By Avi Salzman
President-elect Donald Trump is looking for ways to boost oil supplies. One idea involves resurrecting a controversial piece of infrastructure he championed in his first term.
The incoming administration is considering reviving the Keystone XL oil pipeline from Canada to the U.S., according to three unnamed sources who spoke to Politico. According to the report, Trump wants to greenlight the pipeline on his first day in office.
He isn't the only one who wants Keystone XL back. Chris Wright, Trump's pick for Secretary of Energy, told Barron's in an interview last year that restarting the pipeline is one of the most important things the government can do to boost energy supplies.
"Number one, restore the Keystone Pipeline," Wright said. "It's already been through an exhaustive environmental review. Canada is probably the second biggest country that could grow its oil and natural gas production. It's just limited by access to markets. Build that pipeline, restore some confidence in Canada, and in the U.S. industry."
A spokesperson for the Trump transition team didn't directly address a question about whether the administration wants to restart Keystone XL.
Restoring the Keystone project would be a monumental task: The pipeline has been abandoned and the parts are being sold off. Just this month, water company Cadiz bought 180 miles of steel that had originally been purchased for use in the pipeline. Cadiz plans to use it to transport water through the Mojave Desert.
"Chances are very low and probably zero that Keystone XL is revived," Rob Thummel, senior portfolio manager at Tortoise Capital Advisors and an expert in pipelines, told Barron's.
There's a long history here. The Keystone XL is an expansion of a network of Keystone pipelines that already take crude from the Canadian tar sands into the U.S. TC Energy, a Canadian company, proposed to extend that network with Keystone XL, which was expected to be 1,200 miles long and run from Hardisty, Alberta to Steele City, Neb. Connecting that section to the existing network would allow more than 800,000 barrels of Canadian oil a day to flow to the Gulf Coast, and from there to destinations overseas.
The political pendulum has swung back and forth on this issue. The Obama administration blocked the pipeline in 2015. Trump tried to resume it during his first term, but the pipeline didn't get completed during his presidency. It was then blocked again by President Biden in 2021 and eventually abandoned by TC Energy, which has since spun Keystone XL off into another company called South Bow.
Asked if South Bow would consider resuming the project, a spokesperson was noncommittal.
"South Bow supports the need for a safe, stable supply of energy and efforts to transport more Canadian crude oil to meet U.S. demand," wrote spokeswoman Katie Stavinoha. "As a new company, our focus and priority at this point is to continue to deliver energy safely and efficiently. Part of South Bow's long-term strategy is to grow our business."
The physical, legal, and political constraints on restarting the pipeline would be enormous.
Environmentalists fought the pipeline extension for years. Much of the oil from Canada's tar sands region is a viscous sludge. Lifting and processing it leaves hazardous byproducts and releases substantial carbon emissions.
"The whole process of getting the oil out and making it usable creates three to four times the carbon pollution of conventional crude extraction and processing," the Natural Resources Defense Council says. Some pipelines carrying corrosive tar sands oil have also been found to be more leak-prone. Killing the pipeline "will go down as one of this generation's most monumental environmental victories" the NRDC says.
The battle may not be completely over.
Write to Avi Salzman at avi.salzman@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 21, 2024 13:59 ET (18:59 GMT)
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