As we edge closer to the 2020 United States Presidential Election, it is a nervous time for the pipeline industry and the Keystone XL project in particular with President Donald Trump and Joe Biden holding very different views on the controversial crude oil pipeline.
Keystone XL has become a political football which has been kicked from one side of the road to the other by both the Obama and Trump administrations.
The XL branch of the Keystone Pipeline was first proposed in 2008 to run oil in a more direct route 1,179 miles from Hardisty, Alberta, Canada to a junction with the current pipeline in Steele City, Nebraska.
The new pipeline would feature a larger diameter of pipe and pass through Nebraska’s sensitive Sandhills region. This route left environmentalists up in arms and led President Obama to reject the initial application for Keystone XL in 2012.
In response to that setback, TC Energy Corporation altered the route of Keystone XL with the new plans receiving approval from Nebraska Governor Dave Heineman in January 2013.
An almighty, two-year battle followed between various government departments which was eventually won by President Obama in 2015 when he rejected a permit for a vital border crossing in 2015.
“America is now a global leader when it comes to taking serious action to fight climate change,” said President Obama in a speech to mark what many thought would be the end of Keystone XL. “And frankly, approving this project would have undercut that global leadership.”
President Trump’s election brought with it a change in policy and one of his first acts after taking up office in the White House was to sign a presidential memorandum to revive Keystone XL by approving the border crossing.
Since then, construction on the US section of Keystone XL has stopped and started. Various legal challenges have been dismissed and upheld by bodies varying from judges in Montana right the way up to the Supreme Court.
There have been no such problems over the border in Canada; TC Energy expects the Canadian portion to be online and shipping crude by 2023.
The latest setback to Keystone XL came in July when the Supreme Court left in place a lower court order blocking authorisation for blanket approval of the pipeline’s proposed water crossings in the US.
TC Energy instead had to seek individual permits for each water crossing, a time consuming business which further held up construction.
Keystone XL will have far more to worry about than traversing water if Joe Biden defeats President Trump in November’s election.
Mr Biden’s opposition to the pipeline has long been known. In May, his campaign released a statement saying that he would rescind Keystone XL’s presidential permit “and stop it for good.”
There was further clarification of this position in August. It is not just Keystone XL which is in Joe Biden’s sights either – he also wants to stop new drilling for oil on federal land and is known to be wary about the use of fracking in the US.
On the face of it, the future of Keystone XL looks to be clear cut: if President Trump is re-elected, it stands a chance of being completed; if Joe Biden enters the White House, then the pipeline will find itself killed off.
This may not be the case, however, thanks to a number of reasons – including Covid-19. The pandemic has largely had a devastating impact on the pipeline industry.
Oil prices have plummeted and demand has fallen to the point where there are now too many oil pipelines and not enough oil to fill them in the southern states of the US.
But Covid-19 has also destroyed the economy and led to high levels of unemployment. At a time when the US needs to create jobs and support blue-collar workers as it attempts to recover from the pandemic, Keystone XL has the power to put thousands of Americans into work.
Mr Biden will also have to consider where the US imports its oil from, if not Canada. Keystone XL would bring 830,000 barrels of oil per day from Alberta to Nebraska, allowing America to trade with a strong ally as opposed to dealing with despotic regimes around the globe.
A divided Senate could yet help to keep Keystone XL alive too. Should the Republicans win control, Mr Biden may be tempted to allow the pipeline to proceed if that is the will of the Senate in exchange for their backing of legislation he brings forward in other areas.
The response to Covid-19, energy security, and bipartisan politics are all genuine reasons which would allow Joe Biden to go back on his previous opposition to Keystone XL.
He is also known to have a friendly relationship with Canadian Prime Minister Justin Trudeau, who may be able to convince Mr Biden to allow the project to proceed.
TC Energy and the province of Alberta will certainly be hoping that is the case. The Alberta government have already invested $1.5 billion into Keystone XL.
The estimated worth of the entire project has been put at $8 billion to the North American economy, leaving Mr Biden with a decision that is perhaps not as clear-cut as many think or fear.
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