What is at stake in the Keystone XL pipeline decision?

WINNIPEG, Manitoba (Reuters) – A US federal judge in Montana has suspended the construction of TransCanada Corp'sTRP.TO) The Keystone XL Pipeline said Thursday that a US environmental scan "failed to" pinpoint "the cumulative effects of greenhouse gas emissions and their impact on Native American land resources.

The decision is the latest backlog of the project, a decade of planning, which was relaunched by US President Donald Trump after his predecessor, Barack Obama, suspended his activities.

WHAT IS KEYSTONE XL?

KXL, as we know, is a 1,900 km (1,900 km) proposed pipeline that would deliver heavy crude to Steele City, Nebraska, from the oil sands of Canada, Alberta. Expected by TransCanada in Canada, KXL would provide a shortcut to bring more Canadian oil to US markets, completing the existing Keystone line from Alberta to Steele City, and then to refineries on the Gulf Coast.

WHY IS IT NECESSARY?

Oil production in Alberta's oil sands is growing faster than pipeline capacity, creating a bottleneck that has led to lower prices. Canadian heavy crude now has a fraction of the US light crude oil reference price and some producers have reduced their production. According to some estimates, the significant discount has helped to draw billions of dollars from the Canadian economy.

WHAT IS THE NATURE OF THE OPPOSITION?

Environmental groups have campaigned against pipelines to extract crude oil from Canada's oil sands, saying that mining methods used in the region are more environmentally damaging than conventional oil drilling.

In Nebraska, landowners criticized what they saw as significant efforts by TransCanada to force the pipe to cross ecologically sensitive areas.

WHAT OTHER OBSTACLES DOES IT HAVE?

Obama, a Democrat, halted the project in 2015, saying Canada would take away the bulk of economic benefits, while the project would increase greenhouse gas emissions. Republican President Donald Trump was forced to approve the KXL soon after taking office, saying it would create jobs in the United States. In 2017, a presidential permit allowed the line to move forward and several environmental groups sued the US government.

The Nebraska Public Service Commission approved last year an alternative route, a decision that environmental groups are defying.

WHAT ARE THE POLITICAL IMPLICATIONS?

In Washington, the judge's ruling Thursday was a blow to Trump, who, according to critics, is trying to impose an unpopular project on the American people.

In Ottawa, Canadian Prime Minister Justin Trudeau is increasingly in a hurry to build a pipeline to help Canadian producers sell their oil at higher prices, while strengthening support for other measures to reduce oil prices. Greenhouse gas emissions ahead of scheduled elections next year.

In the summer, the Trudeau government purchased the troubled Trans Mountain Pipeline Project, hoping to build it.

AND AFTER?

Judge Brian Morris of the US District Court ordered the federal government to conduct a more in-depth environmental scan. Moreover, TransCanada said it expects a decision from the Nebraska Supreme Court on routing by the first quarter of 2019.

TransCanada has not yet made the final decision to invest to continue the project, although construction has begun. Last week, he said he was also looking for partners to fund the construction of KXL.