Friday, March 24, 2017

The Next Hurdle for Keystone XL Pipeline

The Trump Administration has issued a Permit authorizing construction of the Keystone XL Pipeline across the U.S. Border, reversing one of President Obama's most politically charged decisions.

TransCanada this morning announced it received the State Department Permit.

Now the Company needs to receive Approval of the Pipeline's route through Nebraska.

Nebraska Environmental Activists and Landowners have plotted ways to keep blocking the Pipeline TransCanada Corp. has been trying to build for more than eight years. Just winning Nebraska Regulators’ approval for Keystone XL’s route through the state could take TransCanada another six months.

"A federal approval of the permit is not the end of the line for this project; there’s still many obstacles," said Anthony Swift, an Attorney with the Natural Resources Defense Council that opposes Keystone. "There’s legal challenges, there’s the Nebraska issues and, frankly, there are the economic and market obstacles."

The Pipeline is slated to carry as much as 830,000 barrels of oil per day from Alberta, Canada, crossing 1,179 miles and cutting through Montana and South Dakota on its way to Steele City, Nebraska. From there it will join a Southern leg that flows to Gulf Coast Refineries.

Keystone has long been a flash point for fossil-fuel opponents who argue it will encourage the development of Canadian oil sands crude, which generally requires more energy to extract and process. Landowners also say it endangers drinking water resources in America’s heartland.

Those same opponents who chained themselves to bulldozers, rallied at the White House, and forced route revisions in Nebraska now are plotting a multi-pronged Legal attack as well as protests in the Pipeline’s path.

Sara Shor, a Campaign Manager for the Climate Advocacy group, vowed to "raise hell at the national level" and recruit millions of people to fight the Project, including by highlighting their concerns during Lawmakers’ Town Halls during a planned Congressional recess next month.

"We’re going to continue to make Keystone XL a political issue and push every elected official to come out against this project if they care about communities, local rights, eminent domain, air, water and climate," Shor said. "It just touches so many issues."

Environmental Groups are slated to file at least one Legal challenge right away, arguing that the State Department violated the National Environmental Policy Act by approving Keystone on the basis of a three-year-old analysis of the Project that was issued when oil prices were nearly double what they are now. West Texas Intermediate crude oil, the U.S. Benchmark, traded near $100 a barrel when the State Department’s final Environmental Study was issued in January 2014 but has slumped by roughly half, now hovering near $50 a barrel. That comes after a prolonged rout that sent crude plummeting to nearly $26 in 2016.

"The oil market has shifted and will always be shifting, and it’s really not adequate to rely on old analysis to approve this pipeline," said David Turnbull, Campaigns Director with Oil Change International. That earlier analysis was built around assumptions about prices and the availability of rail transport and alternatives for moving Canadian oil sands crude that have not come to pass, Swift said. “The weaknesses of an approval at this stage and the legal vulnerabilities of that approval are apparent," Swift said. "Moving forward solely on the basis of an objectively outdated environmental review on a pipeline that doesn’t have a full route does pose a lot of problem for the legality of the approval."

Other legal challenges will play out in Nebraska, where energized Landowners have already forced changes to the Project during previous reviews. At least 40 groups or individuals have filed Intervenor applications with the State’s Public Service Commission, seeking to participate in the review. At least one of the Petitions came from a Law firm representing 92 people. All of them are subject to Review and Approval by the Hearing officer assigned to the Case.

TransCanada submitted an application to the Commission last month, triggering a 210-day period for the Agency to decide whether the Company demonstrated the Project serves the Public interest. That points to a decision in September, if the Public Service Commission’s review is not extended for an additional five months.

If TransCanada wins State approvals and invokes Eminent Domain to claim land for Pipeline construction, the Activist group Bold Alliance will file a Lawsuit challenging the action, said Jane Kleeb, President of the Organization.

Separate challenges may play out in South Dakota, where Opponents earlier this month asked a Judge to reverse an Authorization critical to its path through the State.

All of the activity means that Keystone’s "best-case scenario for coming online" is the second half of 2019, Bloomberg Intelligence analysts said.

TransCanada is making its third attempt to carve a path across Nebraska. After the Company encountered opposition from Landowners with its initial proposed Route, which sliced through the State’s Environmentally sensitive Sand Hills region, Lawmakers passed and then-Governor Dave Heineman signed Legislation enabling him to work closely with TransCanada to chart a course for the Project. Successive Landowner Legal challenges over the Legality of that maneuver brought the Project to a standstill.

TransCanada eventually surrendered to a Review by the Commission instead of waging further Court battles shortly before Obama’s rejection.

All the concerns about Land, Water, and using Foreign Steel remain, Kleeb said. "It’s going to be a long process -- very much into the weeds," Kleeb said, noting that "the courts are the only fair and viable path for us," given Trump’s support for Keystone XL.

The Public Service Commission’s Review will not encompass Design and Safety considerations, according the Agency. Rather it will be limited to how it impacts the Environment, including Soil, Plant Life, Groundwater, and Wildlife.

Legal opposition is already mounting. Attorneys David Domina and Brian Jorde, who led the fight previously, last month reiterated their view that there is no Public use whatsoever for this private Pipeline company’s Project.

Opponents have argued that the Economic backdrop has changed since TransCanada first pursued the project, and the numbers no longer work in its favor. Pipeline capacity from the Canadian oil sands is expanding, so producers have more options to send their crude to market. The Canadian Government approved Kinder Morgan Inc.’s Trans Mountain line to the Pacific and Enbridge Inc.’s expansion of Line 3 to the U.S. Midwest. With the addition of Keystone, the combined capacity of 1.8 million barrels a day would be enough to handle Western Canada’s growing oil production for nearly two decades, according to National Energy Board oil projections.

TransCanada officials have said the Company is committed to build a state-of-the-art Pipeline system that will be monitored around the clock using satellite technology and aerial patrols. The company has stressed that Pipelines are safer than Trains for transporting crude and has vowed to work with all stakeholders in Nebraska.

Native Americans have battled the Dakota Access Pipeline in South Dakota and are set to reprise the activity against Keystone XL.

The activism will spill over into Local Debates over other Pipelines proposed to ferry Oil and Natural Gas across the Country, Shor said. Her group,, is planning to "use Keystone to fight hundreds of other projects" nationwide. "People are going to be mad at Trump for bringing Keystone back because it’s going to cause resistance for every single pipeline project across the country and it’s going to cause pressure for the banks that fund all these projects," Shor said. "We are building an army of resistance. This fight is not over. And we’re going to have to keep on fighting this for probably years to come."

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