Name and location
Keystone pipeline Gulf Coast expansion (Keystone XL) project, Canada and the US.

Client
TransCanada Corporation (TransCanada).

Project description
The project will enable Canadian and US oil producers to have more access to the large refining markets in the American Midwest and along the US Gulf Coast.

The project proposes a 1 897 km, 36” diameter crude oil pipeline, beginning in Hardisty, Alberta, and extending south to Steele City, Nebraska, in Canada and the US respectively. This pipeline is a critical infrastructure project for the energy security of the US.

Along with transporting crude oil from Canada, the Keystone XL pipeline will also support the significant growth of crude oil production in the US from producers in the Bakken region of Montana and North Dakota.

The pipeline will have capacity to transport 830 000 bbl/d of oil to Gulf Coast and Midwest refineries, reducing American dependence on oil from Venezuela and the Middle East by up to 40%.

Value
$8-billion.

Duration
TransCanada expects to have the pipeline in service by 2015.

Latest developments
TransCanada Corp is suing the US government to reverse President Barack Obama's rejection of the Keystone XL pipeline; the energy major also plans to seek $15-billion in damages from a trade tribunal.

TransCanada's lawsuit in a federal court in Houston, Texas, has called the rejection of its permit to build the pipeline “unconstitutional”. In a separate action under the North American Free Trade Agreement (NAFTA), the company has said that the pipeline permit denial is "arbitrary and unjustified".
The company has called the rejection of its permit "a symbolic gesture" aimed at burnishing the Obama administration's leadership on climate change in the eyes of the international community.

The company's US lawsuit is not seeking monetary damages, but wants the permit denial invalidated and is amining for a ruling that no future US President can block construction. Its request for $15-billion under NAFTA reflects its desire to recover its investment in the pipeline.

Defendants in the Houston lawsuit are US Secretary of State John Kerry, Attorney General Loretta Lynch, US Homeland Security Secretary Jeh Johnson and Secretary of the Department of Interior Sally Jewell.

Obama, who is not named as a defendant, rejected the cross-border crude oil pipeline last November, seven years after it has been proposed, saying it would not make a meaningful long-term contribution to the US economy.
All Democratic US presidential candidates, including frontrunner Hillary Clinton, oppose the pipeline, while most Republican candidates are in favour of it.

Senator John Hoeven, a Republican from oil-producing North Dakota, has said Keystone's rejection has cost Americans jobs and has now also put taxpayers "on the hook for potentially billions of dollars in fines and legal costs".

In filing the NAFTA claim, TransCanada has said it "had every reason to expect its application would be granted" as it has met the same criteria the US State Department has used when approving other similar cross-border pipelines.

Chapter 11 of the NAFTA trade agreement between Canada, Mexico and the US gives investors the right to make claims against governments.

Unlike Canada and Mexico, the US has never lost a Chapter 11 NAFTA case. The NAFTA tribunal process, which cannot reverse the President's decision, will likely be lengthy and expensive.

TransCanada has said it is "prepared for a lengthy process that could take several years".

Environmental regulatory lawyer with international firm Dorsey & Whitney James Rubin, said Keystone’s federal court suit will be "challenging,” further noting that courts have considered cross-border pipeline decisions before and have generally found that they fall within the President’s discretion.

The White House has referred requests for comment to the US State Department. A State Department spokesperson has said it will not comment on pending litigation.

In Ottawa, a spokesperson for the Canadian foreign ministry has said government "has no role in this dispute".

Since October, Canada has been run by Prime Minister Justin Trudeau's Liberal party, which supports the pipeline, but has said the Canada-US relationship is “much bigger than any one project”.

TransCanada has said it will also take an after-tax writedown of C$2.5-billion ($1.78-billion) to C$2.9-billion in the fourth quarter, as a result of the permit denial.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Keystone XL has been delayed, owing to the rejection of TransCanada’s application for a permit to build and operate the project.

Contact Details for Project Information
TransCanada, tel +1 866 717 7473 or email keystone@transcanada.com.