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What is at stake in the Keystone XL pipeline?



WINNIPEG, Manitoba (Reuters) – An American federal judge in Montana stopped the construction of TransCanada Corps ( TRP.TO ) Keystone XL oil pipeline on Thursday, saying that an American environmental analysis "hard look" on the cumulative effects of greenhouse gas emissions and the impact on native American resources.

PHIL PHOTO: A TransCanada Keystone Pipeline Pump Station Operates Outside Steele City, Nebraska March 10, 2014. REUTERS / Lane Hickenbottom / File Photo

The government is the last delay of the project, a decade of planning, revived by American President Donald Trump after being stopped by his predecessor, Barack Obama.

WHAT IS KEYSTONE XL?

KXL, as it is known, is a proposed pipeline of $ 8 billion, 1,180 kilometers (1,900km) that would carry heavy raw materials to Steele City, Nebraska, from Canada's oil sands in Alberta. Designed by Canada's TransCanada, KXL would provide a shortcut to carry more Canadian oil to US markets, which complement the existing Keystone line than driving from Alberta to Steele City and then the Gulf Coast refineries.

why is it necessary?

Crude oil production in Alberta's oil sands expands faster than pipeline capacity, creating a bottleneck that has driven prices down. Canada's powerful commodity now picks up a fraction of the reference price for US light oil prices, and some manufacturers have reduced production. The steep rebate has removed billions of dollars from the Canadian economy with some estimates.

WHAT IS THE NIGHT OF THE SETUP?

Environmental groups have campaigns against pipelines to carry crude oil from Canada's oil sands, saying recovery methods used in the region damage the environment more than conventional oil drilling.

In Nebraska, landowners blasted what they saw, like TransCanada's heavy effort, forcing the pipe through ecologically sensitive areas.

WHAT OTHER OBSTACKS HAS THE FACT?

Obama, a Democrat, urged the project in 2015 and said that Canada would reap most economic benefits while the project would add greenhouse gas emissions. President Donald Trump, a republican, pressured to approve KXL shortly after he took office and said it would create American jobs. In 2017, a presidential permit allowed the line to move on, and several environmental groups sued the US government.

The Nebraska Public Service Commission issued an approval last year for an alternative route, a decision that environmental groups are challenging.

WHAT ARE THE POLICY IMPLICATIONS?

In Washington, the referee's decision on Thursday was a blow to Trump, as critics say trying to force an unpopular project on the American people.

In Ottawa, Canadian Prime Minister Justin Trudeau is pushing for a pipeline built to help Canadian producers sell the oil at higher prices while supporting other measures to reduce greenhouse gas emissions before a choice is expected next year.

In the summer Trudeau bought the government Floundering Trans Mountain pipeline project, hoping to have it built.

WHAT IS NEXT?

US District Court Judge Brian Morris ordered the federal government to conduct a more thorough environmental analysis. Separately, TransCanada has said that it expects a decision on routing from the Nebraska Supreme Court by the first quarter of 2019.

TransCanada has not yet made a final investment decision to continue the project, even though it had started construction. It said last week that it also seeks partners to finance KXL's construction.

Reporting of Rod Nickel in Winnipeg, Manitoba; Editing David Gregorio

Our Standards: Thomson Reuters Trust Principles.

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