Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Opponents of the Dakota Access oil pipeline march out of their main camp near Cannon Ball, N.D., on Feb. 22, 2017.

Terray Sylvester/Reuters

A rapid-fire succession of setbacks for big energy pipelines in the United States this week has revealed an uncomfortable truth for the oil and gas industry: Environmental activists and landowners opposed to projects have become good at blocking them in court.

The latest setbacks have increased the difficulty for developers of billions of dollars worth of pipeline projects in getting needed permits and community support. The oil industry says the pipelines are needed to expand oil and gas production and deliver it to fuel-hungry markets, but a rising chorus of critics argue they pose an unacceptable future risk to climate, air and water.

“Any company that is going to look to invest that kind of money into our infrastructure is really going to have to take a hard look,” said Craig Stevens, spokesman for Grow America’s Infrastructure Now, a coalition comprised mainly of chambers of commerce and energy associations.

Story continues below advertisement

The Trump administration has sought to accelerate permits and cut red tape for big-ticket energy projects such as the Dakota Access and Keystone XL pipelines. That effort has failed so far, and may even have made legal challenges easier, because rushed permitting paperwork has caught the eyes of judges.

A federal judge on Monday ordered the Dakota Access Pipeline, the biggest duct moving oil out of the huge Bakken basin, to shut down and empty because the Army Corps of Engineers had failed to do an adequate environmental impact study. The same day, the U.S. Supreme Court blocked construction on the proposed Keystone XL line from Alberta pending a deeper environmental review.

For years, both those pipelines have been targets of protests and lawsuits by climate, environment and Indigenous rights activists.

On Sunday, Dominion Energy Inc. and Duke Energy Corp. decided to abandon the US$8-billion Atlantic Coast Pipeline, meant to move West Virginia natural gas to East Coast markets, after a long delay to clear legal roadblocks almost doubled its estimated cost.

“What we have been seeing in the last couple of weeks is a shift in the importance of communities and landowners – and their voices in this process,” said Greg Buppert, a lawyer for the Southern Environmental Law Center, which represented opponents of the Atlantic Coast Pipeline.

“Building energy infrastructure today is certainly more challenging than it was five, 10 or 15 years ago,” said Joan Dreskin, chief counsel to the Interstate Natural Gas Association of America.

U.S. oil and gas lobby group the American Petroleum Institute is concerned about the “chilling effect” the recent decisions will have on the industry and investor community, said Robin Rorick, API vice-president of midstream and industry operations.

Story continues below advertisement

RECIPE FOR A SETBACK

The unifying factors in all these setbacks were a highly motivated opposition and shoddy regulatory paperwork, according to Josh Price, senior analyst of energy and utilities at Height Capital Markets.

He added that both factors were, ironically, enabled by U.S. President Donald Trump’s vocal efforts to boost fossil fuel industries and play down climate risks.

“You have environmental justice groups emboldened by the Trump administration’s stance on climate and really dedicating a lot of resources to halting projects through the courts,” Mr. Price said. “The second part in this dynamic is some of the hasty work being done at the permitting agencies in the Trump administration. We’ve seen this time and time again, this effort to streamline projects has backfired.”

A White House official did not immediately respond to a request for comment.

Mr. Trump has said oil and gas jobs are important to the economy and that the industry can thrive without causing significant environmental damage.

Investors in future will likely favour projects that expand on existing infrastructure and already have in place rights of way and environmental permits, said Jay Hatfield, portfolio manager of the New York-based InfraCap MLP ETF, a fund with a focus on energy pipeline operators.

Story continues below advertisement

“There are possible expansion opportunities when you can’t do long-haul pipes. … The cancellations of recent projects could make it more valuable to own those assets,” he said.

In the coming days, the Trump administration is expected to finalize an overhaul of the National Environmental Protection Act, a bedrock environmental law guiding environmental reviews for major projects. The revisions will likely set time limits for environmental assessments and limit the scope of reviews.

Environmental activists oppose the overhaul, but also figure that if it goes ahead it will only formalize legal risks for big energy infrastructure projects.

“There is no path to building new major crude oil pipelines any more,” said Jan Hasselman, the Earthjustice lawyer representing the Standing Rock Sioux tribe in its years-long battle to block Dakota Access.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies