WASHINGTON, D.C. -- The years-long approval process for TransCanada’s Keystone XL pipeline appeared to reach an end this past week as President Donald Trump approved a cross-border permit allowing its northern section to be built.
“The Department finds that the proposed project will meaningfully support U.S. energy security by providing additional infrastructure for the dependable supply of crude oil,” wrote Thomas Shannon, undersecretary of state for political affairs, in a U.S. State Department memorandum on its approval of the permit for the 1,200-mile pipeline, which would bring heavy, sour crude from the Alberta tar-sands region to refineries on the Gulf Coast. This comes after former President Barack Obama rejected approving the pipeline in 2015, citing its contribution to climate change.
Oil industry groups praised the permit approval.
“Today's action to approve the Keystone XL pipeline's cross-border permit is welcome news and is critical to creating American jobs, growing the economy and making our nation more energy secure,” said Jack Gerard, president and CEO of the American Petroleum Institute (API), Washington, D.C., in a statement. “This critical infrastructure project has been studied longer than any pipeline project in U.S. history with exhaustive reviews by the State Department concluding that the project is safe for the environment and the best option for transporting domestic crude and Canadian oil to U.S. refineries.”
The benefits further downstream, however, would be less obvious. In the State Department memo, Shannon wrote, “Any impact on prices for refined petroleum products would be minimal if the proposed project is approved,” noting that crude-oil prices, driven by global production and consumption, hold greater sway.
Tom Kloza, global head of energy analysis, Oil Price Information Service (OPIS), Gaithersburg, Md., echoed this.
“It won't mean much to U.S. fuel markets or U.S. refining economics, in my opinion,” Kloza told CSP Daily News. “It will mean a lot for Canada in terms of removing a lot of trapped crude. Canada will be adding another 750,000 barrels per day of crude by decade's end, and they need the means to deliver it efficiently to the most sensible customer, the United States.”
Patrick DeHaan, senior petroleum analyst at Boston-based GasBuddy, agreed that this is mainly a win for Canadian oil interests.
“It will likely boost the value of the Canadian dollar while bringing more jobs to the energy sector there,” he said in a statement. “Interestingly, it could also allow—for the first time—Canadian oil shipments access to global markets previously unreachable.”
There is unlikely to be “an immediate impact at the pump as a result,” he said, but added, “with the new possibilities the pipeline brings, there is no guarantee that there won't be future impacts to fuel prices.”
The project still faces hurdles in Nebraska, where the state’s Public Service Commission has yet to issue a permit, and there is resistance from some landowners, the Washington Post reported. There is also likely forthcoming legal action from environmental opponents, who have challenged the pipeline's potential effect on greenhouse-gas emissions and the danger of spills.
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