Pipeline future unclear despite victory
Nebraska officials approve route, but obstacles remain
WASHINGTON — The controversial Keystone XL pipeline cleared its last major regulatory hurdle Monday when Nebraska utility regulators approved a route through their state, handing a victory to President Donald Trump’s efforts to boost the oil industry and undo the climate change policies of his predecessor, Barack Obama.
The decision also dealt a blow to environmental activists, who had made Keystone XL a touchstone issue in their campaign to stop the development of projects that would increase the consumption of fossil fuels, a major cause of global warming. The pipeline would ship heavy crude from oil sands in Western Canada to refineries along the Texas Gulf Coast.
“This is clearly a byproduct of (Trump’s) election and there’s no way to spin that positively,” said Ben Schreiber, senior political strategist at Friends of the Earth, an environmental group that fought to block the project. “There’s no question the election set
back the movement to keep fossil fuels in the ground.”
The 3-2 decision by the Nebraska Public Service Commission comes after nine years of stops and starts for the pipeline and its developer, TransCanada, which is headquartered in Calgary, Alberta, but employs close to 1,000 people in Houston. Obama killed the project in 2015, but Trump made that decision a focal point of his presidential campaign, arguing it had hurt the U.S. economy. He revived Keystone XL after taking office.
“President Trump is pleased the state of Nebraska moved the Keystone XL pipeline forward,” said Hogan Gidley, White House deputy press secretary. “We look forward to seeing another promise fulfilled, which will create over 42,000 jobs and $2 billion in earnings for the American people.”
If and when the pipeline gets built remains unclear. TransCanada first filed the application for the $5.2 billion Keystone XL in 2008, when oil prices were more than double what they are today, raising the question of whether the 1,100-mile pipeline still makes economic sense.
TransCanada has yet to say whether it will move ahead on the pipeline, which could deliver more than 800,000 barrels of crude a day to Texas refineries.
“We will conduct a careful review of the Public Service Commission’s ruling while assessing how the decision would impact the cost and schedule of the project,” Russ Girling, CEO of TransCanada, said Monday.
Environmental groups, meanwhile, said they will continue to pursue legal options to block the Keystone XL. A lawsuit in the Montana federal courts aims to force the Trump administration to redo the environmental review of the pipeline — a process that can take years.
“This is going to be a pipeline that’s going to take a good long time to build,” Schreiber said. “The political winds might be different before it’s done.”
The route approved by Nebraska regulators was a compromise to avoid the state’s ecologically fragile Sand Hills region. Just a few days before the vote, another TransCanada pipeline — the original Keystone pipeline — ruptured in South Dakota, spilling more than 200,000 gallons of crude onto the prairie. The pipeline is still shut down, according to TransCanada.
Still, the Nebraska decision marked a move forward for the oil and gas industry, which had watched with dismay in recent years as a number of pipeline projects were delayed amid what oil and gas lobbyists dubbed “the Keystone effect,” including the controversial Dakota Access project in North Dakota. In Houston, pipeline companies, such as Kinder Morgan, Enterprise Products Partner and Plains All American Pipeline, employ tens of thousands of workers.
“The Nebraska Public Service Commission set an example for how to carefully evaluate critical energy infrastructure projects, even in the face of strongly held views and opinions,” American Petroleum Institute President Jack Gerard said Monday. “It’s been a long path to today’s approval.”
That path should eventually lead to the pipeline getting built, analysts said. Gulf Coast refineries are configured to process heavier crude, rather than lighter grades produced in Texas.
But supplies of heavy crude have become tighter as output has dwindled from the two major producers, Mexico and Venezuela, increasing demand for the Canadian oil.