(Bloomberg) -- TransCanada Corp. is surrendering to an additional review of the Keystone XL oil pipeline and backing off from conflicts with Nebraska landowners as it struggles to win approval for the project.
Instead of waging court battles to cross privately owned land and trying to avoid a review by Nebraska’s Public Service Commission, TransCanada will withdraw lawsuits and seek approval from the regulator, the Calgary-based company said Tuesday. While that’s a development Keystone XL opponents had sought all along, the move promises to bring certainty to its route through the state, according to TransCanada.
The oil industry has waited seven years for a U.S. decision on the line, which has faced criticism from President Barack Obama and from Hillary Clinton, a Democratic candidate in the 2016 presidential election who opposes the project. Producers are turning to costlier trains and expanding existing pipelines to ship western Canadian crude to refineries on the U.S. Gulf Coast as Keystone XL’s construction has been delayed and its cost ballooned to $8 billion.
Ending court battles with landowners and seeking regulatory approval may be the easiest way for TransCanada to gain public acceptance for the project in Nebraska after already changing the route once, said Kevin Book, Washington-based managing director at Clearview Energy Partners LLC, an energy policy advisory firm.
“TransCanada tried to go through the front door and they got blocked in Nebraska and they tried to change their path and they got blocked again,” Book said. “Eminent domain is a tough way to pursue a controversial project.”
Mark Cooper, a spokesman for TransCanada, said that despite the company having won approval for the route from now-former Nebraska Governor Dave Heineman, “there has been uncertainty in the courts” about the legality of that process.
TransCanada made the decision while facing an Oct. 19 trial date in a lawsuit brought by landowners.
Environmental and landowner groups that oppose the pipeline, including Bold Nebraska, characterized the company’s move as a win that will add delays and expressed confidence that Obama will ultimately reject the project.
“This is a major victory for Nebraska landowners who refused to back down in the face of bullying by a foreign oil company,” Jane Kleeb, director of Bold Nebraska, said in an e- mail.
Obama has questioned Keystone XL’s benefits to the U.S. and vetoed a Republican-backed bill that would have bypassed a State Department review and cleared the way for construction.
Republican Senator John Hoeven, a North Dakota Republican who supports the line, citing its potential to create jobs, has said multiple times since July that he expects Obama to deny TransCanada a permit for Keystone XL, a prediction the White House has declined to comment on.
“The company realized it could not win a Nebraska legal challenge and faced additional delay if it continued along those lines,” David Domina, an attorney representing Nebraska landowners, said Tuesday.
TransCanada may submit its application to the regulator by Friday for a process the company expects could last seven months to a year, Cooper said. Shares were up 1.3 percent to C$41.90 at 7:42 a.m. before the start or regular trading in Toronto.
The move in Nebraska could give the U.S. administration a reason to delay its review further, Book said.
“The president and the State Department have not been pushing ahead as long as there has been some kind of state-level event that was unresolved,” Book said. “Today’s news would suggest that the White House would indeed keep waiting.”
--With assistance from Mark Drajem in Washington.
To contact the reporters on this story: Andrew Harris in Washington at firstname.lastname@example.org; Rebecca Penty in Calgary at email@example.com To contact the editors responsible for this story: David Glovin at firstname.lastname@example.org; David Marino at email@example.com Jim Efstathiou Jr., Joe Richter.
Copyright 2016 Bloomberg News.
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