The Trump administration announced that it would issue a permit for construction of the Keystone XL pipeline, a long-disputed project that would link oil producers in Canada and North Dakota with refiners and export terminals on the Gulf Coast. TransCanada Corporation (USA)(NYSE: TRP) the Calgary-based firm that has been trying to win approval for the pipeline for years, has also announced that the State Department has signed and issued a construction permit for the project. The project spans 1,179 miles (1,897 kilometers), crossing Montana, South Dakota and Nebraska, where it connects with the existing Keystone system, which runs to the Gulf Coast refineries. It was originally planned to open in 2012, the Keystone XL would transport up to 830,000 barrels a day.
The move had come two months after Trump, only days into his presidency, signed an executive order aimed at reviving the Keystone XL and Dakota Access pipelines. The pipeline has been the focus of a long fight between environmentalists and the project’s advocates. When President Barack Obama rejected the project in late 2015, he said it would undermine American leadership in curbing reliance on carbon fuels. However, the State Department has considered a range of factors, including, but not limited to, foreign policy, energy security including environmental, cultural and economic impacts, and compliance with applicable law and policy.
Moreover, although Trump has spoken frequently about the need to accelerate job development in the United States, the project marks one of the first concrete steps his administration has taken to set aside environmental considerations to foster economic growth. Trump had vowed to support energy companies and advocate for new infrastructure during his campaign, a part of Trump’s approach to a 10-year, $1 trillion infrastructure package. The White House is looking for various ways to accelerate the approvals and permits for other infrastructure projects, which can sometimes take years to go through a regulatory maze.
Meanwhile, the pipeline still faces hurdles before it is built and it needs the approval of the Nebraska Public Service Commission and local landowners who are concerned about their water and land rights. Further, the protests are likely since the project has become an important symbol for the environmental movement, with the Canadian oil sands among the most carbon-intensive oil supplies.
In addition, the project is not subject to usage of American steel. The White House had announced earlier this month that that would only apply to pipelines with new applications but TransCanada has already bought the pipe for the project. About half came from an Arkansas plant owned by an Indian company, a quarter from a plant in Canada owned by a Russian company and the remainder from Italy and India.