Today the Army Corps of Engineers granted approval for TransCanada to begin construction on the southern portion of the Keystone XL pipeline that would end at the Gulf of Mexico. Last January, President Obama denied a National Interest Determination permit for the high-profile project that is opposed by many environmental groups because it moves large amounts of oil sands crude that have a more energy intensive extraction process than conventional crude oil. Today's announcement generally aligns with Administration's proposal from last March where they urged TransCanada to reapply for a construction permit by breaking up the project into two portions: a southern leg which needs no additional Presidential permits and a northern leg crossing the international border into the US which does.

Late last week, Kinder Morgan Energy Partners announced its intention to expand the Trans Mountain Pipeline to 850,000 barrels per day. Currently, the Trans Mountain Pipeline is the only Pacific Coast outlet for Canadian crude oil to reach growing marketplaces in Asia. The news underscores the continued interest by Canadian producers and pipeline companies to search for additional markets for oils sands should US opposition persist in approving the Keystone XL Project.