Trump Champions Pipeline Obama Once Did
With the stroke of a pen, President Donald Trump fulfilled another campaign pledge; to advance the Keystone XL and Dakota Access pipelines. This resets the country’s pledge to support and advance the oil industry. (Source: “Trump Revives Keystone Pipeline Rejected by Obama,” The New York Times, January 24, 2017.)
This is expected to be a boon for North American oil producers that have been concerned about limited pipeline capacity. And another feather in the cap of an administration that is eager to create American jobs and source oil from politically stable countries.
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Trump’s order is a major departure from the Obama administration, which had blocked the Dakota Access since September and rejected TransCanada Corporation‘s (TSE:TRP) Keystone proposal in 2015.
Hollywood actors and environmentalists concerned about the effects these two pipelines will have on climate change, water, and Native-American cultural sites are now facing a much different administration with President Trump. For the broader oil industry, and in particular, pipeline and infrastructure companies, Tuesday’s executive order ushers in greater freedom to increase infrastructure spending and improve transportation bottlenecks.
“We are going to renegotiate some of the terms and, if they’d like, we’ll see if we can get that pipeline built. A lot of jobs, 28,000 jobs. Great construction jobs,” Trump said as he signed the two measures in the Oval Office.
Earlier in the day, Trump said, “We’re going to make the process much more simple for the oil companies and everybody else that wants to do business in the United States.” (Source: Ibid.)
The more contentious of the two pipelines, Keystone XL, is designed to transport oil from Alberta to refineries in Nebraska, Illinois, and Texas. “Keystone XL” simply refers to a leg of the pipeline. When fully operational, Keystone will transport 800,000 barrels of oil daily from the Alberta oil sands to the Gulf Coast.
The Dakota Access pipeline in North Dakota would run 1,100 miles from North Dakota to Illinois. The pipeline became a lightening rod when the Standing Rock Sioux Tribe protested its construction less than a mile from its reservation. The tribe said the pipeline threatened drinking water and cultural sites. Protestors celebrated in December when the Army Corps of Engineers said it would look for an alternative route for the $3.7 billion pipeline. December was a long time ago. With the new pipeline orders now signed, those celebrations will be muted. Or silenced.
Memories of President Obama, the Selective Environmentalist
While many decry President Trump’s pro-oil stance, it should be noted his beliefs are not all that different from what President Obama once held close to his heart. Though Obama would want you to think otherwise.
As a primer, the proposed Keystone pipeline irked Hollywood because it passes through environmentally sensitive areas, would impact climate change, and has no material impact on the U.S. economy.
President Obama vetoed a bill that would have approved construction of the last leg of the Keystone XL pipeline in February 2015; this was only the third time this POTUS shot down a bill passed by Congress. At the time, Obama said it was uncertain “whether or not building and operating a cross-border serves the national interest.” (Source: “Veto Message to the Senate: S. 1, Keystone XL Pipeline Approval Act,” The White House, February 24, 2015.)
Keep in mind, there were, at the time, already 70 operational oil and gas pipelines crisscrossing the U.S./Canada border, transporting three million barrels of oil each day. Oil that would otherwise have to be transported by truck or rail. (Source: “FAQ Concerning Federally-Regulated Petroleum Pipelines in Canada,” Natural Resources Canada, last accessed January 24, 2017.)
And, lest we forget, the environmentally friendly president approved the southern portion of the Keystone pipeline back in March 2012, extolling the virtues of job creation and prosperity. “Today, I’m directing my administration to cut through the red tape, break through the bureaucratic hurdles, and make this project a priority, to go ahead and get it done.” (Applause) (Source: “Remarks by the President on American-Made Energy,” The White House, March 22, 2012.)
In an effort to distract from his 2015 veto of Keystone XL, President Obama, friend to the environment, gave Royal Dutch Shell plc (ADR)(NYSE:RDS.A) permission to drill for oil in the Arctic. The Bureau of Ocean Energy Management said there should be no concerns about harm coming to the pristine waters of the Arctic; Shell would have to meet tough restrictions to prevent spills and leaks. (Source: “Obama drills a hole in his climate policy,” The Washington Post, May 18, 2015.)
How it’s more environmentally friendly and safe to drill in the Arctic than use a pipeline is beyond me. It’s not. And President Trump knows this.
While the executive order doesn’t fully approve the pipelines, it does suggest they will face fewer hurdles during the approval process. What Tuesday’s executive order shows though, is that President Trump is looking to create jobs, make it easier for oil to get to consumers, and (hopefully) cut costs at the pump.
How did the markets respond? TransCanada’s (TSE:TRP) share price shot up more than three percent in heavy trading to an intra-day high of $64.48. Energy Transfer Equity LP (NYSE:ETE) and Energy Transfer Partners LP (NYSE:ETP), the developers of the Dakota project, climbed 3.7% and 4.6% (respectively) in intra-day trading.
The Canadian dollar also strengthened against the Greenback. The Canadian dollar was trading at $1.323 to the U.S. dollar, or US$0.755. On Monday, the Canadian dollar closed at $1.32, or US$0.753.
