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TransCanada's Keystone XL Pipeline Faces Another Legal Snag
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A cloud of uncertainty seems to be hovering around TransCanada Corporation’s (TRP - Free Report) Keystone XL pipeline project yet again. After facing delays for near about a decade, the pipeline finally received a regulatory approval from Nebraska commissioners late last year, albeit on an alternative route to the one proposed by the company. However, the pipeline has been hit by a fresh controversy again, as rerouting of the pipeline has subjected it to new legal investigation.
Let’s delve deeper.
Past Challenges Galore
The $8-billion Keystone XL pipeline, with a capacity of 830,000 barrels, was designed to improve oil extraction from Alberta’s oil sands and the Bakken region in the U.S. refineries. The initial phase of the pipeline project was finished in 2011. A proposal was made to add another 1179 miles to the 2100-mile-long pipeline.
However, the proposed extension was strongly opposed by environmentalists and politicians, owing to risks involved in transporting bitumen and crude to the United States, as this might emit greenhouse gases. In November 2015, president Obama rejected TransCanada's application to construct the Keystone XL pipeline on fears that it would weaken United States’ position in the international climate change negotiations. The outgoing administration also halted the construction of Energy Transfer Partners L.P.’s Dakota Access Pipeline on environmental and climate change concerns.
However, in 2017, both the projects were cleared by President Trump as he was of the opinion that the development of such pipelines can revive the economy.
While the 1,172-mile Dakota Access Pipeline became fully operational in June 2017, Keystone XL has been facing regulatory obstacles, route challenges and opposition from landowners, environmentalists and Native American tribes.
Last year, TransCanada had to stall operations at the existing Keystone pipeline, following a spill of around 5,000 barrels in Marshall County, SD, highlighting the risk posed by the pipeline expansion.
It cleared a major regulatory hurdle when Nebraska commissioners approved the Keystone XL project, although on an alternative route to the one proposed by the company. The alternate route will likely balloon costs and delay the disputed pipeline project further. The alternate path calls for a 63-mile detour, and attempts to add 5 miles of pipeline along with additional transmission lines, and pumping stations.
The project has been challenged by a new set of problems of late.
Latest Setback
Recently, a U.S. federal judge, Brian Morris, issued a decree requiring the State Department to conduct a fresh environmental evaluation of the Keystone XL pipeline under the new alternative route. The judge believes that the alternative route proposed by the Nebraska Public Utilities Commission had not been properly assessed.
Per Morris’ ruling, the State Department is required to reexamine the changed route as it is interdependent on the entire project. Under the alternative route which is likely to be longer, the pipeline would run across different countries and water bodies, posing environmental risks to indigenous communities and marine life. Federal defendants are thus required to review the alternative route under the National Environmental Policy Act.
The recent ruling comes as a huge blow to the company, especially after the project had won a relatively positive nod from the U.S. State Department about a month ago on the ground that the pipeline would not lead to significant environmental concerns.
Notably, this is not the only obstacle faced by the pipeline as of now. The project faced other challenges in Nebraska, pursuant to a lawsuit currently pending before Nebraska Supreme Court, which is not expected to get resolved by this year. In view of such roadblocks, TransCanada already declared that it won’t commence the construction of the project until the second quarter of 2019. TransCanada currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Pipeline Worries Loom Large in Canada
With pipeline construction in Canada failing to keep pace with rising domestic oil, it has forced producers to sell their products at a discounted rate. Political and environmental turmoil, along with lack of streamlined regulatory policies associated with the pipeline projects have challenged the Canadian energy sector to be competitive globally. Reportedly, infrastructural bottlenecks are likely to result in lost revenues of C$15.8 billion in 2018.
The industry has got bogged down with various pipeline projects either getting derailed or delayed. With the cancellation of major projects like TransCanada’s Energy East and Enbridge Inc.’s (ENB - Free Report) Northern Gateway, along with uncertainties related to the existing ones, things have gone from bad to worse for investors in the Canadian oil energy space.
While Enbridge’s mega Line 3 pipeline project recently begun construction, providing some ray of hope, it is nonetheless facing public outcry amid environmental concerns. Also, while the National Energy Board recently green-lit Kinder Morgan, Inc.’s (KMI - Free Report) Trans Mountain expansion project, it is unlikely to become operational until late 2019.
