U.S. judge deals Blow to Keystone XL plans

Judge orders new environmental review while rival energy projects catch a break

CALGARY A U.S. federal judge dealt Transcanada Corp. a new setback in its years-long push to build the Keystone XL pipeline on Thursday, as competing export pipeline projects celebrated major milestones on the same day.

U.S. District Court Judge Brian Morris issued a ruling Thursday in Montana requiring the State Department to conduct an environmental assessment of the new Keystone XL route through Nebraska.

The judge ruled that a new assessment was necessary because the Nebraska Public Utilities Commission approved the Us$8-billion pipeline along an alternative route through the state, rather than the company’s desired route, and because that route had not been properly studied.

“We’re reviewing the decision,” Transcanada spokesperson Matthew John said in an email following the ruling.

The Calgary-based pipeline company had planned to begin preliminary work on the project, which would ship 830,000 barrels of oil per day from Alberta to the U.S. Gulf Coast, later this year but the ruling adds new uncertainty to the poten- tial construction timeline.

Meanwhile, and on the same day, rival Enbridge Inc. announced the start of construction on its own new export project, Line 3, and the National Energy Board cleared Kinder Morgan Canada to begin construction on the majority of the Trans Mountain expansion project.

For KXL, Transcanada is preparing for one legal challenge to its route approval later this year and Thursday’s development could force the U.S. State Department to undertake further reviews.

“This is an order that is ordering the Department of State to do some work,” said former Transcanada executive Dennis Mcconaghy, who wrote an insider’s account of the pipeline in a book titled Dysfunction: Canada after Keystone XL.

Mcconaghy said the judge’s order was based on a “technicality” as the Department of State’s environmental impact assessment of the project was in 2014 and U.S. President Donald Trump approved the project in 2017 before the Nebraska commission issued its approvals along the alternative route the same year. “This is not good but it’s expected,” he said.

Now the State Department can either appeal the judge’s decision or argue that work the U.S. federal government conducted on the alternative route for the Bureau of Land Management, in the Department of the Interior, should satisfy the judge’s order.

Either way, Mcconaghy said the ruling was a setback for the project and neither option would placate the opponents.

Indeed, environmental and other opposed groups said the ruling was proof the project would never be built. “What we have here is really another potential nail in the coffin, which is a supplemental (Environmental Impact Statement), and if there are any findings in that supplemental EIS that would modify the allegedly approved mainline alternative route, then that could affect the approval,” said Brian Jorde, a lawyer with Omaha-based Domina Law, which represents landowners opposed to Keystone XL.

Domina Law has appealed the approval of KXL to the Nebraska Supreme Court on the basis that the state’s utilities commission did not have the authority to consider alternate routes. Jorde said he expects a decision on that case by year’s end.

Given the ongoing delays to Keystone XL and trade spats with the U.S. and Saudi Arabia, some groups have called for Transcanada to reconsider its $15.4-billion Energy East pipeline to Atlantic Canada.

Transcanada proposed the Energy East project in 2014 but cancelled the project in 2017 after the federal government announced a new, more stringent review process for energy and pipelines.

Meanwhile, Natural Resources Minister Amarjeet Sohi and Enbridge Inc. vice-president Leo Golden announced the start of construction on the company’s Line 3 replacement project in Manitoba on Thursday. The Line 3 replacement project will roughly double the capacity of the line to 760,000 bpd, allowing Canadian oil companies to send more crude to refineries in the U.S. Midwest.

In addition, the National Energy Board announced Thursday it was granting permission for the project to begin construction on the majority of the pipeline route.

Trans Mountain can now begin construction between Edmonton and Kamloops, B.C. The route between Kamloops, in the province’s interior, and Burnaby, on the coast, has not yet been approved and route hearings are set for October.

Kinder Morgan Canada Ltd. has been preparing to begin construction on the Trans Mountain pipeline in Alberta and eastern B.C. at the end of August. The federal government will take ownership of the project shortly thereafter.