LINCOLN — A smaller, less controversial crude-oil pipeline will cross a corner of Nebraska and the Ogallala Aquifer.
Work on the Pony Express Pipeline, which will be converted from shipping natural gas to oil, is still full-speed ahead despite this week's announced sale of the pipeline's owner.
Kinder Morgan Energy Partners plans to sell the Pony Express and other pipeline assets in Nebraska and the Rockies to Tallgrass Energy Partners of Overland Park, Kan.
Officials said the sale has no impact on plans to convert 432 miles of the Pony Express Pipeline, from Wyoming to Kansas, to carry crude oil instead of natural gas.
The pipeline, which crosses Dundy and Hitchcock Counties in extreme southwest Nebraska, varies between 20 and 24 inches in diameter. In the conversion, it would carry 110,000 to 145,000 barrels of oil per day, which is 4.6 million to 6 million gallons of oil.
The conversion would provide a new route for crude oil produced in North Dakota's booming Bakken oil fields to reach refineries in Oklahoma and Texas, and, according to Kinder Morgan, help reduce the nation's dependency on foreign oil.
The head of Tallgrass, David G. Dehaemers Jr., said in a statement that the conversion of the Pony Express Pipeline to oil service will be a “significant focus for near-term growth” of his company.
He said he expected oil to begin flowing by the second half of 2014. That would likely be sooner than the proposed Keystone XL pipeline would go into service, if it receives state and federal approval to proceed.
An observer of the pipeline industry said he doubted that the Pony Express line would be much of a competitor for the much-larger Keystone XL, because the latter is focused mostly on carrying chemically diluted crude oil produced from tar-sand deposits in Canada.
The 36-inch Keystone XL pipeline is projected to carry up to 830,000 barrels of oil a day from Alberta to the U.S. Gulf Coast, though it will include a lateral line to pick up some conventional crude oil from North Dakota.
“There will be more than enough oil coming out of the Bakken to support both the XL pipeline and what Kinder Morgan is doing,” said Jeff Share, editor of Pipeline & Gas Journal of Houston.
Share said that because the pipeline conversion involves an existing pipeline that doesn't cross an international border, regulatory approval should be swifter and easier than the nearly four-year process to get approval to build the Keystone XL.
A new Nebraska law governing the siting of new crude-oil pipelines does not apply to the Pony Express conversion, since it is not a new pipeline.
A leading opponent of the Keystone XL said she was aware of the planned conversion, as well as another crude-oil pipeline owned by Kinder Morgan — the 20-inch Platte Pipeline, which has been carrying crude oil across the state since 1953. The Platte Pipeline and TransCanada's first pipeline across Nebraska — the Keystone — are the only pipelines now transporting crude oil across the state.
Jane Kleeb of Bold Nebraska said the Pony Express project and the aging Platte Pipeline point to the need for state regulations that address pipeline monitoring and emergency response plans.
“We don't know anything about this new company, and we have no state oversight or checks and balances over oil pipelines,” Kleeb said.
She added that Bold Nebraska is not opposed to domestic production of conventional oil but objects to tar-sand oil from Canada because it's foreign oil and more environmentally damaging to extract. The group also contends tar-sand oil is more corrosive and dangerous to transport via pipelines.
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