Nebraska Governor OKs Keystone XL Pipeline

Keystone XL route
Keystone XL route

Governor Dave Heineman of Nebraska has sent a letter to President Obama today expressing his approval for the re-worked Keystone XL pipeline project through the state. Heineman's approval can now be added to those of the governors of Montana and South Dakota for the 1,700-mile long pipeline that will carry bitumen and crude from the oil sands of Alberta to the main U.S. crude oil hub at Cushing, Oklahoma.

Because the pipeline crosses an international border, the U.S. State Department must approve the plan as well. A determination on the pipeline is due by the end of the first quarter of this year according to TransCanada Corp. (NYSE: TRP), the company that is proposing to build the pipeline.

The state of Nebraska's Department of Environmental Quality had approved TransCanada's request earlier this month after the company re-routed the pipeline's route to avoid the environmentally sensitive Sand Hills region. The Keystone XL would cross the Ogallala Aquifer, a key bone of contention with environmentalists.

The Obama Administration rejected an earlier proposal for the Keystone XL, and there is still plenty of opposition to the new route. However the strongest arguments favoring the new pipeline are that it is likely to be safer and cheaper than transporting the Canadian crude than are the growing networks of rail and truck transportation.

Competing proposals to transport the oil sands product to the West Coast are being sponsored by Kinder Morgan Inc. (NYSE: KMI), which is proposing an expansion to its existing Trans Mountain pipeline, and Enbridge Inc. (NYSE: ENB), which has proposed a new Northern Gateway pipeline.

The impact on railway transportation won't be felt for several years, until the Keystone XL pipeline is completed. But the Burlington Northern Santa Fe, owned by Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK-A), the Canadian Pacific Railway Ltd. (NYSE: CP), and the Canadian National Railway Co. (NYSE: CNI) will very likely see a drop in demand for tank car transportation. Tank car builders The Greenbrier Companies Inc. (NYSE: GBX) and Carl Icahn-controlled American Railcar Industries Inc. (NASDAQ: ARII) are among a handful of companies currently benefiting from the increased demand for rail transportation.

Filed under: 24/7 Wall St. Wire, Commodities, Industrials, Oil & Gas Tagged: ARII, BRK-A, CNI, CP, ENB, GBX, KMI, TRP