US State Department issues long-awaited permit for Keystone XL pipeline

The US Department of State issued a presidential permit for the proposed Keystone XL crude oil pipeline more than 8 years after sponsor TransCanada Corp. originally sought cross-border approval of the project. Under-Secretary for Political Affairs Thomas A. Shannon Jr. signed the permit after President Donald J. Trump reversed his predecessor Barack Obama’s decision and said the project would be in the US national interest.

This article was updated Mar. 24.

The US Department of State issued a presidential permit for the proposed Keystone XL crude oil pipeline more than 8 years after sponsor TransCanada Corp. originally sought cross-border approval of the project. Under-Secretary for Political Affairs Thomas A. Shannon Jr. signed the permit after President Donald J. Trump reversed his predecessor Barack Obama’s decision and said the project would be in the US national interest (OGJ Online, Jan. 24, 2017).

TransCanada Chief Executive Officer Russ Girling said, “We greatly appreciate President Trump's administration for reviewing and approving this important initiative, and we look forward to working with them as we continue to invest in and strengthen North America's energy infrastructure.”

TransCanada has discontinued its claim under Chapter 11 of the North American Free Trade Agreement and will end its US Constitutional challenge, Girling said. The Calgary-based company launched the legal actions soon after Obama’s Nov. 6, 2015, rejection of the cross-border permit application (OGJ Online, Jan. 6, 2016). It reapplied for the permit soon after Trump’s reversal (OGJ Online, Jan. 26, 2017).

In making his determination that issuance of this permit would serve the national interest, Shannon considered a range of factors, including but not limited to foreign policy; energy security; environmental, cultural, and economic impacts; and compliance with applicable law and policy, DOS said in its Mar. 24 announcement.

Officials from oil and gas and other business associations welcomed the news. Environmental and other organizations, which fought the permit application for years, were displeased. The battle had centered on a larger system’s proposed segment that would run from Hardisty, Alta., to Steele City, Neb.

TransCanada will continue to engage key stakeholders and neighbors throughout Nebraska, Montana, and South Dakota to obtain the necessary permits and approvals to advance the project to construction, Girling said.

An important project

“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,” American Petroleum Institute Pres. Jack N. Gerard said on Mar. 24. American Fuel & Petrochemical Manufacturers Pres. Chet Thompson called the announcement “a welcome shot in the arm for America’s energy producers who are eager to fulfill President Trump’s America First Energy Plan.”

Association of Oil Pipe Lines Pres. Andrew J. Black said, “The Trump administration is keeping its promise to bring new jobs and benefits from energy infrastructure to the American people by building pipelines.”

Consumer Energy Alliance Pres. David Holt said, “The Keystone XL Pipeline will provide American refineries with a stable supply of oil, American drivers with lower gasoline and diesel prices, American workers with high-paying jobs, and the American economy with a much-needed shot in the arm.”

US Chamber of Commerce Pres. Thomas J. Donahue said, “Today’s action should send a clear message to investors, and important strategic partners like Canada, that things have changed in Washington.”

Next steps along route

In Nebraska, where landowners had expressed concern about possible leaks from the proposed pipeline adversely affecting water supplies in the Ogallala Aquifer, Gov. Pete Ricketts (R) said Keystone XL’s receiving its presidential permit approval would help secure energy infrastructure in the Cornhusker State as well as nationally while creating jobs and improving the country’s energy security.

“The project will also benefit Nebraska by bringing an estimated additional $11.8 million in property tax revenue in the first year to 12 Nebraska counties,” he said.

TransCanada applied for Nebraska PCS approval of a route for the Keystone XL pipeline on Feb. 16, according to the agency’s web site. Formal interventions had to be submitted by Mar. 22, and a planning conference will be held 7-10 days after that date.

The commission expects on Apr. 17 to schedule a subsequent public hearing on the application as well as other public meetings along the pipeline’s route through June. Another hearing will be held on July 17 or later, with the final order anticipated on Sept. 14 or later.

In North Dakota, where Keystone XL was expected to pick up some light Bakken crude in addition to the heavier diluent it would carry from Alberta’s oil sands, the state’s two US senators each welcomed news that the cross-border permit had been issued.

John Hoeven (R) called it “a clear signal that our nation is once again open for business and that we are committed to building the infrastructure we need now and in the future.”

Heidi Heitkamp (D), meanwhile, said, “While there are still several steps before construction can begin, today’s announcement is important to renewing the United States’ commitment toward mutually beneficial energy solutions with Canada.”

Contact Nick Snow at nicks@pennwell.com.

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