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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--President Donald Trump's actions last week to revive administrative consideration of the Keystone XL pipeline project and expedite the completion of the Dakota Access Pipeline (DAPL) drew praise from industry groups and the affected companies, and criticism from environmental organizations. But other measures signed the same day, January 24, by the president could give new hope to developers who have been stymied in their efforts to construct other infrastructure projects that improve the U.S. electric grid and telecommunications systems, and repair and upgrade critical port facilities, airports, pipelines, bridges and highways.
The Keystone XL (KXL) pipeline project, an $8 billion project being developed by TransCanada Corporation (NYSE:TRP) (Alberta, Canada), has been stalled since late 2015 when then-president Obama denied it a presidential permit. For more on that, see November 10, 2015, article - KXL Pipeline Permit Denial Caps a Week to Forget for TransCanada. The project, delayed for years by permitting disputes and lengthy environmental assessments, is designed to transport about 830,000 barrels of oil-sands crude oil per day (BBL/d) about 1,179 miles, from Hardesty, Alberta, to Steele City, Nebraska, where it would intersect with other pipelines that could bring that crude to refineries in Patoka, Illinois or the Texas Gulf Coast.
On January 24, during the first week of his administration, Trump issued a presidential memorandum inviting TransCanada to resubmit its application for a presidential permit and instructing the U.S. Department of State to "take all actions necessary and appropriate to facilitate its expeditious review." The secretary of state was instructed to reach a final permitting decision within 60 days after resubmission as to whether the project was in the national interest.
"To the maximum extent permitted by law," the memorandum continued, the secretary of state shall rely on the final supplemental environmental impact statement of January 2014 as satisfying "all applicable requirements" of the National Environmental Policy Act of 1969 and certain aspects of the Endangered Special Act of 1973. The memorandum also instructed the Department of the Army to "to take all actions necessary and appropriate to review and approve as warranted, in an expedited manner" applicable Clean Water Act permits for the project.
The State Department's 2014 final supplemental environmental impact statement on Keystone XL concluded its construction was unlikely to affect global greenhouse gas (GHG) emissions and that denying a permit was not likely to prevent the extraction of crude oil from Alberta's oil sands. For more on that, see February 3, 2014, article - State Department: Keystone XL Unlikely to Affect Canadian Oil Sand Extraction. Nonetheless, in October 2015 then-President Barack Obama denied KXL a presidential permit, saying it would undermine U.S. leadership on global climate change.
TransCanada President and Chief Executive Russ Girling welcomed the Trump administration's January 24 decision. "This privately funded infrastructure project will help meet America's growing energy needs, as well as create tens of thousands of well-paying jobs and generate substantial economic benefit throughout the U.S. and Canada," he said in a statement.
Analysts have noted that crude-oil markets have changed dramatically since the KXL project was originally proposed (in 2008) and when it was expected to be operating (in 2012). A decade ago, before the shale revolution, the U.S. was importing a significant amount of its oil, and prices rose to as high as $140 per barrel in early 2008 before the Great Recession cut demand. In the intervening decade, crude-oil production from domestic unconventional formations jumped by millions of barrels per day, and prices stayed in the $85 per barrel to $105 per barrel range for most of 2011-2014 before prices crashed in late 2014 amid global oversupply.
Production has fallen off somewhat since then, but there are signs it is rising again following a decision by OPEC and other oil-producing countries to lower output by about 1.8 million BBL/d, starting last month.
In a separate order, Trump instructed the U.S. Commerce Department to investigate ways to compel TransCanada to use U.S.-made steel pipelines in KLX.
Federal expedition of KXL likely will be opposed by some Nebraska landowners and environmental organizations. TransCanada reportedly submitted paperwork to the State Department the day after the presidential memorandum. In the coming weeks, the company plans to submit a route for approval by the Nebraska Public Service Commission, according to company spokesman Terry Cunha. The Nebraska agency could take eight months to a year to decide on KXL's route.
Another presidential memoranda issued by Trump on January 24 concerned the nearly finished DAPL, a $1.4 billion project that would stretch for about 1,000 miles from western North Dakota to Patoka, Illinois. The pipeline, being developed by Energy Transfer Partners (NYSE:ETP) (ETP) (Dallas, Texas), is designed to carry roughly 450,000 BBL/d of Bakken crude oil to Midwestern refineries. Completion of that project has been stalled for months in a controversy with the Standing Rock Sioux Tribe, which believes the pipeline's planned underwater crossing of Lake Oahe could contaminate its water source and defile the tribe's sacred ground.
