What Trump’s Executive Orders on Two Pipelines Mean for the PVF Industry
Both projects had been halted under former President Barack Obama. Trump has made supporting the oil and gas industry a key priority of his presidency. U.S. crude imports have fallen dramatically in recent years as domestic production has boomed, but the country still relies heavily on imports.
Trump’s executive orders all point in the direction to make it easier for TransCanada to construct the Keystone XL pipeline and for Energy Transfer Partners to build the final uncompleted portion of the Dakota Access pipeline.
So what’s ahead for the PVF industry? Work on either pipeline still seems years away before all issues are resolved.
However, although the pipeline orders made headlines, Trump also signed additional mandates that could also positively affect the U.S. PVF industry – particularly one that orders the Secretary of Commerce to develop a plan requiring all new and upgraded pipelines within the United States “use materials and equipment produced in the United States, to the maximum extent possible and to the extent permitted by law.”
Here’s a look at each pipeline project followed by more on the other orders:
Dakota Access Pipeline
While the 1,134-mile pipeline is already 85 percent finished. It’s that last leg that has been the most controversial. The Army Corp of Engineers had originally approved the pipeline’s route. However, following a lawsuit and protests at the Standing Rock Reservation in North Dakota primarily over water supplies and sacred sites, the Obama Administration ordered the Army Corps to reconsider.
Last month, the Army Corps announced that it would explore alternative pipeline routes farther away from the Indian reservation.
That review process, called an Environmental Impact Statement, entails not only exploring the different routes, but also soliciting public opinion – all of which is expected to take another year and likely more.
In his executive order, however, Trump told the Army Corps to “take all actions necessary and appropriate” to review and approve the pipeline “in an expedited manner ... to the extent permitted by law and as warranted.”
The next move appears to be largely in the Army Corps’ court. The group could go ahead with the EIS – or not and stick with its original decision. Regardless, there’s bound to be a lengthy legal challenge.
Nine years ago, the Canadian company TransCanada proposed a 1,790-mile pipeline expansion designed to carry 830,000 barrels of oil daily largely from Alberta’s oil sands to Steele City, Neb.
Since Keystone XL crosses the U.S.-Canada border, the State Department has to approve it first. That review process includes both an EIS and a national interest assessment. TransCanada applied for a permit in 2008, not expecting much trouble. Keep in mind, there’s already a Keystone pipeline that cuts through Canada, crosses into the United States at North Dakota and travels all the way to terminals at Houston and Port Arthur, Texas.
The process to approve the pipeline has been bogged down by environmental protest ever since. The Obama administration eventually rejected the TransCanada application, ruling that the pipeline was not in the nation’s interest.
Trump’s order basically invites TransCanada to reapply for Keystone XL. Of course, Trump added a twist when he also told reporters that he would renegotiate the deal and insist that the pipeline be constructed with only American steel.
“I am very insistent that if we’re going to build pipelines in the United States, the pipe should be made in the United States,” Trump said.
However, there is nothing in the Keystone XL executive order about negotiating.
Meanwhile, if Trump does want to renegotiate the deal that might be a big problem for TransCanada. Right now, about half of the Keystone pipe suppliers are from its own country with the rest from India and Italy.
Finally, Trump signed three more executive orders on Jan. 24 to insist pipeline companies buy materials from U.S. companies for all new and upgrades to pipelines inside the United States. Whether even the President of United States can do that remains to be seen.
The two other related orders to expedite environmental reviews for "high priority infrastructure projects."
Sources: The Washington Post and The New York Times