Keystone XL Oil Pipeline Progress Halted by U.S. Federal Court

(Bloomberg) -- TransCanada Corp.’s long-troubled Keystone XL oil pipeline project hit another roadblock as a U.S. District Court in Montana ruled it must wait for a further environmental review.

• The court blocked any activity furthering the construction or operation until the U.S. State Department completes a supplement to a 2014 environmental impact statement that complies with the National Environmental Policy Act and the Administrative Procedure Act.

Key Insights

• The 1,179-mile conduit from western Canada to the central U.S. has faced opposition almost since its inception, as environmentalists see it allowing the further expansion of carbon-intensive oil sands production in Alberta.
• President Donald Trump approved a permit for the pipeline in January 2017, reversing a 2015 decision by his predecessor Barack Obama.
• The pipeline would help carry 830,000 barrels of crude a day from Alberta to Steele City, Nebraska, where it could then move on to refineries in the central U.S. and Gulf Coast.
• Western Canadian Select crude oil is selling at about $18 a barrel as its discount to U.S. benchmark West Texas Intermediate as a lack of pipeline capacity bottlenecks production in Alberta.

Market Impact

• U.S. benchmark WTI little changed after the decision, trading down 0.1 percent.
  • No immediate impact in oil markets as the pipeline isn’t scheduled to come online for years regardless of the ruling.
• Canadian dollar extended its decline after the news, trading down 0.2 percent versus the dollar at $1.3182.

To contact the reporters on this story: Dan Murtaugh in Singapore at dmurtaugh@bloomberg.net;Andrew Harris in Washington at aharris16@bloomberg.net;Ben Livesey in San Francisco at blivesey@bloomberg.net

To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Alexander Kwiatkowski

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