An independent, five-person panel voted to approve an alternative route for TransCanada’s Keystone XL pipeline on Monday in a major milestone for the controversial project.
But the decision to approve an alternative route for the pipeline, rather than TransCanada’s preferred route, could open up a new set of issues for the Canadian energy company, which may need to reapply for permits with the Bureau of Land Management and Army Corps of Engineers, as well as potentially obtain a new review from the State Department.
TransCanada reacted to the decision by saying that it would “conduct a careful review of the Public Service Commission’s ruling while assessing how the decision would impact the cost and schedule of the project.”
The decision comes just days after the existing Keystone pipeline leaked more than 200,000 gallons of crude oil in South Dakota, and a little more than two years after the Obama administration first denied the project’s cross-border permit on economic and climate reasons.
The pipeline, if constructed, would carry 830,000 barrels of diluted bitumen a day from the tar sands of Alberta, Canada, to refineries along the Texas Gulf Coast. From a climate perspective, the project would add an additional 181 million metric tons of carbon dioxide to the atmosphere each year — the same as 51 coal plants.
President Donald Trump promised to revive the proposal during the 2016 presidential campaign, and signed an executive order in January directing the State Department to reconsider TransCanada’s cross-border permit. Less than 60 days after the executive order, the State Department announced that it would be approving the company’s request.
That meant the final step for TransCanada was winning approval from the Nebraska Public Service Commission, which is charged with making decisions about oil pipelines throughout the state. The commission, under a 2011 Nebraska law known as the Major Oil Pipeline Siting Act, was only allowed to consider whether the pipeline would be in the best interest of the state — it was prohibited from considering safety risks, like spills or leaks, in rendering its decision.
Opponents of the project argued that the pipeline would not be in the interest of the state as it would likely reduce property values for landowners along the proposed route, as well as potentially have an adverse impact on wildlife and natural resources. Proponents, by contrast, argued that the pipeline would create jobs and would be a safer way to bring oil to market than by train. Trump has claimed that the project would create 28,000 “great construction jobs,” though the State Department has estimated that the number would be closer to 3,900. Permanent job creation would be much lower — just 35 jobs to maintain, inspect, and repair the pipeline once operational. The pipeline would also be exempt from a Trump administration order mandating that pipelines be constructed with American steel.
The Public Service Commission, which heard arguments from both sides during a multi-day hearing this summer, could have chosen to approve TransCanada’s preferred route, which would cut diagonally across the state, or a route known as the “mainline alternative” that parallels the existing Keystone pipeline. The commission could also have chosen to reject the pipeline altogether, or proposed an alternative route of its choosing.
Ultimately, the commission chose to approve the “mainline alternative” by a vote of 3 to 2.
“Whatever the route, shipping more dirty tar sands through America’s heartland at the expense of our climate and communities remains unacceptable,” Michael Brune, executive director for the Sierra Club, said in a statement following the Public Service Commission’s decision. “It is disappointing that the Public Service Commission sided with a foreign oil company over the interests of American communities who would be threatened by this pipeline, but we remain confident that Keystone XL will never be built.”
Despite finally winning approval from the state of Nebraska, questions still hang over the pipeline’s construction. Environmental groups are currently challenging the Trump administration’s approval of the project’s cross-border permit, arguing that the administration relied on environmental studies from 2014 to make its decision. Those studies, the groups claim, rely on outdated information, especially when it comes to the economics of the project — the environmental study, for instance, claimed that the price of oil would never fall below $100 a barrel throughout the lifetime of the Keystone XL pipeline (oil is currently trading at around $56 a barrel).
Paul Miller, president of TransCanada’s liquid pipelines business, has said that TransCanada is still searching for customers for the project, telling investors during a September call that the company would “make an assessment of the commercial support and the regulator approvals” after the Public Service Commission rendered its decision. If constructed, the project would not be operational until close to 2020 — meaning that the economic benefit of the project would likely be tied to what happens with an increasingly volatile international oil market. Low oil prices have already hurt the Canadian tar sands industry, with some of the country’s largest companies reporting billions in net losses in 2015.
“The Keystone XL pipeline is and has always been a disaster – from a climate perspective, from a risk perspective, and from an investment perspective,” David Turnbull, strategic communications director for Oil Change International, said in a statement. “The tar sands are a losing bet, as evidenced by fleeing investment and stagnant development.”
UPDATE: The piece has been updated to include a statement from TransCanada, as well as to clarify potential next steps involved in the regulatory approval of the pipeline.