Thursday, January 26, 2017

Keystone Pipeline back from the Dead

On Tuesday President Trump among other first week actions signed several Presidential memorandums designed to revive and expedite the approval of the final segment of the Keystone XL pipeline and the Dakota Access pipeline. Both projects had languished for years but had ultimately been denied permits by the Obama administration more for their symbolism rather than any direct impact.

These actions by President Trump do not immediately change anything. The Keystone XL Pipeline was denied. President Trump has invited TransCanada Corp. the owner of the existing Keystone Pipeline and the proposed builder of the new Keystone XL section to reapply for a permit and directed the State Department to make a decision within 60 days of receiving the application, as opposed to the almost 8 years the last decision took.

The Dakota Access project did not require a State Department permit because it does not cross international borders. Thus, the other memos put responsibility on the Commerce Department provide leadership on expediting federal review of infrastructure projects, to issue a plan within six months for using American made steel for pipeline projects, and directs the commerce secretary to produce a report on streamlining federal permitting for domestic manufacturers saying “The regulatory process in this country has become a tangled mess.” 

There is currently a pipeline Keystone I that runs east from Hardesty Saskatchewan to Manitoba and then south through the Dakotas to Steel City, Nebraska. It is a less direct route and is a lower volume pipeline than the proposed Keystone XL. The Keystone XL would replace Keystone I with a new and better pipeline. Keystone I is old and this would be an upgrade to the oil transport infrastructure. Keystone II runs from Steel City to Cushing, Oklahoma at the Oklahoma storage facilities. Keystone III running from the Cushing Oklahoma to the Nederland, Texas began delivering crude oil from Cushing, OK, to the oil refineries in Texas on Wednesday, January 22, 2014. The Keystone XL required a Presidential Permit because it crosses an international border. Former President Obama denied the permit not because of any anticipated impact but because it would undercut American leadership in fighting climate change and turning away from carbon based energy.

The Dakota Access project, which was about 90% finished before it was halted, would carry up to 570,000 barrels of oil a day from North Dakota oil fields to Illinois. The project was halted by the previous administration last month even after a federal judge ruled that the U.S. government had met all its legal obligations to the Standing Rock Sioux tribe to protect their drinking water supply and sacred land. Based on the environmental impact reports prepared, neither project is likely to do much to impact or effect climate change, energy security, or the U.S. economy. However, pipelines are the safest and most reliable way for oil and gas to travel great distances and could allow the adoption of gas fired generators across for electric utilities. A simplification of the expensive and lenghty regulatory process is due.

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