Keystone XL pipeline gets OK from U.S. State Department

Calgary-based TransCanada has received a presidential permit from the U.S. State Department that allows it to build the long-delayed Keystone XL pipeline.

Pipeline to link Canadian oilsands to refineries in the U.S.

Former President Barack Obama rejected the Keystone XL pipeline proposal in November 2015, but on Friday, the Trump administration approved it. (Daniel Acker/Bloomberg)

Calgary-based TransCanada has received a presidential permit from the U.S. State Department that allows it to build the long-delayed Keystone XL pipeline.

The pipeline had been blocked by President Barack Obama, who said that it would do nothing to reduce fuel prices for U.S. motorists and would boost emissions that cause global warming.

Awarding cross-border pipeline permits is technically the domain of the Secretary of State. However, Friday's decision came from Undersecretary of State Tom Shannon because his boss, former oil executive Rex Tillerson, has recused himself from the decision.

The new administration has said repeatedly that President Donald Trump supports the project. Trump signed an executive order in his first week in office that invited TransCanada to reapply for a permit and promised a decision within 60 days. The 60-day deadline on Trump's executive order would have expired Monday.

"Transcanada will finally be allowed to complete this long-overdue project with efficiency and with speed," Trump said in the Oval Office before turning to ask TransCanada CEO Russ Girling that the company "hire thousands of Americans to build it."​

"Thank you very much for this opportunity, and we're not going to let you down sir," Girling told the president.

While TransCanada has had countless kilometres of pipeline ready and waiting to start construction for years, it has committed to buy any additional pipes it needs for the project from U.S. companies.

While the project has received all the approvals it needs in Canada, very little of the construction has been completed here due to U.S. delays, so it's likely to require many kilometres worth of new pipeline material and many new jobs in Canada, too.

Canadian Prime Minister Justin Trudeau welcomed the news in a scrum with reporters Friday, saying the government is "very pleased with the announcement coming out of the United States. We have long known that getting our resources to market in safe and responsible ways is important [for] Canadian jobs, for Canadian economic growth."

The multibillion-dollar pipeline, first pitched in 2008, would bring more than 800,000 barrels per day of heavy crude from Alberta  into Nebraska, linking to an existing pipeline network feeding U.S. refineries and ports along the Gulf of Mexico along the entire almost 1,900 kilometre route.

The Keystone XL pipeline would bring oil from Hardisty, Alta., to Steele City, Neb. One of the key risks cited in this project, the political risk in the U.S. jurisdiction, where much of the pipeline is located, is largely out of control of the Alberta government. (Natalie Holdway/CBC)

No sure thing

Despite getting the thumbs-up from the White House, the project still faces myriad hurdles — a major one being that environmentalists are still vowing to block it. "We'll use every tool in the kit," said Rhea Suh, president of the Natural Resources Defense Council.

And TransCanada still does not have deals with all the landowners in Nebraska on the proposed route. The company also lacks a permit in that state and protesters promise they will try to stop the project. 

When the subject of hurdles came up on Friday, the U.S. president was glib: "I'll call Nebraska," Trump said.

According to a report by Platts Analytics, the approvals process could take another six months to a year, which would make the pipeline operational by "late-2019 at the absolute earliest."

"With much uncertainty remaining around whether Energy East pipeline will ultimately be approved, the appeal of moving forward with Keystone XL becomes all the more evident," Platts said.

Energy East is another proposed pipeline which if completed would transport oil from Canada's oilpatch 4,500 kilometres eastward to refineries in the Canadian Maritimes.

TransCanada said Friday it would continue to work with key stakeholders throughout Nebraska, Montana and South Dakota to obtain the necessary permits and approvals to advance the project to construction.

Investment bank RBC Capital Markets said, while the project still faces doubt, "receiving the permit is a good step forward for the project that could provide visible growth in the 2020 time frame."

with files from Reuters, The Associated Press and Canadian Press