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Pause on TransCanada’s Keystone XL project comes as company waits Nebraska decision

Alberta-based TransCanada (ticker: TRP) announced yesterday that it sent a letter to the U.S. State Department requesting a pause on the decision making process for its Keystone XL pipeline project. The request comes as TransCanada waits to hear from the Nebraska Public Service Commission for approval on a pipeline route, according to a company press release.

TransCanada President and CEO Russ Girling noted that a precedent has been set in the past to pause review on the project, which has been in regulatory limbo since 2008, while waiting for approval from other governmental bodies.

“I note that when the status of the Nebraska pipeline route was challenged last year, the State Department found it appropriate to suspend its review until that dispute was resolved,” said Girling. “We feel under the current circumstances a similar suspension would be appropriate.”

According to the letter sent to the State Department, “[The pause] will allow a decision on the [Presidential] Permit to be made later based on certainty with respect to the route of the pipeline.”


Source: TransCanada

Politics and pipelines

The decision by TransCanada to ask for a pause in the decision making process is widely being viewed as a way of staving off an impending “no” from the Obama administration, which has become increasingly vocal about its climate-change concerns. Concerns that President Obama would veto the project outright likely motivated the decision to request a pause.

In Washington, U.S. lobbyists close to the case said TransCanada was finally facing political reality, recognizing that a delay would better protect shareholder value than allowing Obama to reject the project, reports Reuters.

In Canada, the Keystone XL pipeline recently lost one of its most vocal supports as former Prime Minister Stephen Harper leaves office after losing re-election to Liberal Party Leader and Prime Minister Elect Justin Trudeau.

In a surprise upset, Trudeau’s Liberal Party won a majority government with 184 seats in parliament (39.5%) on October 20 over the incumbent Conservative Party.

While Trudeau and his party have not indicated that they are anti-energy, they are also not as supportive of projects like TransCanada’s Keystone XL as the previous administration. Trudeau has offered cautious backing for Keystone XL, but he has warned that both the pipeline and wider oil sands development must demonstrate improved environmental sensitivity.

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