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Trump executive action could expedite energy pipeline projects

President Donald Trump signed executive actions to accelerate the Keystone XL and Dakota Access pipeline projects and to decree that American steel should be used for pipelines built in the United States, according to a report from Reuters. Trump also signed an action to speed up the environmental review and approval of high-priority infrastructure projects as part of a wider policy to rebuild U.S. infrastructure.

The orders issued by the executive office do not grant the final permits needed for the pipelines, but will move both projects toward approval.

Keystone XL, which will be owned and operated by TransCanada Corp. (ticker: TRP), requires a presidential permit since the project traverses the international border with Canada, while Enterprise Transfer Partners’ (ticker: ETP) Dakota Access needs an Army Corps of Engineers easement to build under Lake Oahe in North Dakota.

Both pipelines have become significant targets of environmental and political activism. The Obama administration denied Keystone the necessary permits even after an environmental review said the pipeline would have limited impact, and the construction site for Dakota Access remains a flashpoint with activists trying to block the project from being built.

Last month, the Obama administration ordered a comprehensive environmental impact statement to be conducted on the Dakota Access pipeline before any decision could be made on building its final section below Lake Oahe in North Dakota.

Trump told reporters that “we are going to renegotiate some of the terms” of the Keystone XL project. “And if they like it, we will see if we can get that pipeline built – a lot of jobs, 28,000 jobs, great construction jobs.”

Keystone XL pipeline map, Rail

In the White House’s release on the executive actions, the Trump administration said “construction and operation of the Keystone XL Pipeline, as well as oil production and refining activities related to it, would create tens of thousands of jobs for American workers, enhance our nation’s energy security, support affordable and reliable energy for American families, and generate significant State and local tax revenues that can be invested in schools, hospitals, and infrastructure.”

He said the Dakota pipeline would be “subject to terms and conditions negotiated by us.”

Trump said his order on pipelines “will put a lot of steelworkers back to work.”

“We are very insistent that if we are going to build pipelines in the United States, the pipes should be built in the United States,” he said.

TransCanada may need to reapply for Keystone XL

TransCanada may need to submit another formal application to build the pipeline. But the company’s plans for Keystone XL already have been vetted, with years of environmental scrutiny culminating in former President Barack Obama’s 2015 decision that the pipeline was not in the U.S. interest, reports Bloomberg.

TransCanada has not said it would reapply for a permit to build the pipeline, but the day after Trump’s election, the Calgary-based company said it was looking for ways to convince the new administration of the project’s benefits to the U.S. economy. The company has previously said it remains “committed to Keystone XL.”

Trump does not mean a return to business as usual: DOT expert

The portion of Keystone XL that TransCanada will need to reapply for is just the piece that crosses the border, a process which should go quickly, but that does not mean all obstacles have been removed from TRP’s path, transportation policy expert Brigham McCown told Oil & Gas 360®.

McCown recently wrapped up his work on President Trump’s U.S. Department of Transportation landing team, briefing Cabinet-level nominees and developing the policy framework for the U.S. Department of Transportation (DOT) under President Trump and Secretary Eliane Chao.

Brigham previously served on Governor Mitt Romney’s transition team, and was a senior executive at U.S. DOT during both terms of the George W. Bush Administration, including a stint as the first acting administrator of the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA).

Keystone Pipeline - Oil & Gas 360

Pipe destined for TransCanada’s Keystone XL pipeline is stockpiled near Gascoyne, N.D. (CBC)

Keystone not a ‘done deal’

Even after receiving the presidential permit, TransCanada will then have to go back to the states to ensure all their approvals are current, explained McCown. “That means they’ll have to go back to Nebraska, the heart of the opposition. It’s not a done deal by any means,” he said.

“It’s a new day. You have a very different president in office. He wants to get stuff done, and he has made reinvesting in American infrastructure a key component of his strategy moving forward.”

Environmental review will continue to be considered in the approval of new projects, but they will not be used in the way they have been to stop projects like Keystone XL.

Streamlining the process

“The president is going to streamline the process. Environmental concerns will be taken into account, but they won’t be allowed to have an oversized stake any longer,” said McCown. “Certain groups have used procedural mechanisms [in these reviews] to hold these projects hostage in the past.”

Despite the positive outlook for Keystone XL, Dakota Access and other new projects, McCown warned that oil and gas companies should not get ahead of themselves.

Work at front end of projects is critical

“You can’t return to business as usual,” he said. “Companies are going to have to spend time, money and resources on the front end of these projects to get to know the local people, state officials, and to prepare for local opposition.”

Energy projects will be a “very high priority” in terms of new infrastructure projects for the Trump administration, McCown said, but his election will likely reinvigorate groups that oppose the oil and gas industry as well. Effectively communicating with policy makers and other community stakeholders before there is a problem will save companies time, money and a great deal of headache moving forward, even if the new administration is more friendly to new projects.

On the topic of the steel used in for the pipelines, McCown said that companies may be able to make a case for using steel made outside the U.S. if the cost of the project becomes unrealistic otherwise. The release from the White House said that “to the maximum extent possible and to the extent permitted by law” materials and equipment made in the U.S. should be used.

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