• 3 minutes Oil Price Could Fall To $30 If Global Deal Not Extended
  • 8 minutes Why Is America (Texas) Burning Millions of Dollars Per Day Of Natural Gas?
  • 11 minutes Is $60/Bbl WTI still considered a break even for Shale Oil
  • 15 minutes CNN:America's oil boom will break more records this year. OPEC is stuck in retreat
  • 23 mins The Pope: "Climate change ... doomsday predictions can no longer be met with irony or disdain."
  • 2 hours Hormuz and surrounding waters: Energy Threats to the World: Oil, LNG, shipping markets digest new risks after Strait of Hormuz attack
  • 6 hours As Iran Nuclear Deal Flounders, France Turns To Saudi For Oil
  • 1 hour The Magic and Wonders of US Shale Supply: Keeping energy price shock minimised: US oil supply keeping lid on prices despite global risks: IEA chief
  • 11 hours Middle East on brink: Oil tankers attacked off Oman
  • 3 hours (Un)expectedly: UK Court Sets Assange U.S. Extradition Hearing For February 2020
  • 5 hours Never Knew Gasoline Prices were this important!
  • 19 hours Middle East Attack Jolts Oil-Import Dependent Asia
  • 2 hours Russia removes special military forces from Venezuela . . . . Maduro gone by September ? . . . Oil starts to flow ? Think so . .
  • 22 hours Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 21 hours Emmissions up, renewables nowhere
  • 24 hours The Cards Are On The Table: China Willing To Meet Reasonable Rare Earth Demand From Other Countries
  • 22 hours Canada Issues Updated NGV Roadmap
  • 22 hours Only one country is contemplating destroying its own resource sector: Canada
Alt Text

Can Shale Survive Low Oil Prices?

With the shale industry still…

Alt Text

Escalating Trade War Signals More Pain For Oil

The quick resolution of the…

Alt Text

Oil Inches Higher On Falling Rig Count

Oil prices inched higher at…

Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

More Info

Trending Discussions

Keystone XL Still Faces Obstacles Even With Trump’s Approval

President Donald Trump moved to fulfill one of his campaign promises on Tuesday, signing an executive order to revive the Keystone XL and Dakota Access Pipelines. The former had been rejected outright by the Obama administration while the latter had been given an indefinite delay.

The industry hailed the executive order, but just because President Trump wants to see the pipeline built does not mean TransCanada will move to break ground anytime soon. There are a number of uncertainties that could prevent construction from progressing.

First, the President said that he would “renegotiate” the terms of the Keystone XL pipeline, presumably to get a “better deal” as he promised during the campaign. The specifics of “renegotiating” the pipeline are unclear – he also signed an executive order to expedite the environmental review process for major infrastructure projects, so it is not as if he has a problem with the pipeline’s route or environmental impact. “The regulatory process in this country has become a tangled mess,” President Trump said.

Based on his comments during the presidential campaign, it would appear that he wants to ensure some of the oil flowing through the Keystone XL Pipeline would be consumed in the U.S. rather than be shipped to the Gulf of Mexico for export. Again, it is unclear what kind of requirements he wants to place on the project and how that might complicate the calculations for TransCanada. Related: Trump Angers Buffett – To Sign Executive Orders On Keystone, Dakota Pipelines

Another complicating factor for the project is that President Trump signed a separate order calling for all pipelines to be constructed with American-made steel. If that order is binding on TransCanada, it is uncertain how that will affect the ultimate cost of the project.

Meanwhile, environmental groups argue that the executive order does not resolve all legal questions surrounding both pipelines and have promised to resume the fight against the project. “President Trump appears to be ignoring the law, public sentiment and ethical considerations with this executive order aimed at resurrecting the long-rejected Keystone XL pipeline,” Trip Van Noppen, President of environmental group Earthjustice wrote in a statement. “He should brace himself to contend with the laws he is flouting, and the millions of Americans who are opposed to these dangerous and destructive projects. We will see his administration in court.”

On top of that, President Trump is proposing a border-adjustment tax as part of his larger tax reform push for this year. The idea is that products exported from the U.S. will be exempted from tax while at the same time companies will no longer be able to deduct the expenses of imports from their tax bill. The proposal is highly controversial and it would have huge ramifications for the oil industry. Related: How The Saudi Rift With Egypt Is Spiraling Out Of Control

The effects of such a tax would be complex, but would boil down to prioritizing U.S.-produced oil and gas, making oil from Canada less competitive. Oil from the U.S. shale patch would be priced at a premium to oil from abroad because of the tax. If such a tax were passed it would damage the prospects of oil exported through the Keystone XL Pipeline. President Trump would be pursuing one of his priorities at the expense of another.

Finally, Canada has moved on since the Obama administration rejected the pipeline back in 2015. Just a few weeks ago the Canadian government gave the greenlight to Kinder Morgan’s Trans Mountain Expansion, which would nearly triple the volume of the pipeline’s existing line from 300,000 to 890,000 bpd, taking Alberta oil to the Pacific coast for export. Canadian Prime Minister Justin Trudeau also approved Enbridge’s Line 3, a more than $7 billion overhaul of a pipeline that runs from Alberta to Wisconsin in the U.S., taking Canadian oil to Midwestern refineries. Enbridge’s project has received considerably less attention from environmental activists, but it would double the pipeline’s capacity to 760,000 bpd. The two pipelines together would add more capacity than Keystone XL would. The midstream market is different than it was back when Keystone XL was the only game in town. It is not at all clear that Keystone XL makes sense anymore with two major competing pipelines now moving forward.

In short, President Trump, with the stroke of a pen, has put Keystone XL back on the map. But it will take more than that for the pipeline to move forward.

By Nick Cunningham of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • Kr55 on January 25 2017 said:
    Trump actually does not want the border adjustment tax. It's an old republican idea that likely will still never see the light of day.
  • Tatonka on January 27 2017 said:
    I think XL would be damaging to the US oil and gas business. The flood of oil sands oil saturate our market down here leaving basins like Williston to wither.

Leave a comment





Oilprice - The No. 1 Source for Oil & Energy News