Trump plans to revive Keystone pipeline, but industry experts say Biden’s damage can’t be undone

President-elect Donald Trump will likely reverse President Joe Biden’s cancellation of the Keystone XL oil pipeline, a 1,200 mile project running from Canada to Nebraska. 

Citing unnamed sources, Politico reported that Trump plans to take the action on his first day in office. While the news has been met with excitement over the jobs and economic activity it would bring, experts say Biden’s decision to kill the project has likely destroyed any chance it will ever be built. The decision may also impact large energy projects well into the future. 

Energy analyst David Blackmon, who publishes his work on his “Energy Absurdities” Substack, told Just the News that Trump’s reversal of the decision will be largely symbolic, but he should still do it anyway. 

“It was really a very damaging thing that the current president did, and so I think it’s really important that Trump does take that action,” Blackmon said. 

Long, costly effort

TransCanada, which is now TC Energy, first proposed the project in 2008. The contested Keystone XL pipeline portion was to be the second half of a pipeline running from Hardisty, Alberta, Canada, to the Gulf Coast, and these two portions are part of a larger pipeline system running through the heart of America. The southern portion, which is now known as the Gulf Coast Pipeline, runs between Cushing, Oklahoma, and Port Arthur, Texas. It was completed in August 2019. 

The second portion of the Keystone XL project would have run from Hardisty to Steele City, Nebraska, but because it crosses an international boundary, it’s required to receive approval from the U.S. Department of State. This gives the president the power to deny, approve or revoke the permits. 

Amid protests, President Barack Obama first rejected TC Energy’s application in 2012 and continued to oppose the project, despite State Department estimates showing it would create 42,000 direct and indirect jobs and add close to $20 billion to the U.S. GDP. After Trump’s first victory, TC energy resubmitted a presidential permit application, and Trump reversed Obama’s rejection with an executive order allowing the project to move forward. 

The Keystone XL segment was more than half complete and on track to be completed by 2022. The project would have transported 830,000 barrels of crude oil per day. As his first act to carry out his campaign promise to “end fossil fuels,” Biden canceled the permit, claiming that it would make climate change worse. 

The cancellation “was a completely unprecedented act of crony politics that should never have happened,” Blackmon said. 

Risky investment

In his second term, Trump could flip the reversal, but resurrecting the project is unlikely to happen. TC energy, Blackmon writes, terminated the project and sold off the assets to South Bow Energy in June. A spokesperson for the company responded to questions from Barron's about reviving the project with no firm commitment. 

After canceling the project, TC Energy removed hundreds of miles of pipe it had already installed to be used in other projects. Also, the right-of-way agreements for the pipeline to pass through private property are nullified, as are other permits for the project. 

“Thus, any effort to revive it by South Bow would necessitate a repetition of the painstaking, years-long process of reacquiring all those miles of rights-of-way and local, state, and federal permits,” Blackmon explained on his Substack. 

The Mountain Valley Pipeline, a $6.6 billion, 300-mile project running from northwestern West Virginia to southern Virginia, will have taken a decade from its announcement to its expected completion date in 2028. The project faced extensive opposition from environmentalists, and litigation against it went all the way to the Supreme Court, which ultimately cleared the way for it to be constructed. Any attempt to resume construction of the Keystone XL would face the same hurdles. 

It’s a tall order to expect investors to risk $8 billion on a decades-long project whose certainty rests on the political whims of the White House. TC Energy’s efforts cost the company $15 billion, according to a lawsuit the company filed to recoup its losses – a request that the courts denied. 

“It's really made it harder not just for companies in the oil industry but for any industry to secure the financing for these big, multi-billion dollar long-term projects related to infrastructure,” Blackmon said. 

Questionable benefits

While environmental groups seeking to block consumers from accessing fossil fuels, like the Natural Resource Defense Council, cheered the termination of the project, the inability for companies with permits in hand to be sure investments are secure also undermines net zero goals, such as transmission lines.  

“I think you're going to see streamlining of permitting processes to be a key focus area in the Trump administration. I don't know how successful they'll be, but they're certainly going to work on that issue,” Blackmon said. 

While environmentalists fight pipelines on the hope the lack of infrastructure will stop consumers from using fossil fuels, the U.S. and Canada have seen record-high production in the time that Biden has been in office, despite the Keystone XL never being realized. Absent pipelines, petroleum products get shipped via rail and trucks, which is much more dangerous and produces more carbon dioxide emissions. 

“So any arguments that this has been better for the environment are, frankly, laughable. Anybody should be ridiculed for even trying to say that,” Blackmon said.