The proposed Keystone XL pipeline survived nine years of protests, lawsuits and political wrangling that saw the Obama administration reject it and President Donald Trump revive it, but now the project faces the possibility of death by economics.
Low oil prices and the high cost of extracting Canadian crude from oil sands are casting further doubts on Keystone XL as executives with the Canadian company that wants to build it face the final regulatory hurdle next week in Nebraska.
The pipeline proposed in 2008 has faced dozens of state and federal delays, many of them prompted by environmental groups who ultimately persuaded President Barack Obama to deny federal approval in November 2015. President Donald Trump resuscitated the project in March, declaring that Calgary-based TransCanada would create “an incredible pipeline.”
After all that, a TransCanada executive raised eyebrows in the energy industry last week when he suggested that the pipeline developer doesn’t know whether it will move forward with the project. Paul Miller, an executive vice president who is overseeing the project, told an investor call that company officials won’t decide until late November or early December whether to start construction.
“We’ll make an assessment of the commercial support and the regulatory approvals at that time,” Miller said in the conference call Friday with investors.
The company has invited customers to bid for long-term contracts to ship oil on the pipeline. The bidding will run through September.
An energy expert said the project has been delayed so long it may no longer make economic sense.
“Frankly, in the current price climate, it’s probably not going to be a going venture unless there’s a massive improvement in technology” for processing Canadian crude, said Charles Mason, a University of Wyoming professor of petroleum and gas economics. Crude oil was trading at around $49.50 a barrel on Wednesday, down from highs of more than $100 in 2014.
More: Keystone XL survived politics but economics could kill it