Oil producers and refineries aren’t interested in buying the Canadian oil that the Keystone XL pipeline is supposed to ship through the U.S., anonymous sources told the Wall Street Journal Thursday.
TransCanada, which owns the pipeline, is struggling to get enough customers for it, according to the WSJ. The company is still committed to completing Keystone XL as it should still be profitable in the long term, but it will likely take years for TransCanada to recoup its investment.
Oil prices today are far lower than they were a decade ago when the pipeline was proposed. Back then, prices were above $130 a barrel, which meant that demand from oil producers and refineries for the pipeline was high. A barrel of oil today sells for about $45, largely due to the emergence of hydraulic fracturing, or fracking.
TransCanada has spent $3 billion to date on Keystone XL, and expects that it will eventually have to spend $8 billion constructing the pipeline.
TransCanada initially applied for a cross-border permit in 2008 and the State Department determined the project would have no significant impact on the environment or U.S. greenhouse gas emissions. Former President Barack Obama didn’t issue a ruling on the pipeline until late 2015, rejecting it on the grounds it would diminish the U.S.’s credibility on global warming.
The Trump administration approved the final stages of the Keystone XL oil pipeline in March, only 16 months after Obama rejected it. TransCanada says construction on the pipeline will begin next year and should finish in 2020.
Six environmental groups sued the Trump administration over the pipeline’s approval, arguing the project needed to go through another environmental review before it could be approved.
The Keystone XL oil pipeline could generate about $44 million in tax revenues a day once it’s fully up and running, according to a report published in April by the American Action Forum.
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