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December 7, 2013

Southern leg of pipeline to open

OKLAHOMA CITY — Oklahoma oil producers say the planned opening next month of the southern leg of the Keystone XL pipeline will remove a glut of crude oil at a storage hub in Cushing and help them get a price that better competes with what producers along the Gulf Coast receive.

In regulatory filings this week, operator TransCanada said the southern leg from Cushing to Port Arthur, Texas, is expected to become operational Jan. 3.

“We remain focused on completing the construction, testing and commissioning for the Gulf Coast Project,” the filing with the Federal Energy Regulatory Commission said.

The pipeline’s northern leg from Canada into the U.S. has been opposed by environmental groups. The southern leg doesn’t cross an international border and doesn’t require presidential approval, although it too has been opposed on environmental grounds.

President Barack Obama visited Cushing in 2012 and urged construction of the southern leg.

The 485-mile pipeline will initially carry up to 700,000 barrels per day from Cushing to the Houston area.

“We have a lot of oil being developed in the state. Having another outlet going south is very positive for us,” Tony Say, CEO of Oklahoma City-based Clearwater Enterprises, told The Oklahoman.

Some have speculated that the pipeline will not eliminate the glut, but instead move it downstream to Houston instead of Cushing — something that Jeff Hume, vice chairman of strategic growth initiatives at Oklahoma City-based Continental Resources Inc., said is unlikely.

“There’s plenty of refining capacity down there. I think it could displace some foreign oil, which is good for us,” Hume said.

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