In what has been described as "the worst time" for Canada's oil industry, a United States District Judge, Brian Morris, ruled last week that more time was needed to study the potential environmental impact of the 1905-km, $8 billion Keystone XL pipeline project.
In his decision, Morris said the analysis didn’t fully cover the cumulative effects of greenhouse gas emissions, the effects of current oil prices on the pipeline’s viability or include updated modelling of potential oil spills.
TransCanada, the pipeline's prospective operator, said it is unsure how the ruling will affect the timeline and cost of the project, but delays usually raise the costs of such complex, capital-intensive projects.
While the United States government repeatedly demonstrates concern over Keystone's continuation, its counterpart in Canada deems the project a key infrastructure development needed to provide greater market access to oil producers in the country.
Canada Natural Resources Minister Amarjeet Sohi was quoted as saying: “I am disappointed in the court’s decision and I will be reaching out to TransCanada later on today to show our support to them and understand what the path forward is for them.”
The lack of export pipeline access from Western Canada has been blamed for steep discounts for crude oil compared with New York-traded West Texas Intermediate, prompting some producers to reduce oil production and leading to record levels of crude-by-rail shipping.