But the route picked by the state is not the one preferred by the project’s developer.
Following years of political controversy that demanded the attention of two presidents, the Nebraska Public Service Commission on Monday declared that the proposed Keystone XL pipeline was in the public interest but the 275-mile route it approved through the state was not the one preferred by TransCanada, the pipeline developer.
By a vote of 3 to 2, the commission cleared the final regulatory hurdle for the proposed 1,179-mile pipeline from Hardisty, Canada, to Steele City, Neb., adding to routes already approved by Montana and South Dakota. President Trump overturned President Obama’s earlier rejection of the pipeline and in March approved the federal permit for it to cross the U.S. border.
Despite a long series of delays and a slump in world oil prices, TransCanada this month expressed confidence that the project would be able to move forward. Yet Monday’s action endorsing an alternative route may have made the path to success more difficult.
The pipeline company told the Nebraska commission this year that the route approved Monday was much more problematic than the one the firm preferred. The company will need to secure land from more farmers, a process that has already proved difficult. Of the 275 landowners the company needed for its preferred route, 100 have refused to sign leases for the Keystone XL pathway.
The new route is but one of many dimensions of the pipeline’s business plan that are markedly different from the one TransCanada wrote nine years ago when it introduced the project.
Oil prices are less than half what they were a decade ago. Tar sands production in Canada has leveled off. And legal challenges remain formidable: Opponents have vowed to appeal the commission’s decision and battle eminent domain procedures. The legal processes for both strategies could make the Keystone XL battle an issue in the 2020 presidential election.
Russ Girling, Trans- Canada’s chief executive, said he was confident about the pipeline’s prospects. During a third-quarter conference call with investors this month, Girling said the company needed to secure commitments to transport 500,000 barrels of oil a day to start construction. Trans-Canada, he said, is close to reaching that goal.
“Overall, we expect support for the project to be substantially similar to that which existed when we first applied for the Keystone pipeline permit,” he said. “To be clear, production of Canadian heavy oil continues to grow, and the need for new pipeline transportation capacity remains high.”
The pipeline’s opponents vowed to carry on.
“It’s not over. We will appeal,” said Jane Kleeb, the founder and president of Bold Nebraska, the activist group leading the opposition to the Keystone XL project. “There will be lawsuits to fight TransCanada’s eminent domain claims. It could be another two years before this is decided.”
Suncor Energy and Cenovus Energy, two of the biggest tar sands oil producers, have said they are committed to long-term Keystone XL transport contracts, a promising signal that Keystone XL ultimately will succeed, according to some financial analysts.
Other authorities note, though, that oil production in northern Alberta, the pipeline’s source, has leveled off at 2.5 million barrels per day as prices have plummeted from historic highs a decade ago. TransCanada’s competitors have proposed other tar sands pipelines. Banks and international financiers, moreover, are withdrawing from potential capital markets to pay for other multibillion-dollar fossil fuel projects. And the cost of construction and civic opposition to massive fossil fuel infrastructure projects have increased.
A number of analysts predict that even with the Nebraska go-ahead, the pipeline will not be built.
“There is no economic rationale, no validity to the investment calculation, no positive bottom line,” said Tom Sanzillo, director of finance for the Institute for Energy Economics and Financial Analysis, a Cleveland-based think tank, and former deputy controller responsible for managing New York’s $168-billion retirement fund. “Our view is that TransCanada is unlikely to build it.”
The Keystone XL pipeline was supposed to be the final phase of a 3,863-mile oil transport system designed to move 1.4 million barrels of oil daily from northern Alberta to refineries in Illinois and Texas, and to a mammoth storage terminal in Oklahoma. TransCanada marketed the $15-billion Keystone
The initial $5-billion, 1,853-mile Keystone pipeline, Keystone XL’s older sister, was permitted without conflict by President George W. Bush in 2008 and began moving oil in 2010. The Keystone XL was meant to transport 830,000 additional barrels of oil daily from Alberta.
When TransCanada introduced the project in 2008,
Many of the world’s largest energy companies — Exxon Mobil, Royal Dutch Shell, ConocoPhillips and Chevron among them — bought leases in Alberta’s northern forests, which emerged as one of the largest oilfields in the world. Their refineries on the U.S. Gulf Coast were eager for the fuel. The path from Canada through the Great Plains seemed cleared by the existing Keystone line.
The company did not anticipate the political and market turmoil around fossil fuels that quickly unfolded in the U.S.
In Nebraska, opponents focused on a foreign company they felt was bullying the state, and the risks of an oil spill to the Ogallala Aquifer, which supplies much of Nebraska’s water. Their concerns were not unfounded: On Friday, the Keystone line, which is similar in design to the Keystone XL, leaked and poured 210,000 gallons of tar sands oil onto a South Dakota field.
Republican politicians across the Great Plains have consistently supported the project, as have business leaders.
Opposition, though, is deep and committed. Most of the 500,000 comments the Nebraska commission received expressed opposition to Keystone XL.
