UPDATE 2-TransCanada wins 1 of 3 US permits for Keystone line

Wed Jun 27, 2012 2:29am IST

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* Army Corps grants OK for Galveston district

* Approvals needed for Tulsa, Fort Worth districts

* TransCanada hopes to start construction this summer

* Friends of the Earth calls for EPA to step in

CALGARY, Alberta, June 26 (Reuters) - The U.S. Army Corps of Engineers has granted TransCanada Corp one of three permits it needs to build the $2.3 billion southern section of the Keystone XL pipeline, a project President Barack Obama had pledged to move forward quickly.

TransCanada, which seeks to build the overall project in stages after Obama rejected the contentious first application, said the approval covers wetland and water crossings in the Galveston, Texas, district.

The company needs two other permits from the agency's Tulsa, Oklahoma and Fort Worth, Texas districts for the pipeline section, which it has rebranded the Gulf Coast project. Tulsa is expected to decide on the permit on Thursday when a 45-day period of consideration draws to a close, said Lavonna Davis, an Army Corps public affairs specialist.

The Fort Worth district has asked TransCanada for more information, so there is no estimate when the agency might decide on the permit, she said. "Their clock hasn't started ticking, not until they get the full package of information," Davis said.

The southern section would initially carry 700,000 barrels a day of crude to Texas refineries from the glutted Cushing, Oklahoma, storage hub with the aims of helping to raise deeply discounted prices and providing the region more secure oil supplies. It could be expanded to 830,000 bpd.

TransCanada expects to start construction later this summer. It is free to begin work on the bit around Galveston at its own risk, the Army Corps said.

In January, Obama nixed the initial $7.6 billion Keystone XL application to take Canadian oil sands-derived crude to the Gulf Coast, saying it needed more environmental review than could be completed before a tight deadline set by the U.S. Congress.

But in February, he said he welcomed TransCanada's separate initiative to build the southern section, saying it would create jobs and encourage American energy production. He pledged to fast-track approvals so the line could be in service by mid- to late 2013.

TransCanada has also re-applied to build the northern part of the pipeline between the Canada-United States border and Steele City, Nebraska, though like the first application it requires a more complex presidential permit process because it crosses the international boundary.

Environmentalists have urged rejection of both, saying they spell unnecessary oil spill risks and stand to increase greenhouse gas emissions by fostering more tar sands development in Alberta.

Friends of the Earth called on the Environmental Protection Agency to intervene.

"The Army Corps has shown a willful disregard for the concerns of residents whose health, land and livelihoods are at stake if Keystone XL is rubber-stamped, which is why we're urging Administrator Lisa Jackson to step in and call for a full environmental review," Kim Huynh, campaigner for the group, said in a statement.

Davis said there is no process for other agencies to appeal decisions on the permits.

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