The Trump team’s plan to resuscitate a dead oil project [XL]

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Posted on 11/21/2024 6:04:21 AM PST by Red Badger

The company behind the project cancelled it and the steel that was in ground has been removed, but it’s on the president-elect’s energy to-do list.

Donald Trump is looking to revive the Keystone XL oil pipeline on his first day back in the White House, according to three people familiar with the president-elect’s plan, even though no companies are trying to build it anymore.

Trump believes declaring the 1,200-mile Canada-to-Nebraska crude project back on the table would drive the pro-oil message he delivered in his campaign, said people involved in the transition team discussions about the idea. Trump also wants to show he can defy President Joe Biden, who reversed Trump’s initial 2017 approval of the project, which was strongly opposed by the climate movement.

“It’s on the list of things they want to do first day,” said one of the people familiar with Trump’s plan, who was granted anonymity because they were not authorized to talk to the media.

But Trump’s renewed interest in the pipeline faces a sharply different reality now than existed than when he first entered office.

The pipeline’s permit to cross the U.S.-Canadian border was first rejected in 2015 by President Barack Obama. Trump in 2017 reversed that decision and approved the border crossing — only to have that decision revoked by Biden in January 2021. After that, TC Energy, the pipeline’s developer, said it would no longer pursue its construction.

Calgary-based TC Energy no longer owns the pipeline system that the Keystone XL was intended to complement. And the portions of the pipeline that TC Energy had put in the ground in both Canada and the United States in anticipation of the cross-border permit approval have been dug up. Replacing that pipe would require any company that wants to rebuild it to again obtain local permits for the project.

And since Keystone XL’s demise, U.S. oil output has surged to record levels, making the economic case for the Canadian crude shipments to the Gulf Coast less attractive. Canada’s shipments of oil have reached record levels this year — but those barrels are moving through a recently built link to the West Coast, providing a new outlet for that Alberta crude.

During his latest presidential campaign, Trump railed against Biden’s decision to revoke the Keystone XL permit.

“Why does Biden go in and kill the Keystone [XL] pipeline and approve the single biggest deal that Russia’s ever made, Nord Stream 2, the biggest pipeline anywhere in the world going to Germany and all over Europe?” Trump said during his debate with Vice President Kamala Harris, referring to the gas line that was hit by sabotage in 2022. “Because they’re weak and they’re ineffective.”

A Trump transition spokesperson did not respond to email and text message inquiries.

How to get the pipeline built given the original project has ceased to exist was a topic the transition team was discussing, a second person familiar with effort said.

But the pro-oil message it would send was something Trump was interested in delivering, the person said, even if an actual pipeline didn’t materialize right away.

“Everyone in the country knows what the KXL pipeline is,” said this person, who was granted anonymity to discuss private conversations. “It’s energy. It’s infrastructure. It’s construction.”

Any company building the pipeline would have to once again acquire land for the pipeline route, at least in Nebraska, said Jane Kleeb, chair of the Nebraska Democratic Party and head of Bold Alliance, a progressive group that fought against Keystone XL the first time around. That could once again raise bad feelings even among conservative landowners fearful about a private company’s use of eminent domain rights to gain access to land, Kleeb added.

“They can try, but they’ll be starting from scratch,” Kleeb said in an interview. “When the federal permit got revoked, we just didn’t celebrate — we went all the way through the court system to make sure the easements were returned to landowners” in Nebraska.

TC Energy — which tried unsuccesfully to recoup $15 billion in arbitration for the project — spun off its oil pipeline business in October into a new company, South Bow Energy, also based in Calgary. A South Bow spokesperson did not answer specific questions on whether Trump or his associates had approached the company about reviving the project.

“South Bow supports efforts to transport more Canadian crude oil to meet U.S. demand,” Southbow spokesperson Katie Stavinoha said in an email. “South Bow’s long-term strategy is to safely and efficiently grow our business.”

Andy Lipow, head of oil market consulting firm Lipow Oil Associates said the current oil market conditions don’t support undertaking what would be a multibillion-dollar pipeline.

The Trans Mountain pipeline, which completed a major expansion in May, already transports 890,000 million barrels a day of Canadian crude and other fuel to the British Columbia coast for export, reducing the need for a pipeline going south into the United States, Lipow said.

The oil producing cartel OPEC also has five million barrels a day of spare capacity it could bring online, and overall global oil demand growth is expected to be slow for the foreseeable future, something that would weigh against building the pipeline, Lipow added.

“A lot of the impetus for Keystone XL that we had seen in years past is not there today,” Lipow said.

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1 posted on 11/21/2024 6:04:21 AM PST by Red Badger

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