Trump administration grants permit for Keystone XL pipeline

Trump administration grants permit for Keystone XL pipeline

SHAWN MCCARTHY

OTTAWA — The Globe and Mail

Published Friday, Mar. 24, 2017 7:09AM EDT

Last updated Friday, Mar. 24, 2017 9:49AM EDT

 

 

TransCanada Corp. has finally received its presidential permit to build the Keystone XL pipeline – nine years after the project was first conceived in a world of $100 (U.S.) crude prices and rising imports to the United States.

Keystone XL route map

The company still has a significant hurdle to clear in Nebraska, where the state’s Public Service Commission must approve the route following a court decision invalidating a previous green light issued by the governor.

TransCanada chief executive Russ Girling was scheduled to meet U.S. President Donald Trump at the White house on Friday morning to announce the agreement.

Keystone XL will deliver some 800,000 barrels per day of oil sands crude from Alberta to Steele City, Neb., where it will connect with lines taking the oil to the massive refining hub on the U.S. Gulf Coast.

With new projects coming on stream in the oil sands in the next few years, production is expected to grow until 2020, straining the capacity of the existing pipeline network.

The KXL project became a political lightning rod during the Obama era.

Failure of Barack Obama to approve the project over the course of his administration created a rift in Canadian-U.S. relations as former prime minister Stephen Harper had invested considerable political capital in getting it done.

Environmentalists rallied against the project, making it a symbol of fossil-fuel infrastructure that would keep the world dependent on the carbon-intensive energy that is driving feared changes to the climate.

The Trump administration decision reverses the 2015 rejection of Keystone XL by Mr. Obama who said it would contribute to rising greenhouse gas emissions from the oil sands. Friday’s approval is part of a broader effort by President Trump to roll back Obama era climate-change policies and support development in the coal, oil and natural gas industries.

The Liberal government in Ottawa is cheering the pipeline decision. Prime Minister Justin Trudeau has long supported Keystone XL, even as his government approved two pipeline project, Kinder Morgan Inc.’s expansion of its Trans Mountain line to Vancouver and Enbridge Inc’s rebuilding of its main export line to the U.S.

“Keystone XL will create thousands of good, middle-class jobs for Canadians during construction,” said Alexandre Deslongchamps, a spokesman for Natural Resources Minister Jim Carr.

After years of company and government leaders insisting the Canadian industry needs to diversity its export markets, the TransCanada and Enbridge projects will dramatically expand capacity into the United States, where growing shale oil production is reducing the need for imports.

However, refiners in U.S. Gulf Coast and the MidWest spent billions of dollars prior to the shale-oil boom in configuring their operations to handle the diluted bitumen that comes from the oil sands. And declines in Mexican and Venezuelan heavy-oil production, they remain prime markets for Canadian oil-sands producers.

However, if today’s low oil price persist, growth in oil sands production would level out, raising questions as to how much additional pipeline capacity is actually needed. At the same time, environmentalists warn that rising production would jeopardize Canada’s commitment to cut greenhouse gas emissions by 30 per cent form 2005 levels by 2030.

TransCanada’s Mr. Girling – who has battled for years to win KXL approval – welcomed it Friday.

“We greatly appreciate President Trump’s administration for reviewing and approving this important initiative and we look forward to working with them as we continue to invest in and strengthen North American’s energy infrastructure,” he said in a statement.

Anthony Swift, of the Natural Resources Defense Council said his organization will be looking closely at the approval and considering a court challenge. Mr. Swift contended that Keystone’s environmental-impact statement, completed in January, 2014, is so out of date that it would open any decision up to legal action.

“It is vulnerable to reversal. There was an assumption that oil prices would stay above $100 a barrel,” he said Thursday. “We’re looking at a project, the route for which is unknown and the market for which has changed fundamentally.”

Mr. Swift said the pipeline must also be assessed under the U.S. Clean Water Act, providing another hurdle to the project at the federal level.

 

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on March 24, 2017, in economic impact, oil, political. Bookmark the permalink. Leave a comment.

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