Company News

U.S. judge halts Keystone XL pipeline, dealing project another setback


Nov 9 (Reuters) - A U.S. judge in Montana late Thursday halted construction of the Keystone XL pipeline that would carry heavy crude oil from Canada to the United States, throwing another obstacle in the path of the project that has been in development for a decade.

The ruling dealt a major setback to TransCanada Corp and could delay the construction of the $8 billion, 1,180 mile (1,900 km) pipeline. It was also a blow to U.S. President Donald Trump, who approved the line shortly after taking office in 2017 as part of his plan to boost U.S. energy infrastructure.

A TransCanada spokesperson could not be immediately reached for comment.

The ruling is a victory for environmentalists, tribal groups and ranchers who have spent more than a decade fighting against construction of the pipeline that will carry heavy crude from Alberta to Steele City, Nebraska. From there, it would connect to key refining points in the U.S. Midwest and U.S. Gulf Coast, as well as export terminals in the Gulf.

U.S. District Court Judge Brian Morris ruled late Thursday that the U.S. government did not complete a full analysis of the environmental impact of the project.

His ruling came after a lawsuit was filed by several environmental groups against the U.S. government in 2017, soon after Trump announced a presidential permit for the project.

Morris wrote in his ruling that a U.S. State Department environmental analysis “fell short of a ‘hard look’” at the cumulative effects of greenhouse gas emissions and the impact on Native American land resources.

State Department officials were not immediately available for comment.

In Thursday’s ruling, Morris ordered the government to issue a more thorough environmental analysis before the project could move forward.

Canada has long sought more arteries to move oil out of the province of Alberta, where the heavy, tar-like bitumen is extracted. Several projects have already been scrapped, and the Canadian government had to take ownership of another project - an expansion of the Trans Mountain line - to move it forward. But that project is facing delays in Canada.

“It means more delay for TransCanada,” said Sandy Fielden, an analyst at Morningstar. “You have to wonder how long investors will tolerate the delays and whether the Canadian government will intervene again to protect the industry.”

The United States is the biggest importer of Canadian crude, but full pipelines have forced shippers to rely more heavily on less efficient transportation methods, including railroad, and in some cases, trucks to deliver oil to U.S. pipeline injection points.

“The Trump administration tried to force this dirty pipeline project on the American people, but they can’t ignore the threats it would pose to our clean water, our climate, and our communities,” said the Sierra Club, one of the environmental groups involved in the lawsuit.

Morris said in his ruling the analysis failed to fully review the effects of the current oil price on the pipeline’s viability and did not fully model potential oil spills and offer mitigations measures.

Former President Barack Obama rejected the pipeline in 2015, citing environmental concerns related to emissions that cause climate change. (Reporting by David Gaffen and Brendan O’Brien; Editing by Jeffrey Benkoe)