Keystone XL Firm Undecided on Pipeline Future
The company behind the long-delayed Keystone XL oil pipeline has signaled that the project is still up in the air, and a final call on its execution won’t come until later this year.
According to Politico, the executive vice president of energy company TransCanada Corporation told investors Thursday (July 27) that the firm will make a decision on the pipeline in November, after assessing commercial demand and determining the status of its permission to build in Nebraska, where its permit is still pending.
If the project is a go, it would take six to nine months to commence construction, then another two years before the pipeline is complete, the report says.
Keystone XL, which would carry crude oil from the oil sands of Alberta to Steele City, Nebraska, was first proposed in 2008 and went through years of environmental reviews and regulatory holdups before the U.S. State Department rejected the pipeline in November 2015. The project was thought to be dead in the water at that point, though procurement of some of the materials had already begun.
TransCanada sued the U.S. government in 2016, alleging that regulators evaluated the project based on politics, not the merits of the pipeline itself.
|Meclee, CC BY-SA 3.0, via Wikimedia Commons|
Keystone XL, shown here in green, would carry crude oil from the oil sands of Alberta to Steele City, Nebraska.
Then, in January, President Donald J. Trump invited TransCanada to re-apply for federal permission to build the 1,179-mile pipeline. The company did, and in March, the Trump administration officially reversed former President Barack Obama’s rejection of the project.
State Permit, Oil Demand
TransCanada applied for state permissions as well; both Montana and South Dakota issued permits for the project years ago, before the Obama administration’s decision on the pipeline, but the permit process for construction in Nebraska is ongoing. That state’s Public Service Commission says a decision should not be expected before mid-September; it could come as late as November.
In addition to possible permission issues, TransCanada faces the issue of demand: According to Politico, the planned route—which would move oil to the American Midwest and Gulf Coast—may not be as attractive to Canadian producers as a pipeline to the Canadian Pacific coast, where oil is then shipped to Asia, where demand is up.
According to the Canadian Association of Petroleum Producers, while the U.S. is currently the destination of 99 percent of Canadian oil exports, China and India are poised to constitute 90 percent of the world’s increased demand over the next 25 years. The organization notes that U.S. oil production has been growing in the past decade, making the United States Canada’s “biggest customer and its biggest competitor.”
Flagging oil prices in general could also play into the company’s decision on the future of the project. Prices for Western Canadian Select crude oil have held in the $30- to $40-per-barrel-range in the past year, compared with prices between 2010 and 2014, when the oil generally sold at $60 to $85 per barrel.