TransCanada Corp.’s Keystone XL pipeline faces one less hurdle after Nebraska’s highest court cleared its path through the state, setting aside a challenge to the power of its Republican governor to dictate the route, and sending the matter back to Washington.
The project would send crude from Alberta’s oil sands to a network junction in southeast Nebraska, for transport to Gulf Coast refineries. While the ruling is a victory for energy independence proponents, the project’s fate remains uncertain. It now returns to President Barack Obama for approval, who deferred a decision citing the lawsuit and has voiced opposition to the project.
Though four of the seven Nebraska justices would have blocked the pipeline, five were needed to declare the state law unconstitutional, the court said. As a result, they allowed the law -- and the pipeline route -- to survive by default.
The U.S. Senate Energy Committee Jan. 8 passed a measure seeking to force approval of the pipeline, setting up a confrontation with Obama, who has pledged to veto the legislation. The full chamber is to take up the issue next week, Republican Majority Leader Mitch McConnell of Kentucky has said.
“President Obama is out of excuses for deciding on whether or not to allow thousands of Americans to get back to work,” McConnell said today in a statement. “If today’s ruling is still not enough to move the President to approve the project, Congress will force that decision.”
TransCanada rose 1.7 percent to $47.13 at 9:51 a.m. in New York trading after climbing as much as 2.4 percent.
A final Senate vote isn’t expected until later this month, while the House is to vote today on similar legislation. Democrats in both chambers say they have the votes to sustain a veto, though Keystone supporters contend they are still trying to persuade colleagues.
“TransCanada is left with a risky route to defend,” said Jane Kleeb of Bold Nebraska, a group opposed to the pipeline. “This is a bad day for property rights in our state. Private, foreign corporations now know they can buy their way through our state.”
Josh Earnest, a spokesman for the Obama administration, didn’t immediately return an e-mail seeking comment on the ruling.
The Obama administration had suspended a State Department review of the international pipeline while the Nebraska case was pending. Environmentalists oppose the project because the energy-intensive extraction of oil from sand is blamed for increasing carbon dioxide emissions linked to climate change.
Keystone XL is one of at least four major Canadian export pipeline proposals to carry surging oil-sands output, which is expected to more than double to 4.8 million barrels a day by 2030, according to a June forecast from the Canadian Association of Petroleum Producers. Oil-sands production rose to a record of 2.3 million barrels a day in October, according to Alberta Energy Regulator data.
First proposed in 2008, the completion of Keystone XL has been stalled by litigation and political wrangling, helping drive its price-tag to $8 billion from $5.4 billion. The lower portion of the pipeline has already been completed, at a cost $2.3 billion.
Though its long-term employment impact would be slight -- as few as 50 full-time jobs after construction is completed -- the project has become a potent economic issue on both sides of the border.
In Canada, it’s been an element of that country’s strategy to become an energy superpower. In the U.S., Republicans used it in a successful campaign to reclaim Senate control in the Nov. 4 election, touting the delays as evidence Obama wasn’t doing enough to create jobs and encourage energy independence.
On Nov. 18, the Senate, while still led by Democrats, fell one vote short of the 60 needed to approve construction of the pipeline. The vote was taken at the behest of Louisiana Democrat Mary Landrieu, a supporter of the project who lost a Dec. 6 run-off election to retain her seat.
Last year, all 45 Republican senators voted in favor of the legislation, joined by 14 Democrats. With Landrieu’s loss to challenger Bill Cassidy, Republicans now hold 54 seats, including newly elected Nebraskan Ben Sasse.
The House on Nov. 14 voted 252-161 in favor of the project, with 31 Democrats supporting it.
TransCanada Chief Executive Officer Russ Girling said after the Senate vote that his company remains committed to the project.
“The marketplace need for Keystone has probably grown,” he said, citing the more than 4 million barrels of crude being imported daily to the U.S. Gulf Coast. Obama has said the project wouldn’t affect U.S. gas prices if completed because the Alberta crude pumped across America to the gulf would be sold “everywhere else.”
TransCanada has said the completed pipeline will funnel crude to refineries in Texas and Louisiana.