Trump greenlights Keystone XL pipeline,
but obstacles loom
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[March 25, 2017]
By Jeff Mason and Ethan Lou
WASHINGTON/CALGARY, Alberta (Reuters) -
U.S. President Donald Trump's administration approved TransCanada Corp's
<TRP.TO> Keystone XL pipeline on Friday, cheering the oil industry and
angering environmentalists even as further hurdles for the controversial
The approval reverses a decision by former President Barack Obama to
reject the project, but the company still needs to win financing,
acquire local permits, and fend off likely legal challenges for the
pipeline to be built.
"TransCanada will finally be allowed to complete this long-overdue
project with efficiency and with speed," Trump said in the Oval Office
before turning to ask TransCanada Chief Executive Officer Russell
Girling when construction would start.
"We've got some work to do in Nebraska to get our permits there,"
"Nebraska?" Trump said. "I'll call Nebraska."
Trump announced the presidential permit for Keystone XL at the White
House with Girling and Sean McGarvey, president of North America's
Building Trades Unions, standing nearby. He said the project would lower
consumer fuel prices, create jobs and reduce U.S. dependence on foreign
The pipeline linking Canadian oil sands to U.S. refiners had been
blocked by Obama, who said it would do nothing to reduce fuel prices for
U.S. motorists and would contribute to emissions linked to global
Trump, however, campaigned on a promise to approve it, and he signed an
executive order soon after taking office in January to advance the
TransCanada's U.S.-listed shares <TRP.N> dipped 5 cents to close at
$46.21 on Friday.
Trump has claimed the project would create 28,000 jobs in the United
States. But a 2014 State Department study predicted just 3,900
construction jobs and 35 permanent jobs.
The president said he would get in touch with Nebraska Governor Pete
Ricketts later in the day.
TransCanada applied to the Nebraska Public Service Commission in
February for approval of the pipeline's route through the state. The
company said it expects that process to conclude this year.
Ricketts said in a statement posted on Twitter that the project would
help his state.
"I have full confidence that the Public Service Commission will conduct
a thorough and fair review of the application," he said.
The White House has said the pipeline is exempt from a Trump executive
order requiring new pipelines to be made from U.S. steel, because much
of the pipe for the project has already been built and stockpiled.
"As we move forward, we'll continue to look to buy the rest of the
materials we need from ... American manufacturers. We'll put American
workers to work," Girling told reporters.
Environmental groups vowed to fight it.
Greenpeace said it would pressure banks to withhold financing for the
multibillion-dollar project, and others said they would fight the
pipeline in court.
"We'll use every tool in the kit," said Rhea Suh, president of the
Natural Resources Defense Council.
[to top of second column]
President Donald Trump smiles after announcing a permit for
TransCanada Corp's Keystone XL oil pipeline while TransCanada Chief
Executive Officer Russell Girling (L), U.S. Commerce Secretary
Wilbur Ross (C) and Energy Secretary Rick Perry (R) stand beside him
in the Oval Office of the White House in Washington, U.S., March 24,
2017. REUTERS/Kevin Lamarque
Since Obama had nixed the pipeline based on an environmental
assessment commissioned by the State Department in early 2014,
opponents will likely argue in court that Trump cannot reverse the
decision without conducting a new assessment.
Fred Jauss, partner at the international law firm Dorsey & Whitney
and a former attorney with the Federal Energy Regulatory Commission,
said local permitting would also be a challenge.
"The Presidential Permit is only one part of a web of federal,
state, and local permits that must be obtained prior to starting
construction," he said. "Other federal agencies, such as the Army
Corps of Engineers, state regulatory commissions, and even local
planning boards may have requirements that need to be fulfilled by
Keystone prior to construction."
"In addition, TransCanada may still need to reach deals with
hundreds of potentially affected landowners on the pipeline’s route.
There is a lot of work ahead for TransCanada.”
The Keystone XL pipeline would bring more than 800,000 barrels per
day of heavy crude from Canada's oil sands in Alberta into Nebraska,
linking to an existing pipeline network feeding U.S. refineries and
ports along the Gulf of Mexico.
The project could be a boon for Canada, which has struggled to bring
its vast oil reserves to market.
"Our government has always been supportive of the Keystone XL
pipeline and we are pleased with the U.S. decision," said a
spokesman for Canada's minister of natural resources. "The
importance of a common, continental energy market cannot be
The president of the American Petroleum Institute, Jack Gerard, said
the approval was "welcome news" and would bolster U.S. energy
Expedited approval of projects is part of Trump's approach to a
10-year, $1 trillion infrastructure package he promised on the
campaign trail. The White House is looking for ways to speed up
approvals and permits for other infrastructure projects, which can
sometimes take years to go through a regulatory maze.
TransCanada tried for more than five years to build the 1,179-mile
(1,897-km) pipeline, until Obama rejected it in 2015. The company
resubmitted its application for the project in January, after Trump
signed the executive order smoothing its path.
(Additional reporting by Timothy Gardner in Washington, Luciana
Lopez in New York, Ahmed Farhatha in Bengaluru, and Denny Thomas in
Toronto; Writing by Richard Valdmanis and Jeff Mason; Editing by
Bernadette Baum and Matthew Lewis)
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