Trump signs orders to allow Keystone and Dakota Access construction

By James Osborne and Jordan Blum

President Donald Trump on Tuesday signed executive orders to push ahead  the construction of the Keystone XL and Dakota Access pipeline projects, reversing the policies of President Barack Obama who had  blocked both projects.

Trump appears to be making good on its promise to remove regulations and policies that  U.S. oil and gas industry says impedes its growth. The action was immediately hailed by industry officials and lawmakers from energy producing states and condemned by environmental groups that have fought to block pipeline projects as a way to reduce the country’s dependence on fossil fuels

“For years the previous Administration inexplicably robbed this country of tens of thousands of new jobs and a chance to become less dependent on unstable sources of energy,” Sen. John Cornyn, R-Texas, said in a statement Tuesday. “An ‘all of the above’ energy strategy includes moving these projects forward, and this decision is long overdue.”

Read: Out West, Trump eyes federal lands for oil and gas boom

A powerful alliance of indigenous communities, ranchers, farmers, and climate activists stopped the Keystone and the Dakota Access pipelines the first time around, and the same alliances will come together to stop them again if Trump tries to raise them from the dead,” Greenpeace Executive Director Annie Leonard said in a statement.

The Keystone project, developed by TransCanada, was rejected by the Obama administration in 2015 after a six- year review. The Dakota Access,  developed by Dallas-based Energy Transfer Partners, was nearing the end of construction until last summer when the Standing Rock Sioux tribe protested to block the project, drawing international attention. In December the U.S. Army Corps of Engineers announced it would not approve the final leg of the project and would explore alternative routes.

The $3.8 billion Dakota Access Pipeline  is designed to carry  crude oil from the Bakken shale in North Dakota. It’s now  carried primarily by rail. From Illinois, the pipeline connects to existing networks to bring the oil as far south as Nederland, Texas.

The project united the Standing Rock Sioux tribe fighting to protect their water source with environmental activists resisting the construction of nearly all new pipelines. Hundreds were arrested and injured during recent protests and skirmishes.

Read: Behind pipeline protests, tensions among Native Americans over oil

Obama had instructed the U.S. Army Corps of Engineers to further study the impact of building the nearly completed pipeline under Lake Oahe by the Missouri River, knowing that Trump could potentially undo such efforts.

“Things are about to get very nasty in North Dakota,” said Ethan Bellamy, an energy analyst at Robert W. Baird & Co. “Say what you want about Trump, but he does not appear to be moving slowly or delicately on matters of import.”

US President Donald Trump signs an executive order in the Oval Office at the White House in Washington, DC, on January 24, 2017. (NICHOLAS KAMM/AFP/Getty Images
US President Donald Trump signs an executive order in the Oval Office at the White House in Washington, DC, on January 24, 2017. (NICHOLAS KAMM/AFP/Getty Images

Read: Pipeline protests put Kelcy Warren in the spotlight and bull’s-eye

As for the much-debated Keystone XL pipeline, the project was hotly contested for years before Obama finally blocked it.  The pipeline would move Canadian oil sands from into the U.S. and through the Keystone southern leg that ends in Nederland, Texas. TransCanada has a growing Houston presence, recently completed its recent $10.2 billion acquisition of  the Houston-based Columbia Pipeline Group.

Although TransCanada has expressed continued interest in completing the pipeline project, it’s unclear exactly how big a priority the project remains for the Calgary company, which has shifted its focus to other projects, such as its Energy East pipeline project. Analysts said restarting the project could be more complex, given Trump’s proposals  to renegotiate the North American Free Trade Agreement, or NAFTA, and impose border taxes on imported goods.

“If (Canadian) oil imports aren’t exempted from a hypothetical tax,” Bellamy said, “that could put Canadian oil sands production at a substantial price disadvantage to U.S. production, throwing the rationale for Keystone into doubt.

Afolabi Ogunnaike, senior analyst at the energy research firm Wood Mackenzie, said the Bakken shale is emerging as the big winner because both projects would  carry crude from the region. Even the Keystone pipeline can still take Bakken crude in addition to the Canadian oil sands.

Read: TransCanada focuses on North American growth

The Keystone pipeline also could find itself in competition with projects like Houston-based Kinder Morgan’s Trans Mountain pipeline expansion to carry Canadian crude to the West Coast near Vancouver to ship oil worldwide, he saids.

TransCanada likely will also have to decide which of its babies it loves most.

“At best we would expect TransCanada to build Keystone XL or Energy East, but not both,” Ogunnaike said.