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US judge halts Keystone XL oil pipeline

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World Pipelines,

Reuters have reported that a US judge in Montana has blocked construction of the Keystone XL pipeline designed to carry heavy crude oil from Canada to the US, drawing praise from environmental groups and a rebuke from President Donald Trump.

The ruling of a US Court in Montana late on Thursday 8 November dealt a setback to TransCanada Corp, whose stock fell 1.7% in Toronto. Shares of companies that would ship oil on the pipeline also slid.

TransCanada said in a statement it remains committed to building the CAN$8 billion, 1180 mile (1900 km) pipeline, but it has also said it is seeking partners and has not taken a final investment decision.

The ruling drew an angry response from Trump, who approved the pipeline shortly after taking office.

It also piles pressure on Canadian Prime Minister Justin Trudeau to assist the country’s ailing oil sector by accelerating crude shipments by rail until pipelines are built. Clogged pipelines have made discounts on Canadian oil even steeper than they were earlier this year when Scotiabank warned that they may cost the country’s economy CAN$16 billion.

US District Court Judge Brian Morris wrote that a US State Department environmental analysis of Keystone XL “fell short of a ‘hard look’” at the cumulative effects of greenhouse gas emissions and the impact on Native American land resources.

“It was a political decision made by a judge. I think it’s a disgrace,” Trump told reporters at the White House.

The ruling was a win for environmental groups who sued the US government in 2017 after Trump announced a Presidential Permit for the project. Tribal groups and ranchers also have spent more than a decade fighting the planned pipeline.

The pipeline would carry heavy crude from Alberta to Steele City, Nebraska, where it would connect to refineries in the US Midwest and Gulf Coast, as well as Gulf export terminals.

Shares of Canadian oil producers Canadian Natural Resources Ltd and Cenovus Energy lost 2.7% and 2.2% respectively.

Canada is the primary source of imported US oil, but congested pipelines in Alberta, where tar-like bitumen is extracted, have forced oil shippers to use costlier rail and trucks.

Two pipeline projects have been scrapped due to opposition, and the Trans Mountain line project still faces delays even after the Canadian government purchased it this year to move it forward.

The ruling likely sets Keystone back by up to one year, said Dan Ripp, President of Bradley Woods Research.

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