Last September, then-President Obama halted construction of the project, which drew criticism from industry sources but praise from environmental and Native American groups. For more on that, see September 14, 2016, article - Dakota Access Pipeline Construction Halted! ... Across 40 Miles, Temporarily.
President Trump's presidential memorandum on DAPL ordered the secretary of the army to "review and approve in an expedited manner, to the extent permitted by law and as warranted, and with such conditions as are necessary or appropriate, requests for approvals to construct and operate the DAPL."
A flurry of other presidential actions January 24 were signed with the intention of breaking legal and environmental logjams over other vital infrastructure projects, including port projects, electric transmission projects and pipeline projects, among other type of infrastructure.
In an executive order, which is different than a presidential memorandum, Trump said, "too often, infrastructure projects in the United States have been routinely and excessively delayed by agency processes and procedures. These delays have increased project costs and blocked the American people from the full benefits of increased infrastructure investments, which are important to allowing Americans to compete and win on the world economic stage."
The order continued: "Federal infrastructure decisions should be accomplished with maximum efficiency and effectiveness, while also respecting property rights and protecting public safety and the environment. To that end, it is the policy of the executive branch to streamline and expedite, in a manner consistent with law, environmental reviews and approvals for all infrastructure projects, especially projects that are a high priority for the Nation, such as improving the U.S. electric grid and telecommunications systems and repairing and upgrading critical port facilities, airports, pipelines, bridges and highways."
Trump ordered the Chairman of the White House Council on Environmental Quality (CEQ) to decide within 30 days after a request is made whether an infrastructure project qualifies as a "high-priority" infrastructure project. That agency shall make that determination after considering the project's importance to the general welfare, value to the U.S., environmental benefits and such other factors as the Chairman deems relevant. Once so designated, the CEQ "shall coordinate with the head of the relevant agency to establish, in a manner consistent with law, expedited procedures and deadlines for completion of environmental reviews and approvals for such projects."
The CEQ likely will receive a flood of applications for this designation from developers whose electric transmission, pipeline, ports and other infrastructure projects have been snarled in litigation or bureaucratic red tape.
"I imagine President Trump's memoranda and executive orders have given developers reason to hope that their long-delayed projects could get moving again," noted Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "Opponents may well try to continue pressing litigation of these projects, but it looks like the president is holding all the cards. I would not be surprised to see protests like what stalled the DAPL, and at that point it may become a game of chicken to see who blinks first."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
The Keystone XL (KXL) pipeline project, an $8 billion project being developed by TransCanada Corporation (NYSE:TRP) (Alberta, Canada), has been stalled since late 2015 when then-president Obama denied it a presidential permit. For more on that, see November 10, 2015, article - KXL Pipeline Permit Denial Caps a Week to Forget for TransCanada. The project, delayed for years by permitting disputes and lengthy environmental assessments, is designed to transport about 830,000 barrels of oil-sands crude oil per day (BBL/d) about 1,179 miles, from Hardesty, Alberta, to Steele City, Nebraska, where it would intersect with other pipelines that could bring that crude to refineries in Patoka, Illinois or the Texas Gulf Coast.
On January 24, during the first week of his administration, Trump issued a presidential memorandum inviting TransCanada to resubmit its application for a presidential permit and instructing the U.S. Department of State to "take all actions necessary and appropriate to facilitate its expeditious review." The secretary of state was instructed to reach a final permitting decision within 60 days after resubmission as to whether the project was in the national interest.
"To the maximum extent permitted by law," the memorandum continued, the secretary of state shall rely on the final supplemental environmental impact statement of January 2014 as satisfying "all applicable requirements" of the National Environmental Policy Act of 1969 and certain aspects of the Endangered Special Act of 1973. The memorandum also instructed the Department of the Army to "to take all actions necessary and appropriate to review and approve as warranted, in an expedited manner" applicable Clean Water Act permits for the project.
The State Department's 2014 final supplemental environmental impact statement on Keystone XL concluded its construction was unlikely to affect global greenhouse gas (GHG) emissions and that denying a permit was not likely to prevent the extraction of crude oil from Alberta's oil sands. For more on that, see February 3, 2014, article - State Department: Keystone XL Unlikely to Affect Canadian Oil Sand Extraction. Nonetheless, in October 2015 then-President Barack Obama denied KXL a presidential permit, saying it would undermine U.S. leadership on global climate change.
