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Plan flows for $2.8 billion expansion of oil pipeline through Missouri, Illinois

This article first appeared in the St. Louis Beacon, March 27, 2012 - WASHINGTON — The proposed Keystone XL pipeline may get all the attention, but the $2.8 billion expansion of another pipeline route that carries Canadian oil through Missouri and Illinois will have a more immediate impact on the two states, officials say.

On Tuesday, the Canadian owner of the existing 24-inch-diameter “Spearhead” pipeline, Enbridge Inc., made the official announcement of plans to build a 36-inch, parallel pipeline — called “Flanagan South” — along the route from a terminal in Flanagan, Ill. (southeast of Chicago), across 11 Missouri counties to Cushing, Okla.

Missouri Gov. Jay Nixon said in a statement Tuesday that building the Flanagan South expansion “will create jobs for hard-working Missourians, boost our economy, and help make North America more energy independent.” Sen. Claire McCaskill, D-Mo., called the plan “good news for Missouri consumers and Missouri jobs.”

Construction of the new pipeline is expected to start in the middle of next year, an Enbridge spokeswoman said, “subject to the required regulatory approvals” from state agencies. The new pipeline is expected to start transporting oil by mid-2014.

Unlike TransCanada Corp.’s proposed but delayed Keystone XL pipeline — which would cross the U.S.-Canadian border in carrying oil from Alberta’s vast oil-sands region to the U.S. Gulf Coast — the Flanagan South route does not require approval from the State Department.

Last week, under pressure from Republican critics pushing for immediate approval, President Barack Obama said he had asked the federal government to expedite permitting for the southern part of the Keystone XL route. But Obama said federal agencies needed more time to review the environmental impact of the Keystone’s northern segment, which could affect water supplies in Nebraska.

Because the new Flanagan South route is mostly adjacent to the existing Spearhead pipeline, which gained regulatory approval years ago, officials predicted that Enbridge should be able to get its required building permits comparatively quickly.

The 600-mile Spearhead and Flanagan South route crosses the Mississippi River near Hannibal and spans 11 Missouri counties, exiting the state from Bates County, south of Kansas City. It then traverses the southeast corner of Kansas and ends at the major oil-pipeline center of Cushing.

Because steadily increasing North American oil production has led to a bottleneck at Cushing, companies want to drain that stored oil more quickly to refineries along the Gulf Coast. On Tuesday, Enbridge announced plans to bolster its jointly owned Seaway Pipeline from Cushing to Houston. The southern part of the Keystone XL also will carry oil from Cushing to Gulf refineries.

Enbridge’s chief executive, Patrick D. Daniel, said in a statement that “the upsized new Flanagan South pipeline, combined with our existing Spearhead Pipeline System, will offer shippers 775,000 (barrels per day) of capacity from Flanagan to Cushing.” That sum includes Spearhead’s current 193,300 bpd, plus Flanagan South’s planned 585,000 bpd. More pumping capacity could later expand the total to 800,000 bpd, he said.

Daniel said Enbridge is committed to “safe and reliable operation of our pipelines” and would maintain that effort for Flanagan South. “Communities located along the pipeline routes will benefit from property taxes over the life of the pipeline, as well as from the creation of high-paying construction and manufacturing jobs, and associated economic activity during construction,” he said.

Nixon, who had first expressed backing for the project in January, called the Flanagan plan “good news for Missouri consumers and Missouri jobs.” He said his administration “stands ready to work with the company to ensure that construction moves forward as safely and efficiently as possible.”

The governor added: “By increasing the use of North American fuel sources, we will create more jobs and ensure a brighter future for our state and our nation.  This major investment by Enbridge is another important step forward for Missouri's economy.”

In her statement, McCaskill said, “Missourians deserve to know we’re doing everything possible to boost access to local oil reserves. Getting the Flanagan South pipeline one step closer to reality is another step forward in that direction.”

Enbridge, based in Calgary, operates what it calls “the world’s longest crude oil and liquids transportation system.” The company also has a significant and growing involvement in transporting natural gas.

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