August 10, 2017 Read More →

Keystone XL Completion Still 3 Years Out, if Completion Is in the Cards

InsideClimate News:

It will be close to three years, at least, before oil could possibly be moving through the controversial Keystone XL pipeline—if the pipeline is completed at all. Company officials now concede that after battling protests and regulatory hurdles for nearly a decade, market forces could scuttle the project.

Canadian pipeline giant TransCanada first proposed the 1,700-mile project in 2008 to ship tar sands oil from Alberta to the Gulf Coast. The half-built project was halted by President Obama in 2015 only to be revived through an executive order signed by President Trump soon after he took office. The company has spent $3 billion on the project, mostly for pipe but also for land rights and other costs of lobbying for its proposal.  

During the prolonged dispute, the price of oil fell from more than $130 a barrel to roughly $45 a barrel today, undercutting the prospects for production growth in the Canadian tar sands, which were used to justify the Keystone XL project at its outset.

Along with changing market conditions, the emergence of competing pipelines scattered TransCanada’s customer base. Now it’s uncertain whether the company can sign enough new commitments from Alberta’s beleaguered oil patch to move forward.

The company recently embarked on an “open season” for Keystone XL, inviting commitments from companies to ship tar sands crude (or, alternatively, lighter oil from the U.S. Bakken fields, in North Dakota and Montana).

At the same time, regulators in Nebraska are weighing the concerns of landowners, environmental organizations and indigenous groups who oppose the pipeline. The state’s Public Service Commission will hold a week-long hearing starting Aug. 7 on whether or not to approve the pipeline’s proposed route through Nebraska.

The commission is expected to announce its decision by Nov. 28. If the proposal is denied, the company could appeal the ruling or submit a new proposal with a modified route.

Company officials say they will wait for both developments before deciding whether to move forward with the pipeline project.

“We’ll make an assessment of the commercial support and the regulatory approvals at that time,” TransCanada Executive Vice President Paul Miller said during the company’s second-quarter earnings call with financial analysts on July 28. “In the event that we do decide to proceed with the project, we still need probably six months to nine months to start doing some of the staging of the construction crews, et cetera, and that would be followed by about a two-year construction period.”

The combined staging and construction time means that it would be close to three years before the project could possibly be completed. Miller’s statements suggest far more uncertainty than when President Trump came into office and decreed that the pipeline could be built.

The only tar sands projects currently under construction were approved and started before the 2014 oil price crash, according to a recent analysis by environmental advocacy groups Oil Change International and Bold Alliance. Financing for future projects is expected to drop to zero by 2020 due to low oil prices, the report predicted.

More: Keystone XL: Low Oil Prices, Tar Sands Pullout Could Kill Pipeline Plan

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