TRP TC Energy Corporation

By Vipal Monga 

President Trump removed a roadblock to construction of TransCanada Corp.'s Keystone XL oil pipeline on Friday, issuing a permit that effectively allows the much-delayed project to move forward without further federal environmental review.

But the hotly contested pipeline expansion meant to carry oil from Alberta to Nebraska still faces hurdles more than a decade after it was first proposed, including a state-level challenge that could complicate its completion.

Mr. Trump's new permit on Friday authorizing construction sidesteps an order by a federal judge in Montana last year, which blocked construction until completion of a supplemental environmental review. That review was required in connection with an earlier federal permit, which the new presidential permit replaces.

TransCanada Chief Executive Russ Girling hailed Mr. Trump's move Friday. "The Keystone XL pipeline has been studied more than any other pipeline in history and the environmental reviews are clear -- the project can be built and operated in an environmentally sustainable and responsible way, " Mr. Girling said in a statement.

A company spokesman declined to say whether construction would proceed as planned later this year.

TransCanada had contested the court ruling calling for additional environmental review and argued in an appeal earlier this month that it could force the company to delay construction until next year. The ninth circuit court of appeals upheld the lower court ruling, however.

The pipeline company first applied for a permit to build Keystone XL, an expansion of its existing Keystone pipeline, in September 2008. But the project has faced setbacks amid opposition from landowners and environmentalists. Keystone XL would begin in Hardisty, Alberta, and extend south to Steele City, Neb., linking to existing pipelines connecting to the refineries of the U.S. Gulf Coast.

While Mr. Trump's action likely removes the threat of further federal delays, the company is still awaiting a ruling by Nebraska's state supreme court, which is deciding whether regulators properly approved a new route for the pipeline in late 2017.

The president's permit comes as welcome news for Alberta's embattled oil producers. Lack of pipeline capacity from the landlocked oil sands pushed down the price of Canadian oil relative to U.S. grades last year, prompting the provincial government to force producers to cut production.

Meanwhile, Canadian producers haven't been able to capitalize on the increased demand for its grade of heavy crude prompted by sanctions on Venezuelan oil.

"We need all the market access we can get," said Chris Bloomer, president of the Canadian Energy Pipeline Association. "Any forward momentum is a positive for the industry."

--Maria Armental and Timothy Puko contributed to this article.

(END) Dow Jones Newswires

March 29, 2019 18:05 ET (22:05 GMT)

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