President Donald Trump signs executive orders bringing back to life the Keystone XL and Dakota Access pipelines; environmental advocates vow fight ahead.
Fulfilling his campaign pledge to bring the Keystone XL and Dakota Access pipelines back to the table, President Donald Trump signed executive orders Tuesday reversing the position forged by former President Barack Obama.
The orders don’t fast-track either pipeline, but “advance” them for renegotiation. Trump has long said he could obtain a “better deal” for the United States – perhaps even a cut of the profits – on TransCanada Corp.’s proposed Keystone line.
"We are going to renegotiate some of the terms, and if they like, we’ll see if we can get that pipeline built," Trump told reporters in the Oval Office. "If we’re going to build pipelines in the United States, the pipes should be made in the United States.”
Canada May Become More Dependent on US Refineries
Exactly how construction of the Keystone XL and Dakota Access pipelines would affect major players in Canada's oil scene is uncertain, says one analyst.
Because refineries south of the 49th Parallel process 99 percent of Canadian oil exports, Keystone XL would increase Canadian dependence on U.S. refineries, explained Afolabi Ogunnaike, senior research analyst with Wood Mackenzie.
Moreover, he said that border adjustment tax proposals by the Trump administration could diminish the economics of these southward flows. Also, he pointed out that Canadian producers still want to obtain tidewater access beyond the U.S. via other pipeline projects such as Kinder Morgan's Trans Mountain Expansion, TransCanada's Energy East and Enbridge's Northern Gateway.
Timing will determine which pending oil pipeline projects actually get built, Ogunnaike said. "(W)hile we forecast continued growth in Canadian oil production, there might be too much pipe if Trans Mountain Expansion and (Enbridge's) Line 3 Replacement (approved in November 2016) and Keystone XL all start-up by 2020," he said. "At best we would expect TransCanada to build Keystone XL or Energy East, but not both; if KXL goes forward then it could reduce interest in the Energy East pipeline proposal which is currently being reviewed."
TransCanada’s request for a presidential permit to cross the border from Canada into the United States lingered in the Obama White House for years before it was finally rejected in November 2015.
The Dakota Access Pipeline (DAPL), a $3.8 billion project that came to a halt in November after months of fierce protest by Native Americans and environmentalists, is also up for renegotiation.
Reaction to the move was swift on both sides of the aisle.
House Committee on Natural Resources Chairman Rob Bishop, R-Utah, said the infrastructure from these projects would create more jobs and advance affordable energy.
“This action is a path forward on critical infrastructure projects that should have already moved forward,” Bishop said in a statement. “We have a new era before us of investment, jobs and energy security that I look forward to coordinating with the Trump administration.”
Special interests with a “radical, anti-energy agenda” had used these pipeline projects to derail fossil fuels, said House Speaker Paul Ryan, R-Wis. A domestic economic boost and “thousands of good-paying jobs” lay in the balance.
These major infrastructure projects that will yield benefits for U.S. workers and consumers, according to the Washington, D.C.-based Association of Oil Pipe Lines (AOPL).
"We thank President Trump for giving the American people the benefits of jobs and plentiful, affordable energy that pipelines will bring," said Andrew Black, AOPL's president and CEO, in a written statement.
Citing figures from the U.S. State Department, AOPL contends that building Keystone XL (KXL) alone would generate more than 42,000 U.S. jobs and $2.1 billion in U.S. worker payroll. The project would also support 31,500 jobs in construction, manufacturing, trade, finance and insurance, food and accommodations, health services and other services, according to AOPL.
Dakota Access Pipeline (DAPL) has already spurred the creation of approximately 12,000 construction jobs and contributed more than $3.54 billion to the U.S. economy, added AOPL.
The Bakken could also emerge as a big winner as a result of the executive orders, noted Afolabi Ogunnaike, senior research analyst with Wood Mackenzie.
“(B)oth pipelines would increase takeaway capacity from the oil play which has long been the epicenter of US crude-by-rail,” Ogunnaike said.
But those who fought the pipelines with environmental concerns say renewable energy resources should be at the forefront of the U.S. energy future. And, they vow to resist in the struggle ahead.
“Millions of people came together all over this country to stop the Keystone XL and Dakota Access pipelines and say we must transform our energy system away from fossil fuels to renewable energy,” said former Democratic presidential candidate Sen. Bernie Sanders, I-Vermont. “Today, President Trump ignored the voices of millions and put the short-term profits of the fossil fuel industry ahead of the future of our planet.”
And Friends of the Earth President Erich Pica said Trump’s move proves that those who demonstrated against the pipelines aren’t welcome in his America.
“Trump has emphatically pledged his allegiance to the oil companies and Wall Street banks that stand to profit from the destruction of public health and the environment,” Pica said in a statement. “The movement to defend Indigenous rights and keep fossil fuels in the ground is stronger than oil companies’ bottom line. Friends of the Earth and our allies will not give up the fight to stop Trump’s agenda and these destructive pipelines.
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