Challenges remain for Keystone project
Uncertainty, questions surround pipeline’s future after Trump’s order
With the stroke of a pen CALGARY by U.S. President Donald Trump, the Keystone XL pipeline now shows more promise of getting built than it did under U.S. president Barack Obama, who rejected the pipeline in late 2015.
However, the order by Trump is no guarantee that Calgarybased proponent TransCanada Corp. will actually get the 36-inch pipeline welded, buried and operational. Among the headwinds it faces are state-level legal challenges, widespread environmental resistance and unclear guidelines as to how Trump intends to derive more profits for American taxpayers.
Here is a breakdown of some of the open questions surrounding the decade-long bid to get Keystone XL built.
PROFIT SHARING
Profit sharing with America During his campaign, Trump was repeatedly supportive of approving the Keystone XL pipeline, subject to renegotiated terms.
What those terms might be is unclear, analysts at Citigroup said in a research note Tues- day, and could materialize in a number of forms. “We can only postulate that it could require some sort of additional tariff or transportation charge on Canadian producers or the pipeline itself,” the analysts wrote.
Trump has said that the deal between TransCanada and the U.S. should be “better for Americans.” Those terms will ultimately be determined by discussions between the two parties.
Oil and gas companies in Alberta are anxiously considering what Trump’s proposed border tax might mean for Canadian commodity exports, though there are little existing proposal details.
LEGAL CHALLENGES
Much of the local resistance to Keystone XL was concentrated near the Sandhills and Ogallala aquifer regions of Nebraska. Residents were concerned a spill would irreversibly damage the groundwater source, and many joined protests against the project. There was similar misgivings about the project in South Dakota, where the public utilities commission delayed its renewed approval of the project after initially approving the pipeline in 2010. A revival of the pipeline could reignite those local reservations, which could ultimately lead to further delays.
STEEL
As part of the executive order to move ahead with Keystone XL, Trump said a majority of the steel used in the pipeline itself would have to come from the U.S. He tasked his team with determining how his administration could ensure such a deal.
In a statement Wednesday, a TransCanada spokesperson said companies that manufacture its steel pipe must meet “stringent quality and safety thresholds.”
In a 2012 press release, the company said 75 per cent of the pipe used in the project would come from North America.
ENVIRONMENTAL RESISTANCE
The Keystone XL pipeline became a rallying point for many environmental activists after resistance to the project became widespread beginning around 2011. Many activists organizations have stated their intention to block the pipeline despite Trump’s order to move ahead with negotiations.
Keystone XL would provide a more direct route in moving Canadian heavy oil to refineries in the U.S. Gulf Coast. Environmental groups believe the pipeline would “lock in” large volumes of Canadian oilsands production, which is a high source of per–barrel GHG emissions relative to some other sources of oil.