With the Canadian production soaring and pipeline options running dry amid dysfunctional policies, the Canadian oil industry is under much ambiguity at least in the near term, if not in the long run.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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TransCanada's Keystone XL Pipeline Faces Another Legal Snag
A cloud of uncertainty seems to be hovering around TransCanada Corporation’s (TRP - Free Report) Keystone XL pipeline project yet again. After facing delays for near about a decade, the pipeline finally received a regulatory approval from Nebraska commissioners late last year, albeit on an alternative route to the one proposed by the company. However, the pipeline has been hit by a fresh controversy again, as rerouting of the pipeline has subjected it to new legal investigation.
Let’s delve deeper.
Past Challenges Galore
The $8-billion Keystone XL pipeline, with a capacity of 830,000 barrels, was designed to improve oil extraction from Alberta’s oil sands and the Bakken region in the U.S. refineries. The initial phase of the pipeline project was finished in 2011. A proposal was made to add another 1179 miles to the 2100-mile-long pipeline.
However, the proposed extension was strongly opposed by environmentalists and politicians, owing to risks involved in transporting bitumen and crude to the United States, as this might emit greenhouse gases. In November 2015, president Obama rejected TransCanada's application to construct the Keystone XL pipeline on fears that it would weaken United States’ position in the international climate change negotiations. The outgoing administration also halted the construction of Energy Transfer Partners L.P.’s Dakota Access Pipeline on environmental and climate change concerns.
However, in 2017, both the projects were cleared by President Trump as he was of the opinion that the development of such pipelines can revive the economy.
While the 1,172-mile Dakota Access Pipeline became fully operational in June 2017, Keystone XL has been facing regulatory obstacles, route challenges and opposition from landowners, environmentalists and Native American tribes.
Last year, TransCanada had to stall operations at the existing Keystone pipeline, following a spill of around 5,000 barrels in Marshall County, SD, highlighting the risk posed by the pipeline expansion.
It cleared a major regulatory hurdle when Nebraska commissioners approved the Keystone XL project, although on an alternative route to the one proposed by the company. The alternate route will likely balloon costs and delay the disputed pipeline project further. The alternate path calls for a 63-mile detour, and attempts to add 5 miles of pipeline along with additional transmission lines, and pumping stations.
The project has been challenged by a new set of problems of late.
Latest Setback
Recently, a U.S. federal judge, Brian Morris, issued a decree requiring the State Department to conduct a fresh environmental evaluation of the Keystone XL pipeline under the new alternative route. The judge believes that the alternative route proposed by the Nebraska Public Utilities Commission had not been properly assessed.
Per Morris’ ruling, the State Department is required to reexamine the changed route as it is interdependent on the entire project. Under the alternative route which is likely to be longer, the pipeline would run across different countries and water bodies, posing environmental risks to indigenous communities and marine life. Federal defendants are thus required to review the alternative route under the National Environmental Policy Act.
The recent ruling comes as a huge blow to the company, especially after the project had won a relatively positive nod from the U.S. State Department about a month ago on the ground that the pipeline would not lead to significant environmental concerns.
Notably, this is not the only obstacle faced by the pipeline as of now. The project faced other challenges in Nebraska, pursuant to a lawsuit currently pending before Nebraska Supreme Court, which is not expected to get resolved by this year. In view of such roadblocks, TransCanada already declared that it won’t commence the construction of the project until the second quarter of 2019. TransCanada currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Pipeline Worries Loom Large in Canada
With pipeline construction in Canada failing to keep pace with rising domestic oil, it has forced producers to sell their products at a discounted rate. Political and environmental turmoil, along with lack of streamlined regulatory policies associated with the pipeline projects have challenged the Canadian energy sector to be competitive globally. Reportedly, infrastructural bottlenecks are likely to result in lost revenues of C$15.8 billion in 2018.
The industry has got bogged down with various pipeline projects either getting derailed or delayed. With the cancellation of major projects like TransCanada’s Energy East and Enbridge Inc.’s (ENB - Free Report) Northern Gateway, along with uncertainties related to the existing ones, things have gone from bad to worse for investors in the Canadian oil energy space.
While Enbridge’s mega Line 3 pipeline project recently begun construction, providing some ray of hope, it is nonetheless facing public outcry amid environmental concerns. Also, while the National Energy Board recently green-lit Kinder Morgan, Inc.’s (KMI - Free Report) Trans Mountain expansion project, it is unlikely to become operational until late 2019.
With the Canadian production soaring and pipeline options running dry amid dysfunctional policies, the Canadian oil industry is under much ambiguity at least in the near term, if not in the long run.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>