Reuters

TransCanada Corp said on Monday it aims to build the southern leg of its $7 billion Keystone XL oil pipeline first, skirting a full-blown federal review and heightening competition to move crude out of the glutted Cushing, Oklahoma, storage hub.   

TransCanada said it wants to have the southern portion of the 830,000 barrel a day pipeline, running to Texas refineries on the Gulf Coast, in service by mid- to late 2013. The approximate cost is $2.3 billion.

The company had broached the idea of building the controversial Alberta-to-Texas project in stages before, most recently after President Barack Obama rejected Keystone XL in January, saying it needed further environmental reviews.

 One benefit to TransCanada of building the Cushing-Texas portion first would be that approval by the U.S. State Department would not be needed, as the line would not cross the Canada-U.S. border. It will require other regulatory approvals, however.

TransCanada also said it sent the State Department a letter detailing its plans to file a new presidential permit application for northern part of the project.

"Our application will include the already reviewed route in Montana and South Dakota," TransCanada chief executive Russ Girling said in a statement. "The over three year environmental review for Keystone XL completed last summer was the most comprehensive process ever for a cross border pipeline."

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