October 28, 2011 / 5:26 PM / 8 years ago

UPDATE 2-NEB rules TransCanada in compliance on Keystone XL

* Union fails in attempt to overturn Keystone XL approval

* NEB rules TransCanada in compliance on construction

* U.S. approval decision still pending

By Jeffrey Jones

CALGARY, Alberta, Oct 28 (Reuters) - Canada’s energy regulator has rejected a union’s claim that TransCanada Corp violated its approval for the $7 billion Keystone XL oil pipeline, and refused to reopen hearings into the controversial project.

The affirmation of its National Energy Board certificate represents a victory for TransCanada as it takes flak from several angles in the United States over the controversial plan to ship crude to Texas refineries from Alberta’s oil sands.

Last month, the Communications, Energy and Paperworkers union complained to the NEB that it believed TransCanada violated its permit by not starting construction by a March 2011 deadline.

But in a letter to the union and the company on Thursday, the board said it found TransCanada had begun work on the Canadian portion of the pipeline, as required, so its certificate remained valid.

“The board denies the requests to hold a new hearing into the Keystone XL project,” it said after investigating the union’s claim.

It found that TransCanada had gone beyond clearing and groundbreaking with construction on a crude terminal in the Hardisty area of Alberta, where the line would originate, and the scope of work satisfied the condition of the NEB’s approval.

TransCanada is in a quandary on construction, however.

It won approval for the Canadian portion of the pipeline in March 2010, but a final go-ahead decision by the U.S. State Department is about a year behind the initial schedule and opposition among environmental groups and some politicians in the United States is growing louder.

In fact, the company has countered claims from U.S. green groups that is had started construction activities before winning approval to do so.

The groups oppose increased oil sands development, which is more carbon-intensive than conventional oil production, as well as what they say are higher risks of oil spills from the pipeline in environmentally sensitive regions such as the Ogallala aquiver in the central states.

TransCanada and its supporters say the project will create badly needed jobs and boost U.S. energy security.

The State Department has said it aims to decide by the end of this year, although an official with the department told Reuters this week that the deadline could slip.

The CEP, a staunch opponent of Keystone XL, was unhappy with the Canadian regulator’s decision, calling it “incredible” and a “blatant cover up”.

“The construction of this pipeline is two years behind schedule and nothing has been done that would meet any ordinary definition of construction, yet the NEB has declared it is proceeding in a timely manner,” union President Dave Coles said in a statement.

Coles had complained that the union’s own investigation showed that TransCanada’s work was cursory at best, consisting of just earth moving.

The union contends the pipeline, which would ship up to 700,000 barrels of crude a day, would prevent the creation of jobs that would come with building oil sands processing facilities within Canada.

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