Only three weeks after winning Canadian financial backing and starting construction, TC Energy Corp.’s Keystone XL project has suffered a defeat by pipeline foes in a U.S. federal court.
In late March TC and the Alberta government announced a C$7.5 billion ($5.3 billion) financing agreement and immediate start on construction for the oil export pipeline into the United States. The deal included a C$1.5 billion ($1.1 billion) government ownership stake plus a C$6 billion ($4.2 billion) provincial loan guarantee to kickstart the growth project for Canada’s top natural gas user, Alberta thermal oilsands production. The pipeline would be able to export up to 830,000 b/d.
However, U.S. District Judge Brian Morris in Montana has overturned the contested export conduit’s Lower 48 water crossings permit after accepting expert testimony that fish and beetles protected under the Endangered Species Act (ESA) may be threatened.
Morris ordered the U.S. Army Corps of Engineers to craft new water crossings permits by taking construction effects on endangered/threatened species into account in consultation with the U.S. Fish and Wildlife Service, which oversees implementation of the ESA.
Keystone would use a construction method meant to prevent damage by replacing dredging with horizontal directional drilling that tunnels under water bodies.
However, Morris accepted testimony that “inadvertent release of drilling fluid” may jeopardize endangered species such as the ancient giant pallid sturgeon and the American burying beetle.
TC said the ruling is under study, while the Alberta government predicted work would continue at the Montana-Saskatchewan border.
However, Keystone foes called the court ruling a death knell. Environmental groups that brought the case, led by the Northern Plains Resource Council, predicted the verdict would effectively prevent the project from crossing rivers and streams along its entire 1,688-kilometer (1,013) U.S. leg.
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