The pipeline industry in the USA faced and still faces a range of regulatory challenges, including permitting delays, environmental requirements, and public opposition to pipeline projects. In recent years, pipeline projects like the Keystone XL and Dakota Access pipelines had legal and regulatory obstacles that delayed or canceled their construction.

Keystone XL Pipeline, proposed by TransCanada in 2008, aimed to transport crude oil from Canada (around Calgary and Edmonton) to refineries on the Gulf Coast (Port Arthur). The project faced opposition from environmental groups and indigenous communities, who argued that it would contribute to climate change and pose a risk to water resources. In 2015, the project was rejected, citing concerns about its environmental impact. However, in 2017, the project was revived, leading to further legal challenges. In June 2021, it was officially canceled.

Keystone XL Pipeline: Why So Many Controversy Around It? 

The Keystone XL pipeline serves as a prominent case study of how various groups — from Native communities to climate activists and everyday citizens — have engaged in the critical discussion about climate change.

Proposed by Canada's TC Energy in 2008, the 1,200-mile pipeline was designed to transport 830,000 barrels of oil daily from Alberta's tar sands across the border to Steele City, Nebraska. From there, it would connect to pipelines heading south to oil refineries on the Texas Gulf Coast. At the time, with high oil prices and steady demand, the project appeared beneficial, anticipated to catalyze $200 billion in investment from Alberta’s oil-rich sands.

However, tar sands oil is notably different from conventional oil. Extracting it is energy-intensive; it involves clearing vast areas of boreal forest or injecting hot water deep underground to liquefy the oil for extraction, making it one of the dirtiest oil types. This process has raised significant environmental concerns, especially from Indigenous groups who pointed out the detrimental effects on local land and water resources, including the pollution of the Athabasca River and the creation of toxic tailings ponds.

Environmental concerns grew, and after climate legislation faced setbacks, activists rallied to halt the Keystone XL. In 2016, TC Energy sought $15 billion in damages under NAFTA, arguing the cancellation was arbitrary. 

Approval of Keystone Pipeline on U.S. Land

In early 2017, efforts were made to revive the Keystone XL pipeline, a project previously halted. An executive order was issued inviting TC Energy to reapply for the necessary permit to extend the pipeline across the Canadian border, promising a swift approval process. Soon after, the State Department granted the permit.

However, the reasons for the project's initial cancellation, such as concerns about its alignment with America's climate goals, continued to be significant issues for activists and many citizens. In January 2020, an attempt was made to streamline processes by limiting the scope of the National Environmental Policy Act (NEPA), which requires federal assessments of the environmental, economic, and social impacts of government projects.

In July 2020, the Supreme Court ruled in favor of environmental groups from Montana, deciding that the Army Corps of Engineers needed to conduct a thorough environmental review of the Keystone XL pipeline, particularly because it would cross water bodies. This decision effectively halted any remaining prospects for the pipeline's completion.

Permit canceled 

The Keystone XL pipeline project was officially canceled through an executive order, a move that had significant implications. Environmentalists praised the decision, while 21 states filed a lawsuit, arguing that the cancellation would harm the economy. Canadian side expressed disappointment, and TC Energy, the company behind the $8 billion project, announced the immediate layoff of 1,000 workers in response.

The project had been facing financial difficulties for some time. TC Energy struggled to secure private investment and had begun construction largely with public funding. In the spring of 2020, Alberta allocated over $1 billion in public funds to support the pipeline.

The cancellation marked the end of Keystone XL, with declining investment and persistent environmental concerns sealing its fate. However, for many Indigenous groups, climate activists, and communities affected by fossil fuel infrastructure, this decision represented a broader victory. These groups, spanning both sides of the US-Canadian border, continue to advocate for the return of land for traditional practices like fishing, hunting, trapping, and medicine-making.

Three Spills in 5 Years 

In 2017, the Keystone pipeline in South Dakota experienced a significant leak, releasing 210,000 gallons of oil. The situation worsened when, in October 2019, another leak was discovered near Edinburg, North Dakota. Initially estimated to impact 22,500 square feet, the actual affected area turned out to be nearly 209,100 square feet, forcing the pipeline to temporarily cease operations.

The issues continued to escalate, and in 2022, a severe incident occurred in a small county in Kansas where the Keystone Pipeline leaked approximately 14,000 barrels of crude oil into a creek. This spill was not only the largest in the pipeline's history but also the largest onshore oil spill in the U.S. since at least 2013. 

2024 Update on Keystone XL pipeline

Recently, TC Energy's $15 billion legal claim against the U.S. government regarding the Keystone XL pipeline was dismissed. The claim was lodged under the now-defunct North American Free Trade Agreement (NAFTA), seeking compensation for the U.S. decision to revoke the pipeline's permit. However, the tribunal ruled that it lacked the authority to determine if the revocation breached NAFTA obligations.

In March this year, TC Energy announced that its Keystone oil pipeline had resumed operations after a temporary shutdown that impacted the flow of Canadian oil to the United States, subsequently driving up oil prices. The pipeline, capable of transporting 622,000 barrels of oil per day, has faced several issues, notably a significant oil spill in rural Kansas in 2022.

TC Energy confirmed late in the afternoon that the Keystone pipeline was safely back in operation, having briefly halted as a precautionary measure. The company, based in Calgary, Alberta, verified the integrity of the pipeline and reported no oil leakage during the incident.

The Keystone system extends 4,850 km (about 3,000 miles) from Alberta to Nebraska, where it divides into two branches: one heading east to the Midwest and another south to the U.S. crude storage hub in Cushing, Oklahoma, and further on to the Gulf Coast for processing or export.

Last year, TC Energy expressed plans to divest its liquids business, including the Keystone pipeline, to concentrate more on its natural gas transport operations as part of its strategy to reduce debt.

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