Keystone XL Approval Met with Criticism

When the executive order was delivered in January opening the way for TransCanada to resubmit its application for the Keystone Xl, the president said pipeline would be constructed with American made steel. That promise was modified after it was learned that the pipe was already manufactured and purchased resulting in an exemption to the requirement for TransCanada.

Approximately 50 percent of the purchased pipeline was manufactured in the United States but TransCanada recently announced additional procurement that will improve that percentage. TransCanada said it will purchase an additional 200 miles of pipeline from U.S. companies. TransCanada spokesperson Terry Cunha told Politico Morning Energy that some of the pipeline designated for the Keystone XL was shifted to other projects after Keystone was killed by the Obama administration.

Keystone did not respond to an inquiry by SMU on pipe sourcing or steel tonnage for the new purchase.

Nine democratic senators led by Senators Chis Van Hollen and Tammy Duckworth urged the president this week to require that TransCanada use 100 percent American-made steel.

A letter from the senators to the president said, “Your memorandum explicitly covers new and expanded pipeline projects so we were confused and disappointed to learn that the Keystone XL pipeline would not be required to use 100 per cent American-made steel.”

“Further, we are deeply concerned that by allowing this Canadian firm to use foreign steel from countries like India and Italy, which have a history of dumping steel products in the US market at unfair, illegal prices, you are establishing a precedent that will have the effect of costing US jobs and undermining the spirit of your Presidential Memorandum,” the Senators wrote.

Environmental Issues

The Keystone XL will have capacity to carry 830,000 barrels of oil per day, a statistic that concerns environmental activists who fear potential spills that could contaminate water sources that provide irrigation and drinking water.

Protests against the construction of the pipeline have reemerged in Montana, South Dakota and Nebraska. The Sierra Club, Northern Plains Resource Council, Bold Alliance, Center for Biological Diversity, Friends of the Earth and the Natural Resources Defense Council and other filed a suit in a Montana federal court last week to opposing the permit approved by President Trump. The group says the project was approved without an update to the required environmental impact statement.

“In their haste to issue a cross-border permit requested by TransCanada Keystone Pipeline L.P. (TransCanada), Keystone XL’s proponent, Defendants United States Department of State (State Department) and Under Secretary of State Shannon have violated the National Environmental Policy Act and other law and ignored significant new information that bears on the project’s threats to the people, environment, and national interests of the United States,” the suit states. “They have relied on an arbitrary, stale, and incomplete environmental review completed over three years ago, for a process that ended with the State Department’s denial of a crossborder permit.”

Anthony Swift, Canada project director of the Natural Resources Defense Council said the Trump Administration broke the law by endorsing the Keystone XL permit: “It ignored public calls to update and correct a required environmental impact statement that should have led to one conclusion: Piping some of the dirtiest oil on the planet through America’s heartland would put at grave risk our land, water and climate.”

Groups opposing the pipeline said construction will be met with litigation and protests.

Financial Risk

Other critics of the pipeline see it as a financial risk to the company. According to an article by Forbes, oil prices would need to remain at $80 per barrel or above for decades for the Keystone XL to be a success for TransCanada.

Forbes contributor Amory B. Lovins, consultant, designer and chief scientist of Rocky Mountain Institute, wrote, “Keystone XL is meant to fetch a better price for tar-sands output and transport it cheaper. However, unless world oil prices rebound to roughly twice recent prices and stay aloft for decades, this 1,179-mile pipeline can’t repay its $8-billion investment, and producers can’t finance the new projects needed to keep it filled as old ones decline.”

Lovins adds that oil from the Canadian tar-sands transported by the Keystone XL is much more expensive than oil derived from fracking which is currently under $50 per barrel and glutting the market.