Trump to move fast on KXL
Much like the rejection of Keystone XL by U.S. President Barack Obama was about climate change symbolism, president-elect Donald Trump is going out of his way to make the revival of the Alberta-to-Texas pipeline project symbolic of his back-to-business and energy security priorities.
He spoke about the proposed oilsands pipeline during his election campaign, right after his election and again while putting together his transition team, which could include none-other than KXL supporter Rex Tillerson, the former CEO of Exxon Mobil Corp., as his secretary of state.
In his latest plug for KXL, in an interview Sunday with Fox News, Trump suggested — unprompted — he’d move quickly on Keystone XL after taking office, after being pressed on whether his fossil fuel-friendly administration would remain in the Paris climate agreement.
“The Keystone pipeline, you’re going to have a decision fairly quickly,” Trump said. “And you’ll see that.”
Dennis McConaghy, the former TransCanada Corp. senior executive who just completed a book, Dysfunction, about the KXL saga under Obama, said it’s no surprise Trump is enthusiastic about the 800,000 barrels-a-day pipeline linking Alberta’s oilsands to refineries in the U.S. Gulf.
“This is going to be $10 billion of infrastructure investment that the federal government doesn’t have to pay for,” said McConaghy.
In his book, McConaghy writes that Obama’s KXL’s rejection was “a triumph of symbolism over substance and reasonable expectation of due process” that occurred after becoming “a highly politicized emblem for the American environ- mental movement.”
Calgary-based TransCanada, the proponent of KXL, is saying little publicly about a revival of KXL while the transition in Washington is underway. It had to take a $3 billion writedown following Obama’s rejection after a seven-year review and followed up with a challenge against the U.S. government under the North American Free Trade Agreement to recoup US$15 billion in damages.
But behind the scenes, TransCanada’s legal and commercial teams are likely working overtime to assess whether KXL still has shipper support and on what terms it could go ahead, McConaghy said.
McConaghy said the company is likely looking at what a revival could look like from a regulatory and legal perspective.
The company’s legal team would want to ensure a revived KXL is insulated from litigation, he said.
“Don’t underestimate, when this thing moves forward toward approval, the U.S. environmental movement will do everything it can to legally challenge that,” McConaghy said. TransCanada would also have to resolve outstanding litigation in Nebraska. The fight against KXL started in the state, where landowners were concerned about its impact on the Ogallala aquifer.
A further hurdle is that the company would have to re-assemble the team responsible for KXL, which was likely re-assigned after its rejection, McConaghy said.
If Tillerson gets the top job at the State Department, which was responsible for KXL’s review, it would be a bonus for the pipeline. Tillerson is said to be the frontrunner for the job, although blowback due to his ties with Russia could scuttle that.
TransCanada did not reveal which companies made commitments to ship on KXL, but in his book McConaghy said many were U.S.-controlled.
Exxon Mobil’s Canadian afliate, Imperial Oil Ltd., is one of the top developers of oilsands leases in Alberta, which would make Tillerson very familiar with the oilsands and the KXL debacle. If Tillerson gets the secretary of state appointment, Canada’s oil and gas sector would find itself with more support in Washington than in either Edmonton or Ottawa, where governments are more concerned about reducing oilsands impacts.