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BILLINGS, Mont. (AP) – Montana Gov. Brian Schweitzer said Wednesday that he wants oil companies in his state and neighboring North Dakota to be able to tap into a proposed pipeline that would run from Alberta to the Gulf Coast.
On Wednesday, Schweitzer asked the Public Service Commission to investigate whether the state has authority to force Calgary-based TransCanada to allow an “onramp” for the region’s oil near Baker.
That could help oil companies in the two states get better prices for their fuel, which is now often sold at a discount because of shipping constraints, Schweitzer said.
Final approval is pending for TransCanada’s 1,980-mile Keystone XL Pipeline. The company hopes to start construction sometime this year.
“This is a pre-emptive move to make sure Montana oil producers get market price for their oil,” Schweitzer said. “In eastern Montana and western North Dakota, we’re getting discounts of $8 to $12” per barrel below market prices.
Schweitzer said a Montana “onramp” for the pipeline also could encourage new drilling. Exploration lagged in recent months due to the ailing economy and a temporary drop in oil prices.
The pipeline would generate an estimated $57 million in property taxes for Montana. It has run into resistance from some Montana landowners and conservation groups because of environmental concerns.
TransCanada wants to move up to 900,000 barrels of crude a day from Alberta’s oil sands fields to refineries in Texas. However, it has not made any commitment for oil producers along the pipeline’s route to tap into the project.
The pipeline would include a 280-mile section through eastern Montana. That’s where most of the state’s oil comes from and is next to North Dakota counties where production has been booming for the past several years.
Company spokesman Jeff Rauh said Wednesday that TransCanada has received little interest in Keystone XL from Montana oil companies.
“We’d be happy to continue to discuss that with interested parties,” he said.
He added that construction of the pipeline – and the expansion of a second TransCanada pipeline, Keystone – could prove enough to end the region’s shipping constraints. Rauh said the projects, with a combined $12 billion price tag, would let Canadian crude bypass pipelines used by local oil producers.
But North Dakota officials have discussed building their own pipeline to tap into Keystone XL – a $200 million project that would run from the northwestern corner of the state to connect to TransCanada’s pipeline in Saskatchewan.
Public Service Commission Chairman Greg Jergeson said an attorney from the agency is looking into the issue and that an answer could come within the next two weeks.
Jergeson said it will come down to whether Keystone XL meets the definition of a “common carrier” crude oil pipeline. That would give his agency regulatory authority over the project.
“If their response is, ‘You don’t have jurisdiction because we’re an interstate pipeline,’ then we would have to see where to go,” he said.