COLUMBUS — Nebraska Public Power District officials said last week it’s unlikely the electric utility will meet a requested deadline to complete infrastructure for a proposed oil pipeline.
Calgary-based TransCanada Corp. has asked NPPD to finalize the construction of transmission lines that would serve pumping stations along its Keystone XL pipeline by the end of 2014.
However, NPPD Chief Operating Officer Tom Kent called that timeline “wishful thinking” while updating the project’s status during Thursday’s board of directors meeting.
“We have a lot of work to do,” he said.
TransCanada’s 1,700-mile Keystone XL pipeline would connect the oil sands of Alberta, Canada, with refineries in the Midwest and along the U.S. Gulf Coast.
NPPD is required by state law to provide service for the segment crossing Nebraska by building 115,000-volt transmission lines that power five pumping stations smaller public utilities will ultimately serve.
The district originally expected to begin construction on roughly 70 miles of lines early this year, but that was before TransCanada was told to find a new route for its $7 billion pipeline that avoids the environmentally sensitive Sandhills area.
NPPD now must restart its design and easement-acquisition processes for the new route, which adds about 20 miles and moves the pipeline farther east into portions of Boone, Nance and Polk counties.
This preconstruction work could take 12-14 months to complete, Kent said.
Don Veseth, NPPD’s asset value coordinator, shared Kent’s pessimism about meeting TransCanada’s deadline.
“That’s a really tall order,” he said.
NPPD load forecasts have the pipeline beginning operation in 2016.
So far, the utility has spent $11.6 million on the transmission project and current estimates put the final price tag at $44 million.
The district’s board of directors authorized a three-year, $50 million line of credit in November 2011 to cover the project’s costs prior to the in-service date and will eventually seek long-term financing for the debt.
Once the final numbers are in, TransCanada will have 10 years to reimburse NPPD for its expenses, including interest and administrative fees.
TransCanada must pay for the transmission work even if the Keystone XL project is canceled or rejected by the U.S. State Department, which must issue a permit for the pipeline since it would cross an international border.
The State Department is expected to release a supplemental environmental review of the proposed route through Nebraska and other states by April 1.
The NPPD Board previously expressed its support for the pipeline by adopting a resolution in January 2012 that outlines the project’s economic benefits for Nebraska and its electric utilities.
John Bender of the Nebraska Department of Environmental Quality also cast a positive light on the pipeline while summarizing the department’s nine-month review process during last week’s meeting.
He told the NPPD Board the project would support 4,560 jobs and generate $418 million in economic benefits, including $16.5 million in sales and use taxes for materials and $11 million to $13 million in first-year property taxes once the pipeline is operational.
TransCanada will take dozens of safety measures beyond what’s required by state and federal law, Bender said, and the pipeline will cause “minimal environmental impacts.”
Bender said an oil spill would likely have only “localized” impacts and the NDEQ was satisfied with a simulated response drill on the already-constructed Keystone pipeline that showed TransCanada could appropriately react to an issue in less than 20 minutes. The Canadian company is also required to carry $200 million in third-party liability insurance that would cover any clean-up costs.
Although the pipeline route avoids the Sandhills and similar areas, it does cross the High Plains aquifer system, a source of drinking and irrigation water that lies beneath parts of numerous Midwest states.
But, “You can’t go across Nebraska without crossing an aquifer,” Bender said.
Gov. Dave Heineman approved the Keystone XL project Jan. 22, 19 days after the NDEQ submitted its report.
Bender said Nebraskans were heard throughout the process, particularly during a public hearing Dec. 4 in Albion attended by 800 people.
“That had a major impact on what was finally proposed,” he said.