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A federal decision blocking the Keystone XL pipeline's approval by the Trump administration is once again clouding the future of a project that is a decade behind due to the heated opposition of environmentalists, landowners and Native American groups.
US District Judge Brian M. Morris said Thursday night that President Trump's cross-border building permit in 2017
TransCanada Corp
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TRP -2.09%
had not considered all the impacts required by the federal law and this construction could not proceed until the additional environmental study was completed.
The ruling means that the extension of the pipeline to transport oil from Alberta to Nebraska may face at least some additional delays because the decision is being appealed to a higher court or government officials complete the additional analysis.
A spokesman for TransCanada said the company was reviewing Thursday's decision and reiterated the company's support for the project.
"We remain committed to building this important energy infrastructure project," said the spokesman.
The US State Department, which issued the presidential permit and was the other accused in the case, did not respond to a request for comment.
Keystone XL has already faced many legal and political hurdles and has become a rallying cry for environmentalists who want to conserve fossil fuels in the soil. Mr. Trump reactivated the pipeline after it was blocked by former President Obama, but the project continued to face challenges.
TransCanada said earlier this year that its customers were providing enough support to move forward with the project, which is expected to cost about $ 8 billion, and that work could begin next year. But he has not yet made a final decision as to the opportunity to complete the construction.
Chris Cox, Energy Analyst at Raymond James Ltd. based in Toronto, said the new decision could delay construction in 2020 and eventually turn the pipeline into a problem in the upcoming US presidential election, which would increase uncertainty.
"Is TransCanada willing to bet $ 8 billion to get another Trump endorsement?" He said.
Had it been completed as planned, Keystone XL would deliver up to 830,000 barrels of oil a day, mostly from Canada's oil sands, more than 1,000 kilometers from Steele City, Nebraska, where it would be connected to existing pipelines. refineries on the Gulf Coast. The proposed route would cross Montana, South Dakota and Nebraska.
Justice Morris' new ruling, mandated by Obama, requires the federal government to update a previous environmental review of Keystone XL in 2014 to take into account several additional factors. They include the impact of lower oil prices on the viability of the project, its greenhouse gas emissions and the modeling of potential oil spills it could cause.
The State Department was already preparing an additional environmental review of the potential impact of the pipeline in Nebraska, but that analysis is probably not enough, said Matthew Taylor, an investment bank analyst. Energy Tudor Pickering Holt & Co.
Should a second additional review be required, it is unlikely TransCanada will be able to move forward with Keystone XL until the end of 2019 at the earliest, he said, casting doubt on the future of the project.
"How much extra work is stopping?" Taylor said.
Zachary Rogers, an analyst for energy consulting firm Wood Mackenzie, predicted the project would continue to advance, but said delays were a problem for Canadian oil sands producers struggling to get their crude oil to market. "Although it's really a big delay in terms of timing, it's unlikely to be the coffin nail for Keystone XL," he said.
Canadian pipelines have suffered a series of setbacks over the past year. TransCanada canceled its Energy East project last year after the Canadian government announced plans to expand the scope of the pipeline environmental review.
In May,
Kinder Morgan
Inc.
has abandoned its plans to expand the Trans Mountain Pipeline between the provinces of Alberta and British Columbia, despite vocal opposition and several delays. The Government of Canada purchased the $ 4.5-billion pipeline ($ 3.41 billion) for construction. An appeal court said in August that the project had been wrongly approved and needed to be re-examined, delaying construction indefinitely.
Canadian oil producers are struggling to get their pipelines to US refiners. Western Canadian Select crude is trading at a significantly lower price than the West Texas Intermediate crude in the United States, largely because of the inability to get their oil on the market.
The oil price cut reached a record $ 51 last month, although it has since declined as crude oil prices dropped. According to Tudor Pickering Holt, heavy Canadian crude traded at $ 43 a barrel below US benchmark prices.
Write to Rebecca Elliott at [email protected], Vipal Monga at [email protected] and Miguel Bustillo at [email protected]
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