After years of controversy, Keystone XL clears major hurdle

Nebraska approves route although not the one its developer wanted

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Reuters

Nebraska regulators approved a route Monday for TransCanada Corp’s Keystone XL pipeline through the state, removing a big regulatory obstacle for the long-delayed project backed by President Donald Trump but leaving its future shrouded in legal and market uncertainty.

The 3-2 vote by the Nebraska Public Service Commission helps clear the way for the pipeline linking Canada’s Alberta oil sands to refineries in the United States. But opponents have promised to tie the project up in court for years, and TransCanada still is studying its commercial viability after a surge in drilling that has cut crude oil prices in half since the pipeline was first proposed in 2008.

“We are going to fight like hell to make sure this pipeline never gets built,” said Jane Kleeb, the head of advocacy group Bold Nebraska.

The commission’s approval was not for TransCanada’s most preferred route, but for a more costly alternative that would add 5 miles of pipeline, along with an additional pumping station and related transmission lines. State and federal officials said it was unclear if the route required any additional permits that the preferred route already had.

TransCanada Chief Executive Officer Russ Girling said in a statement the company will review the decision and assess its impact on the cost and schedule.

Former President Barack Obama’s administration had rejected TransCanada’s bid for permission to build across the U.S. border in 2015. Trump vowed to reverse that determination and, in January, invited the company to reapply. Approval came quickly.

Trump also championed completion of the Dakota Access pipeline, which runs from North Dakota to Illinois via part of South Dakota and 18 counties in Iowa.

Oil began flowing through the Dakota Access pipeline last summer, although court fights over it continue.

The White House said the president was “pleased” with the Monday’s Keystone decision.

“We look forward to seeing another promise fulfilled,” said Hogan Gidley, a deputy press secretary.

The proposed line, which would run about 1,180 miles from Hardisty, Alberta, to Steele City, Neb., long has been a lightning rod. Many of the arguments for and against it echo the controversy over the Dakota Access pipeline.

Environmentalists have made it into a symbol of their broader fight against fossil fuels and global warming. Much of the opposition also has come from landowners whose farms lie along the route. They have said they’re worried spills could pollute water critical for grazing cattle, and that tax revenue and jobs will be short-lived.

Business groups and Trump say the pipeline could lower fuel prices and create jobs.

The White House said Keystone XL would create 42,000 jobs nationwide, though a 2014 State Department study predicted just 3,900 temporary construction jobs and 35 permanent jobs.

Nebraska had been the only state yet to approve the pipeline’s route. Permits already had been granted in Canada, Montana and South Dakota.

If built, the pipeline could be a boon for Canada and its Western oil producers, which have struggled for decades to bring their vast landlocked reserves to market. But it would fall short of Canada’s ambition to build a pipeline to a deepwater port to tap into the global market.

“While today’s Keystone XL pipeline approval is an important milestone, it does not provide certainty that the project will ultimately be built and begin operating,” said Gavin MacFarlane, a vice president at Moody’s Investors Service.

Just days ago, TransCanada’s existing Keystone system spilled 5,000 barrels in South Dakota, and pipeline opponents said the spill highlighted the risks posed by the proposed XL expansion.

The Bloomberg news service contributed to this report.

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