Mon­tana judge blocks Key­stone, draws Trump’s ire

The Globe and Mail (Alberta Edition) - - REPORT ON BUSINESS - DAVID GAFFEN ROD NICKEL

Or­der halts con­struc­tion, pro­vokes near 2-per-cent drop in Tran­sCanada shares

A U.S. judge in Mon­tana has halted con­struc­tion of the Key­stone XL pipe­line de­signed to carry heavy crude oil from Canada to the United States, draw­ing a sharp re­buke on Fri­day from U.S. Pres­i­dent Don­ald Trump.

The rul­ing out by a U.S. court in Mon­tana late on Thurs­day dealt a ma­jor set­back to Tran­sCanada Corp., whose stock dropped nearly 2 per cent in Toronto. Shares of com­pa­nies that would ship oil on the pipe­line also fell. Tran­sCanada said in a state­ment it re­mains com­mit­ted to build­ing the US$8-bil­lion, 1,900-kilo­me­tre pipe­line.

The rul­ing drew an an­gry re­sponse from Mr. Trump, who ap­proved the pipe­line shortly af­ter tak­ing of­fice. It also piles pres­sure on Cana­dian Prime Min­is­ter Justin Trudeau to as­sist the coun­try’s ail­ing oil sec­tor.

It was a win for en­vi­ron­men­tal groups that sued the U.S. gov­ern­ment in 2017, soon af­ter Mr. Trump an­nounced a pres­i­den­tial per­mit for the project. The rul­ing also re­warded Na­tive Amer­i­can groups and ranch­ers who have spent more than a decade fight­ing the planned pipe­line.

U.S. Dis­trict Court Jus­tice Brian Mor­ris wrote that a U.S. State Depart­ment en­vi­ron­men­tal anal­y­sis of Key­stone XL “fell short of a ‘hard look’ ” at the cu­mu­la­tive ef­fects of green­house gas emis­sions and the im­pact on Na­tive Amer­i­can land re­sources.

“It was a po­lit­i­cal de­ci­sion made by a judge. I think it’s a dis­grace,” Mr. Trump told re­porters at the White House.

“The Trump ad­min­is­tra­tion tried to force this dirty pipe­line project on the Amer­i­can peo­ple, but they can’t ig­nore the threats it would pose to our clean wa­ter, our cli­mate and our com­mu­ni­ties,” said the Sierra Club, one of the en­vi­ron­men­tal groups in­volved in the law­suit.

Rep­re­sen­ta­tives of Mr. Trudeau and Cana­dian Nat­u­ral Re­sources Min­is­ter Amar­jeet Sohi did not im­me­di­ately com­ment. The U.S. State Depart­ment was not im­me­di­ately avail­able for com­ment.

The pipe­line would carry heavy crude from Al­berta to Steele City, Neb., where it would con­nect to re­finer­ies in the U.S. Mid­west and Gulf Coast, as well as Gulf ex­port ter­mi­nals.

Shares of Cana­dian oil pro­duc­ers Cana­dian Nat­u­ral Re­sources Ltd. and Cen­ovus En­ergy Inc. shed 3 per cent. Canada has long sought more ar­ter­ies to move oil out of Al­berta, where the tar-like bi­tu­men is ex­tracted.

Sev­eral pipe­line projects have been scrapped be­cause of op­po­si­tion and the Trans Moun­tain line project still faces de­lays, even af­ter the Cana­dian gov­ern­ment pur­chased it this year to move it for­ward.

En­sur­ing at least one pipe­line is built is crit­i­cal to Mr. Trudeau’s eco­nomic and en­vi­ron­men­tal plans, with a Cana­dian elec­tion ex­pected next fall.

Canada is the pri­mary source of im­ported U.S. oil, but con­gested pipe­lines have forced oil ship­pers to use costlier rail and trucks.

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