You may have noticed the Keystone XL Pipeline Project has been in the news lately. This post reviews recent developments around North America’s most controversial cross-border crude oil pipeline.
Executive Order for Keystone XL Pipeline
Say what you will about the new American President, Donald Trump, but there is no doubt he is doing what he said he would do. During his campaign and after winning the election, he often said he would quickly approve the Keystone XL pipeline.
Every other Republican candidate promised to do the same thing. Trump was a little different.
He would promise to approve the pipeline, but then he would say things like “I want a better deal” or that the U.S. “deserves a piece of the profits.”
Nothing in the relationship between the U.S. and Canada would allow Trump to do a deal like that, so nobody knew what to expect.
Making it Official
On January 24, Pres. Trump made his intentions known. He issued a Presidential Memorandum that invited TransCanada to “promptly re-submit its application” to build the pipeline. The Memorandum then ordered his Department of State to make a final determination on the application within 60 days. In a separate memorandum, Pres. Trump explained how he plans to get America a piece of the pie.
He instructed his Secretary of Commerce to develop a plan for all pipelines to “use materials and equipment produced in the United States, to the maximum extent possible.” In his signing ceremony for these orders, he talked up the “made in America” aspects of his orders. He said “we will build our own pipes…like we used to in the old days.”
Department of State Filing
TransCanada wasted no time and filed a new application just two days later. The company emphasized that the project “will help meet America’s growing energy needs as well as create tens of thousands of well-paying jobs and generate substantial economic benefit throughout the U.S. and Canada.”
“I’ve been on the record for many years supporting [Keystone XL] because it leads to economic growth and good jobs for Albertans.”
Prime Minister Justin Trudeau reiterated his strong support for the project, saying “I’ve been on the record for many years supporting [Keystone XL] because it leads to economic growth and good jobs for Albertans…We know we can get our resources to market more safely and responsibly while meeting our climate change goals.”
Nebraska Still a Question Mark
Of course, the pipeline remains extremely controversial and is far from a done deal. Bold Nebraska, a leading group opposing the pipeline, promised to fight on.
The group argued that no route has even been approved through the state of Nebraska and farmers and ranchers in the state will block the pipeline’s passage. The group points out that many more permits are still needed before TransCanada can complete the project. It is also not entirely clear that the project still makes economic sense given the drop in world oil prices.
Assuming Keystone XL is back on, the project has a domino effect on other crude oil transportation options. TransCanada has a backup option called Energy East, which would take oil from Alberta to Canada’s East Coast instead of America. This pipeline was looking more likely after Keystone XL was rejected, but Keystone XL has always been a more economic option.
That said, there is still a case to be made for Energy East, especially because some analysts think Pres. Trump’s onerous conditions could hurt Keystone XL.
Meanwhile, the freight train industry has made a lot of money shipping crude oil in recent years, and that business could be damaged by new pipelines.
When it come sto Keystone XL, there is certainly no shortage of rhetoric.