TransCanada President and Chief Executive Russ Girling welcomed the Trump administration's January 24 decision. "This privately funded infrastructure project will help meet America's growing energy needs, as well as create tens of thousands of well-paying jobs and generate substantial economic benefit throughout the U.S. and Canada," he said in a statement.
Analysts have noted that crude-oil markets have changed dramatically since the KXL project was originally proposed (in 2008) and when it was expected to be operating (in 2012). A decade ago, before the shale revolution, the U.S. was importing a significant amount of its oil, and prices rose to as high as $140 per barrel in early 2008 before the Great Recession cut demand. In the intervening decade, crude-oil production from domestic unconventional formations jumped by millions of barrels per day, and prices stayed in the $85 per barrel to $105 per barrel range for most of 2011-2014 before prices crashed in late 2014 amid global oversupply.
Production has fallen off somewhat since then, but there are signs it is rising again following a decision by OPEC and other oil-producing countries to lower output by about 1.8 million BBL/d, starting last month.
In a separate order, Trump instructed the U.S. Commerce Department to investigate ways to compel TransCanada to use U.S.-made steel pipelines in KLX.
Federal expedition of KXL likely will be opposed by some Nebraska landowners and environmental organizations. TransCanada reportedly submitted paperwork to the State Department the day after the presidential memorandum. In the coming weeks, the company plans to submit a route for approval by the Nebraska Public Service Commission, according to company spokesman Terry Cunha. The Nebraska agency could take eight months to a year to decide on KXL's route.
Another presidential memoranda issued by Trump on January 24 concerned the nearly finished DAPL, a $1.4 billion project that would stretch for about 1,000 miles from western North Dakota to Patoka, Illinois. The pipeline, being developed by Energy Transfer Partners (NYSE:ETP) (ETP) (Dallas, Texas), is designed to carry roughly 450,000 BBL/d of Bakken crude oil to Midwestern refineries. Completion of that project has been stalled for months in a controversy with the Standing Rock Sioux Tribe, which believes the pipeline's planned underwater crossing of Lake Oahe could contaminate its water source and defile the tribe's sacred ground.
Last September, then-President Obama halted construction of the project, which drew criticism from industry sources but praise from environmental and Native American groups. For more on that, see September 14, 2016, article - Dakota Access Pipeline Construction Halted! ... Across 40 Miles, Temporarily.
President Trump's presidential memorandum on DAPL ordered the secretary of the army to "review and approve in an expedited manner, to the extent permitted by law and as warranted, and with such conditions as are necessary or appropriate, requests for approvals to construct and operate the DAPL."
A flurry of other presidential actions January 24 were signed with the intention of breaking legal and environmental logjams over other vital infrastructure projects, including port projects, electric transmission projects and pipeline projects, among other type of infrastructure.
In an executive order, which is different than a presidential memorandum, Trump said, "too often, infrastructure projects in the United States have been routinely and excessively delayed by agency processes and procedures. These delays have increased project costs and blocked the American people from the full benefits of increased infrastructure investments, which are important to allowing Americans to compete and win on the world economic stage."
The order continued: "Federal infrastructure decisions should be accomplished with maximum efficiency and effectiveness, while also respecting property rights and protecting public safety and the environment. To that end, it is the policy of the executive branch to streamline and expedite, in a manner consistent with law, environmental reviews and approvals for all infrastructure projects, especially projects that are a high priority for the Nation, such as improving the U.S. electric grid and telecommunications systems and repairing and upgrading critical port facilities, airports, pipelines, bridges and highways."
Trump ordered the Chairman of the White House Council on Environmental Quality (CEQ) to decide within 30 days after a request is made whether an infrastructure project qualifies as a "high-priority" infrastructure project. That agency shall make that determination after considering the project's importance to the general welfare, value to the U.S., environmental benefits and such other factors as the Chairman deems relevant. Once so designated, the CEQ "shall coordinate with the head of the relevant agency to establish, in a manner consistent with law, expedited procedures and deadlines for completion of environmental reviews and approvals for such projects."
The CEQ likely will receive a flood of applications for this designation from developers whose electric transmission, pipeline, ports and other infrastructure projects have been snarled in litigation or bureaucratic red tape.
"I imagine President Trump's memoranda and executive orders have given developers reason to hope that their long-delayed projects could get moving again," noted Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "Opponents may well try to continue pressing litigation of these projects, but it looks like the president is holding all the cards. I would not be surprised to see protests like what stalled the DAPL, and at that point it may become a game of chicken to see who blinks first."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
