to complete the $8 billion pipeline.

An attorney for Nebraska landowners who oppose the Keystone XL grilled several of the project's top managers about whether the commission should impose requirements on their application, such as maintaining several feet of topsoil over the pipe and removing it if it's ever decommissioned.

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Omaha attorney Dave Domina questioned whether TransCanada would agree to limits on how long the pipeline would remain in the ground if it's approved, an idea one company executive rejected.

"The commission should know that this route, if they want to permit it, doesn't have to be perpetual," Domina said. "It can be time-limited so the land can go back to the families."

Monday's hearing follows a top company executive's suggestion last month that TransCanada officials haven't yet decided whether to proceed with the project.

Paul Miller, an executive vice president who is overseeing the project, told an investor call that company officials won't decide until late November or early December whether to start construction. Miller said company officials are waiting on approval for their proposed route in Nebraska and an "open season" in which oil companies bid for long-term shipping contracts.

The 1,600-kilometrecrude oil pipeline has faced relentless criticism from environmental groups, Native American tribes and a well-organized minority of Nebraska landowners who don't want the project cutting through their property. Business groups and some unions support the Keystone XL, saying it will provide jobs and property tax revenue for local governments.

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The commission will decide whether to grant Calgary-based TransCanada's application for route approval for the pipeline through Nebraska, allowing the company to gain access to holdout landowners' property through eminent domain laws.

The hearing at a Lincoln hotel, which could run as long as five days, drew about 60 people on Monday. A digital billboard truck circled the block outside, flashing anti-pipeline messages.

If approved, the pipeline would transport oil from oilsandsdeposits from Alberta through Montana and South Dakota to Nebraska, where it would connect with existing pipelines that feed Texas Gulf Coast refineries. It may also provide access for oil fields in North Dakota.

Domina questioned TransCanada executive Tony Palmer about whether the company would cover cleanup and restoration costs in the event of a spill and remove the pipeline once it's no longer in use.

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Palmer said the company would pay for cleanup and restoration costs but might seek compensation from anyone who damages the pipeline. He said it's "very rare" to remove pipelines that have outlived their useful life, but some decommissioned pipelines are filled with an inert gas to keep them from corroding.

Palmer acknowledged under questioning that the company has not estimated the cost of removing the pipeline from the ground. TransCanada could use the pipeline for more than 20 years, but if well maintained, it should last at least 50, Palmer said.

"We fully expect this pipeline can provide service well beyond the commercial contract," Palmer said.

Another company official, Paul Fuhrer, said the pipeline would be "puncture resistance" if struck by farm equipment. But he declined to say under questioning whether the commission should require at least four feet of topsoil over the pipe as a condition of approval.

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"The leadership of our company would need to weigh in on that," he said.

Despite the new uncertainty about the Keystone XL, some of its strongest advocates expressed confidence it will still win approval.

Nebraska state Sen. Jim Smith, an outspoken pipeline supporter, said he called TransCanada last week and was assured by CEO Russ Girling that the company still plans to move forward with the pipeline. Smith said he believed "too much was being read into" the conference call.

"I'm convinced that their commitment is as strong as ever," Smith said.