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Energy and Resources Keystone XL pipeline clears major hurdle as Nebraska Supreme Court approves route

TC Energy Corp. cleared a major hurdle Friday toward construction of its long-delayed Keystone XL pipeline after Nebraska’s Supreme Court upheld the state’s route approval over the objections of landowners and Indigenous tribes.

Calgary-based TC Energy – formerly known as TransCanada – welcomed the ruling but still faces three separate legal challenges to President Donald Trump’s reissuance of the federal cross-border permit, which was done through an expedited presidential order. Opponents in Nebraska vowed Friday to stall the project until next year’s presidential election, with the hopes a Democrat will retake the White House and kill it.

Keystone XL – which was first proposed more than 10 years ago – would deliver some 830,000 barrels per day of crude from Alberta to Nebraska, and then on to the U.S. Gulf Coast, a major refining centre where facilities are specifically designed to process heavy-grade crudes like diluted bitumen from the oil sands.

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“The Supreme Court decision is another important step as we advance towards building this vital energy infrastructure project,” TC Energy’s chief executive Russ Girling said in a release. “We thank the thousands of government leaders, landowners, labour unions and other community partners for their continued support through this extensive review process. It has been their unwavering support that has advanced this project to where it is today.”

However, the company gave no indication when it might make a decision whether to proceed. In a call with analysts this month, TC Energy’s president for liquid pipelines, Paul Miller, said the company was awaiting greater clarity on the legal issues before making a decision. TC Energy has already missed the 2019 construction season and, if it proceeds, the earliest the pipeline would be in service would be mid-2022.

On a conference call earlier this month, Mr. Miller said refiners in the U.S. Gulf Coast have committed to ship crude on the Keystone XL line once it’s built. The massive refining hub in Texas and Louisiana is geared to process the heavy, sulfurous quality of crude like the diluted bitumen produced in Alberta’s oil sands. The crisis in Venezuela and steep decline in that country’s production of heavy crude has refiners eager to buy oil from Canada, if they can get it to the Gulf Coast, said Kevin Birn, Calgary-based analyst with IHS Markit Inc.

The positive court ruling for TC Energy came the same week that federally-owned Trans Mountain Corp. announced that it had given the order to resume construction of its pipeline expansion project, which would add 590,000 barrels per day of export capacity. Expansion of the Edmonton-to-Vancouver line was stalled a year ago when the Federal Court of Appeal in Canada quashed a federal permit because Indigenous communities along the route had not been adequately consulted. The Liberal government conducted further talks with the affected First Nations and reissued the permit in June.

In the ruling Friday, Nebraska’s Supreme Court rejected complaints that the public utilities commission had not followed proper procedures in ruling the pipeline route was in the public interest. Opponents insisted the fight is not over.

"There is a lot of fighting spirit,” said Jane Kleeb, founder of Bold Nebraska which organized landowners, environmentalists and tribal nations against the project. “We stopped this pipeline for the past 10 years and we plan on making sure this pipeline never touches our soil.”

Other groups have launched challenges in U.S. federal court to the presidential permit, which was issued in March. Soon after taking office in 2017, Mr. Trump reversed the decision by former president Barack Obama to reject the pipeline, but a federal judge said that decision lacked proper procedure. The President’s approval in March was done through executive order, bypassing the usual State Department process.

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“Challenging a presidential permit is an uphill battle, but it could delay the project until the 2020 election, when a Democratic winner could revoke the permit,” said Kristen van de Biezenbos, a law professor at the University of Calgary. “Delay is certain in any case.”

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