Keystone XL Pipeline: Trump Administration Approves Controversial Pipeline

The Trump Administration announced today (3/24/2017) that it will grant a permit for construction of the controversial Keystone XL pipeline. The President has referred to this project as “the first of many infrastructure projects” that will employ many Americans and help end the nation’s employment issues.

This long-disputed project will link oil producers in Canada and North Dakota with refiners and export terminals on the Gulf Coast. The announcement, which was made by the State Department, reversed the position of the Obama Administration. The reversal had to go under a 60 day review that began almost immediately after President Trump took office.

“This is a significant milestone for the Keystone XL project,” said Russ Girling, TransCanada’s President and Chief Executive, in a video release today. Russ continued by saying “We greatly appreciate President Trump’s Administration for reviewing and improving this important initiative, and we look forward to working with them as we continue to invest in and strengthen North America’s energy infrastructure.” (http://wapo.st/2mzH9Ql)

The approval is helping with much more than oil. TransCanada will also drop a $15 billion arbitration claim it filed for damages resulting from the North American Free Trade Agreement. The White House also stated that it is waiving the requirement set by President Trump that would require the pipeline to be composed of solely U.S. steel. TransCanada purchased steel pipe about 4 years ago and only half had come from U.S. mills.

The pipeline is projected to move 830,000 barrels of crude oil a day but construction is not quite ready to start. A permit is still required from the Nebraska Public Service Commission which was filed for last month by TransCanada. This permit is necessary in cases where a company resorts to eminent domain because landowners refuse construction. TransCanada also stated that it has agreements covering 90 percent of the route in each of the states the pipeline is set to run across.

Even after the permits are completed, construction of the pipeline would probably not be finished until the tail end of 2019. This is largely due to the local population’s resistance to the pipeline being built. The pipeline has long seen opposition from Nebraskan landowners and environmentalists. The main cause for concern is that construction will interfere with the Ogallala water aquifer and the fragile Sand Hills region. TransCanada responded to these claims by moving the pipeline further east, but resistance is still likely.

It is projected that by 2021, western Canada’s oil production will be up to 5.4 million barrels of oil a day, which is a 1 million barrel increase from their current output. The lack of a pipeline resulted in the need for two to three trains a day to move this large supply of oil out of the region.

Pipeline investors were ecstatic to hear news of the project’s approval. Today at 11:20 A.M. TransCanada’s shares were up 1.25 percent. News of the approval is also good for those in American manufacturing due to an increase in industrial orders that may follow as well as the jobs it will create stemming from construction of the pipeline.

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Sources:

www.chicagotribune.com/business/ct-trump-approves-keystone-xl-pipeline-20170324-story.html

www.washingtontimes.com/news/2017/mar/24/keystone-xl-pipeline-environmentalists-tribes-prom/

www.washingtonpost.com/news/energy-environment/wp/2017/03/24/trump-administration-grants-approval-for-keystone-xl-pipeline/?utm_term=.3b20f847302a