By Vipal Monga and Collin Eaton
The failure of the Keystone XL project demonstrated the
challenges of building new pipelines in the U.S. and Canada amid
galvanized environmental groups and delivered a blow to oil-and-gas
companies that now must rely on aging infrastructure.
Protesters targeted Keystone XL, which Canada's TC Energy Corp.
abandoned Wednesday, and other pipelines for more than a decade,
hoping to choke off fossil-fuel usage by making it harder to
transport. The success with Keystone XL already has emboldened
environmentalists, who in recent weeks have turned their attention
to other pipelines in the U.S. and Canada.
But the U.S. and Canada still rely on pipelines to transport
fossil fuels that underpin commerce, transportation and heating and
cooling. As pipelines become increasingly difficult to build, the
countries will become more dependent on older infrastructure that
is vulnerable to disruptions. The shutdown of the Colonial Pipeline
last month after it was attacked by hackers highlights the
potential impact caused by unexpected disruptions to the current
"Clearly, we're relying on the infrastructure we currently have.
The question becomes, as we think about filling future demand, and
we need to repair or replace old infrastructure, how are we going
to handle it?" said Amy Myers Jaffe, a research professor at Tufts
University's Fletcher School.
Global oil demand is projected to peak in coming years, which
could mean projects like Keystone could eventually outlive their
utility, Ms. Jaffe said. "We're not building for the 1950s, we're
building for the 2030s."
In the past two years, at least four multibillion-dollar
pipeline projects that drew protests have been canceled or delayed
after encountering regulatory and political roadblocks, and
environmental groups are looking to capitalize on the momentum.
Some producers also have resorted to transporting oil by rail, a
more expensive and potentially more dangerous alternative.
On Monday, Calgary-based Enbridge Inc. evacuated 44 workers in
Minnesota, working on replacing a crude-oil pipeline there, after a
group of protesters descended on a pump station in the middle of
the state. Native American tribes and environmental groups continue
to challenge the Dakota Access Pipeline in a long-running effort
that has entangled the company in court for years.
The death of Keystone XL is the latest setback for the
oil-and-gas industry. In May, a Dutch court found that Royal Shell
PLC is partially responsible for climate change and ordered the
company to sharply reduce its carbon emissions in an unprecedented
ruling. Meanwhile, an activist investor won three seats on Exxon
Mobil Corp.'s board, a historic defeat for the oil giant that may
force it to alter its fossil-fuel-focused strategy.
The trio of defeats demonstrates how dramatically the landscape
is shifting for oil-and-gas companies as campaigns directed by
environmentalists have spread to investors, lenders, politicians
and regulators who are increasingly calling for a transition to
cleaner forms of energy.
Last year, Dominion Energy Inc. and Duke Energy Corp. abandoned
the $8 billion Atlantic Coast Pipeline, meant to move West Virginia
natural gas to East Coast markets, and Williams Cos. dropped its
Constitution natural gas pipeline after failing to gain a water
permit from New York state.
President Biden, who made canceling Keystone XL a central plank
of his election campaign, has remained mostly mum about other
pipeline projects under construction.
Environmental and indigenous groups have sued to stop
construction on Enbridge's project to replace its Line 3 crude-oil
pipeline with a larger conduit that will carry oil from Alberta's
oil sands to Superior, Wis., arguing that the U.S. Army Corps of
Engineers failed to consider the environmental impacts of the
pipeline when it granted a water-quality permit.
The company already has replaced sections in other states but
has encountered obstacles in Minnesota, where it hopes to complete
construction by the end of the year. After Enbridge evacuated
workers Monday, the Hubbard County Sheriff's department arrested
179 people for damaging equipment and dumping garbage on the
"The project is already providing significant economic benefits
for counties, small businesses, Native American communities, and
union members -- including creating 5,200 family-sustaining
construction jobs, and millions of dollars in local spending and
tax revenues," said the company in a statement on Thursday.
The Minnesota Court of Appeals is expected to make a ruling on a
case that challenged the state's Public Utilities Commission's
approval of the project.
Michigan state officials in November revoked a permit that
allowed another Enbridge pipeline to run along the bottom of the
Straits of Mackinac, citing the risk of damage to the region's
ecosystem. Gov. Gretchen Whitmer gave Enbridge a May 12 deadline to
shut down the pipeline, but the company hasn't complied, claiming
the governor lacks the authority to do so.
The 645-mile conduit carries more than half a million barrels of
oil and natural-gas liquids each day from Superior to refineries in
Michigan, Ohio, Pennsylvania, Ontario and Quebec.
"Does the Keystone XL cancellation embolden fights against other
pipelines? That's a resounding yes," said Mike Shriberg, Great
Lakes region executive director for the National Wildlife
Federation, which opposes the operation of Enbridge's pipeline
"We're very pleased," said Michael Brune, executive director of
the Sierra Club, which opposes both Enbridge pipelines in Minnesota
and Michigan. He said the successful Keystone XL effort has taught
them important lessons on how to oppose other projects. "It has
taught us to never give up," he said.
Enbridge pointed to the dramatic impact of the Colonial
Pipeline's six-day closure last month as an example of the
consequences of scuttling energy infrastructure. The shutdown of
the nation's largest fuel pipeline, caused by a May 7 ransomware
attack, spurred a run on gasoline across the Southeast, leaving
thousands of gas stations without fuel for days.
During a Senate committee testimony Tuesday, Colonial Chief
Executive Joseph Blount emphasized the scale of the pipeline,
noting 50 million Americans rely on it to carry fuel to gas
stations, as it provides almost half of the fuel consumed on the
"Not only do everyday Americans rely on our pipeline operations
to get fuel at the pump, but so do cities and local governments, to
whom we supply fuel for critical operations, such as airports,
ambulances and first responders," Mr. Blount said in written
Write to Vipal Monga at firstname.lastname@example.org and Collin Eaton at
(END) Dow Jones Newswires
June 10, 2021 14:31 ET (18:31 GMT)
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