Pipeline developer says it is looking for more customers before moving forward with the project.
Towards the end of March, President Donald Trump, surrounded by Republican lawmakers and TransCanada CEO Russ Girling, announced that his administration had decided to approve a key permit for the controversial Keystone XL pipeline, effectively allowing the stalled project to begin moving forward once again.
“The bottom line: Keystone, finished,” Trump said at the time.
Reality, however, presents a very different picture than Trump’s rhetoric. Last week, TransCanada, the pipeline’s developer, announced that it was still trying to secure customers for the oil that would be carried by the pipeline. And the project still needs approval from a Nebraska regulatory commission, which likely won’t come until late November.
Taken together, those developments suggest that the pipeline — which activists, indigenous communities, and Midwestern landowners have spent nearly a decade fighting — might not be built after all.
“We’ll make an assessment of the commercial support and the regulator approvals at that time,” Paul Miller, president of TransCanada’s liquid pipelines business, said during a call with investors last week. “In the event that we do decide to proceed with the project, we still need probably six to nine months to do some of the staging of the construction crews, et cetera, and that would be followed by about a two-year construction period.”
That means that even if the Keystone XL pipeline is constructed, it won’t be operational until close to 2020, leaving the project’s future dependent, at least in part, on the future whims of the international oil market. When the project was first proposed in 2008, oil prices had just topped $70 a barrel, rising to more than $90 a barrel between 2010 and 2014. But since then, oil prices have dropped precipitously — down below $50 a barrel in 2015.
In 2015, when the Obama administration rejected a permit that would have allowed the pipeline to cross the U.S.-Canada border, several potential customers backed away from the project, according to Miller. TransCanada has since re-opened the search for contracts related to the project, and will complete that process by the end of September.
The Keystone XL pipeline would run from the tar sands of Alberta, Canada all the way south to the Gulf Cost, where it could be shipped abroad (Congress lifted the oil export ban in late 2015). But the Gulf Coast is a long way from Asia, which is where most of the demand for oil is currently located. That means that developers or potential customers could be more interested in lines that run closer to Asia — like one of several pipelines currently proposed along Canada’s western coast — than the Keystone XL pipeline.
“Keystone XL would be a disaster for our climate and communities, and what’s more TransCanada’s own CEO questions whether there’s even demand for it in the first place,” David Turnbull, campaigns director for Oil Change International, said in a press statement. “There’s simply no reason to build this dangerous pipeline and put us all at risk.”
In addition to unfavorable economic headwinds, Keystone XL’s supporters will have to contend with a wall of opposition intent on ensuring that the pipeline is never completed. This weekend, landowners and opponents began the first part of a new resistance project called the “Solar XL,” a solar-installation project directly in the path of the proposed pipeline route.
“Solar XL is about showing what’s possible at a massive scale — a renewable energy economy that doesn’t sacrifice our communities or our climate,” Sara Shor, Keep It In The Ground campaign manager for 350.org, said in a press statement. “Putting solar panels in the proposed path of the Keystone XL pipeline will help power the homes of Nebraskans refusing to give in to the fossil fuel industry’s greed.”
In addition to showing opposition through symbolic demonstrations like Solar XL — or planting sacred corn along the pipeline route, which the Cowboy Indian Alliance and Bold Nebraska have done four years in a row — opponents of the pipeline are looking to the Nebraska Public Service Commission to strike the final blow against the project. The commission consists of five publicly elected officials, and has the final say over whether the pipeline can be constructed along its current route. The commission is set to hold a final series of hearings in August. Ultimately, the commission will decide whether the pipeline is in “the public interest” of the state of Nevada.
One factor the members cannot take into account, however, is the safety of the proposed project; Nebraska pipeline-siting law prohibits the Public Service Commission from taking things like the risk or impact of potential spills into consideration.
Still, opponents like Bold Nebraska point to serious safety concerns related to the pipeline, noting that the proposed route would run within 1 mile of more than 2,300 Nebraska water wells.
In addition to community opposition and uncertain economics, the project still faces at least one legal challenge, brought against the Trump administration by environmental groups like Natural Resources Defense Council, Sierra Club, and Friends of the Earth. The lawsuit argues that the Trump administration failed violated the National Environmental Policy Act by relying on a three-year-old environmental impact study when it granted a permit to TransCanada. That study held that oil prices would never fall below $100 a barrel throughout the lifespan of the Keystone XL pipeline, when oil prices have been half that for more than two years.
“The Trump Administration broke the law by arbitrarily approving the Keystone XL tar sands pipeline,” Anthony Swift, director of NRDC’s Canada Project, said in a statement at the time the lawsuit was filed. “And it ignored public calls to update and correct a required environmental impact statement that should have led to one conclusion: Piping some of the dirtiest oil on the planet through America’s heartland would put at grave risk our land, water and climate. We’re asking the court to put an end to Keystone XL once and for all.”
Despite Trump’s promises, the Keystone XL fight is far from finished was originally published in ThinkProgress on Medium, where people are continuing the conversation by highlighting and responding to this story.