HELENA, Mont. - State regulators have granted condemnation powers to the proposed Keystone XL oil pipeline across eastern Montana, but not until its developer agreed Montana has power to regulate local oil producers' access to the line.
Now, eastern Montana oil producers who want to use the pipeline to ship their product are comfortable that the state can regulate the terms of "interconnecting" with the pipeline, one of their attorneys said on Aug. 10.
Continental Resources Inc. "believes that the Keystone Pipeline has recognized its obligation to comply with state law, including matters of interconnection," said John Alke, a Helena attorney representing Continental, one of the largest oil producers in the state.
If the pipeline is built, oil producers in eastern Montana and North Dakota plan to negotiate with Keystone and its owner, Canadian energy giant TransCanada, to ship their oil at interconnection sites near their wells.
Montana Gov. Brian Schweitzer and Gov. John Hoeven of North Dakota have said local producers currently must sell crude oil to refiners at a discounted price, because of a lack of pipeline capacity in the production area along the Montana-North Dakota border.
If negotiations on interconnection break down, producers say Montana law gives the state Public Service Commission authority to regulate interconnection terms for pipelines that cross the state.
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