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Bloomberg News
Weld inspector Shayne Walker fills out paperwork during construction of the Gulf Coast Project pipeline in Prague, Okla., part of the Keystone project.

Pipeline not quite job boon

Keystone project requires sparse workforce after it is completed

– If the Keystone XL oil pipeline gets built, Rick Balcom doubts he’ll see many construction workers at the bar of his No. 3 saloon in this remote town in the northwest corner of South Dakota.

Balcom, 44, knows most of the workers building the Canada-Nebraska pipeline will stay at a catered “man-camp” seven miles away and won’t be hoisting brews under the stuffed mountain lion that adorns his bar. On their days off, they’ll probably travel to places such as Deadwood and Spearfish an hour-and-a-half drive south that offer gambling and other attractions, he said.

“I can’t think of anybody who would be hugely disappointed if it didn’t go through,” Balcom said. “It’s kind of a deal right now where we could take it or leave it.”

His views reflect the hard-to-measure economic impact of a $5.3 billion project that would result in a surge of hundreds of short-term construction jobs, and be followed by a skeletal staff to tend the buried pipe and associated pumps.

It would be among the country’s largest building projects, though one centered in states that already have low unemployment and where competition is fierce for skilled workers.

Supplies and materials will have to be purchased, though many of the big-ticket items – such as the steel – will be sourced from overseas. TransCanada Corp., which wants to build the line, is based in Calgary and about two-thirds of the company’s shareholders live in Canada.

Tax revenues would rise substantially in the counties along the route though the gains would represent only a sliver of the general funds of Montana, South Dakota and Nebraska, the three states Keystone would cross. TransCanada has already donated about $85,000 to communities in the path, for such things as emergency equipment, park improvements and swimming pools.

Some locals say they’re concerned, though, about the truck traffic and the potential for crime and oil leaks if the pipeline were to be built.

A journey through the small towns where the pipeline would travel shows a level of indifference that contrasts to the vehemence of the arguments over Keystone in Washington, where the project has spawned a multimillion dollar lobbying fight over climate change, energy security and job creation.

“I think we’ll get some of the business,” said Ronnie Coyle, 56, the owner of the SuperValu grocery store in Philip – population 770 – about 90 minutes east of Rapid City.

Others are more ambivalent, saying they aren’t sure the benefits outweigh the risks.

“It really doesn’t affect me much,” said Tim Olson, whose construction company in Buffalo is about half a mile down Highway 85 from Balcom’s No. 3 saloon. He says he already has as much work as he can handle. “We’re busy.”

At Steele City, Neb., Keystone XL would link to an existing pipe to Cushing, Okla., and then to a southern leg already under construction, carrying bitumen, a type of heavy crude, from the oil sands of Alberta to refiners on the Gulf Coast.

Much of the area it would cut across is pasture land where the people are as sparse as the trees. That’s by design: the fewer residents, the fewer safety risks to houses and communities.

It also means little of the skilled labor needed to construct the 875-mile line will be found locally, though keeping the work camps up and running may employ as many as 60 people, according to TransCanada.

About 90 percent of the workers who will dig the ditches and lay the pipeline will come from outside Montana, South Dakota and Nebraska, according to a draft environmental impact statement prepared by a contractor for the State Department.

The department is reviewing TransCanada’s application for a permit to build the pipeline because it would cross an international border. A final decision could come late this year or early next.

The State Department’s draft analysis, released in March, said the pipeline would generate the equivalent of 3,900 full-time jobs in each of the two years of construction. The figure is based on a formula that accounts for the temporary nature of the work. More workers would be employed at times, though not over the course of a full year.

After that, Keystone would create 35 permanent jobs, according to the State Department review.

President Barack Obama has cited those sparse jobs estimates to question the economic impact of the pipeline.

“Republicans have said that this would be a big jobs generator,” he said in a July interview with the New York Times. “There is no evidence that that’s true.”

TransCanada says 7,000 jobs were created to make the equipment needed to build Keystone XL and the southern leg to the Gulf Coast. About 9,000 workers will be hired to construct the Canada-Nebraska portion, the company says.

The project represents about 0.5 percent of all non residential, U.S. construction spending, according to Ken Simonson, chief economist for the Associated General Contractors of America, an Arlington, Va.-based group that represents general contractors.

It would be about 3.5 percent of construction spending in the power and energy sector – “a meaningful bump,” Simonson said in an interview.