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Once Again, Presidential Order Cancels Keystone XL Pipeline

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By The Maritime Executive 01-20-2021 02:32:00

On Wednesday, President Joe Biden will sign an executive order revoking a key federal permit for the construction of the cross-border Keystone XL pipeline, repeating an action that was taken by President Barack Obama but reversed by President Donald Trump. The order denies landlocked Canadian crude oil producers an important access route to U.S. Gulf Coast ports, a central component of their long-desired plan to ship product overseas.

The $9 billion project has become a symbol of America's disagreement over the future of fossil fuels. It has ground on for 12 contentious years, stopping and starting with countless protests, regulatory actions and lawsuits. In 2015, President Barack Obama ordered a halt to its development, noting that the majority of the benefits would go to Canadian energy firms and that Albertan tar sands crude is more carbon-intensive than most other sources of oil. Trump issued a presidential permit in 2017 to reverse Obama's decision and move the project forward, allowing the construction of the cross-border segment of the line to proceed.

If completed, Keystone XL would have connected Alberta's bitumen producers with overseas refiners via marine export terminals on the U.S. Gulf Coast. Alberta's extra-heavy oil is currently stranded by its geography, but with access to the sea, it could be sold to any buyer - not just American and Canadian refiners. This goal is a high priority for Alberta's government, which provided $1.1 billion in direct funding and $4.2 billion in loan guarantees to support the pipeline's construction. Two alternative routes - the TransMountain pipeline to Vancouver, B.C. and the Enbridge Line 3 pipeline to a U.S. hub in Wisconsin - are still under way with heavy backing from the province.

To build Keystone XL, developer TC Energy would have had to obtain U.S. permitting for the construction of more than 1,100 miles of pipeline and 1,000 water crossings within U.S. territory. Last year, a federal lawsuit voided a blanket Corps of Engineers water quality permit for these waterway crossings, forcing TC Energy to stop work and prepare an environmental impact statement for each crossing. Biden's order doubles down on the court-ordered halt and ensures the project will not move forward for at least one four-year presidential term.

“When this pipeline was proposed, it was a foregone conclusion that it would easily be approved and constructed," said Sierra Club campaign associate director Catherine Collentine. "The fact that it still hasn’t been built over 12 years later, and that later today it will be rejected for good, is a testament to the dedication and tenacity of a nationwide movement of frontline communities, Indigenous leaders, and environmentalists working together to insist that our future is not worth sacrificing for a dirty tar sands pipeline."

The Association of Oil Pipe Lines (AOPL) pointed to the number of construction jobs that the cancellation would eliminate, and it suggested that this was a lamentable start for the new administration. 

“Killing 10,000 jobs and taking $2.2 billion in payroll out of workers pockets is not what Americans need or want right now,” said Andy Black, AOPL President and CEO. 

"The Keystone XL Pipeline has been through more than 10 years of extensive environmental reviews, and today’s announcement is a slap in the face to the thousands of union workers who are already a part of this safe and sustainable project," echoed Mike Sommers, the head of the American Petroleum Institute. "This misguided move will hamper America’s economic recovery, undermine North American energy security and strain relations with one of America’s greatest allies."