BILLINGS — Montana officials on Thursday announced environmental approval for a major oil pipeline from Canada's tar sands to the Gulf Coast, but the proposal still needs approval from the federal government and Nebraska.
TransCanada's 1,700-mile Keystone XL pipeline would carry oil from western Canada to refineries in Texas, passing through Montana, South Dakota, Nebraska, Kansas and Oklahoma.
The project has been fiercely opposed by environmental groups and some landowners along the route, and the Obama administration last month said it was postponing its decision on Keystone XL until after the next election.
Republicans in Congress are trying to speed up a decision by linking approval to a measure renewing a payroll tax cut.
The $7 billion project would include a loading point for domestic crude as the 36-inch line passes through Montana near the booming Bakken oil field.
"Some people say this pipeline is just about the oil sands, it is not. It is also about Bakken oil in Montana," Gov. Brian Schweitzer said after announcing the approval. Schweitzer said the project would generate $60 million in property taxes annually in the state.
TransCanada would have to post a $100 million bond to cover any future problems with the line in Montana.
Montana's announcement that it intends to issue a permit to the project under the state's Major Facility Siting Act means the pipeline could proceed with construction under state law.
But with federal approval pending, TransCanada spokesman Shawn Howard said there were no immediate plans to begin work in Montana.
He said construction has started on a tank farm connected to the project in Hardisty, Alberta, but not on any sections of pipe. The Calgary-based company has asked the State Department if it can begin work on a 435-mile section of Keystone XL from Oklahoma to the Gulf Coast, but Howard said no decision has been made.
"We don't have plans to construct other portions of the line at this time," he said.
An eastern Montana woman whose property would be crossed by the line criticized Schweitzer's announcement and said the state should have waited until the federal review of the project is completed.
Sandy Barnick, who has a farm and ranch about 17 miles south of Glendive, said she worried an oil spill from the line could get into the Yellowstone River — as happened in July when an ExxonMobil pipeline broke near Laurel, spilling 1,000 barrels of crude into the river.
"The Yellowstone River supplies the drinking water for Glendive. It provides all the irrigation water," Barnick said. "Safety needs to come ahead of big oil profits."
TransCanada announced Thursday that it had received new commitments from potential Keystone XL customers that could allow it to expand the capacity of the line to 80,000 barrels a day from 700,000 barrels. Subject to approval, the company also said it would build a 48-mile extension of the line in Texas to reach refineries in Houston.
The prior endpoint for the line was in Port Arthur, Tex.
The pipeline already has approval from South Dakota under its major facilities act. Such approvals are not needed in Kansas, Oklahoma and Texas, Howard said, leaving only Nebraska and the federal government.
A law passed by Nebraska lawmakers during a recent special session gave the state the authority to conduct an environmental review of a new pipeline route that TransCanada is now developing. The state wants the line to go around the environmentally sensitive Sandhills region in Nebraska.
Once TransCanada submits a new route plan through Nebraska, the state's review is expected to take six to nine months.