The legacy of Keystone XL lives on, as fallout from that politically influenced debate has created a stigma for many new pipeline construction projects.  The Sierra Club and other opposition groups openly admitted that their challenge to the Keystone XL pipeline was really a stalking horse to bring more attention to climate change generally.  While that opposition was not intended as a more specific objection to pipelines, regional and local citizen groups are now opposing almost any form of new pipeline construction, on a more confrontational basis, using Keystone XL climate change type arguments even where they are not relevant.

Some recent examples of this new level of opposition include the following:

  • in response to opposition from regional groups and a state, a new natural gas pipeline project in the Northeast has had to move back its planned time for commencement of operations (even though energy supplies may be affected).
  • two new hazardous liquid pipeline projects in both the Southeast and the Northeast have been withdrawn entirely, due to local opposition, unfavorable eminent domain rulings and lack of support by states.
  • an oil pipeline construction project in the Midwest had to make concessions to various landowners due to local opposition and lack of one state’s support (those concessions potentially increase system integrity risks, rather than decrease them, because different standards must be met in different locations within a limited area).
  • a LNG export project in the West was denied approval by FERC for lack of a defined market, a decision prompted by strong local opposition.

None of the above noted projects presented the primary issues underlying the Keystone XL debate (i.e., a cross border pipeline carrying tar sands crude oil).  Instead, the opposition in all of these examples objected to the construction of any new oil or gas pipeline infrastructure, citing various issues specific to each proposed project.  One of the emerging themes after Keystone XL and the 2015 Paris Climate Change Summit is that the U.S. should immediately cease use of all fossil fuels.  While the use of fossil fuels has been linked to climate change, even the 2015 Paris Climate Change Conference recognized that no country can simply cease use of all fossil fuels immediately.  Instead, the Paris Accords requested commitments from all countries on various schedules to transition to less polluting forms of energy.  That call for commitments is proving to be a tall order politically, as each country – the U.S. included – debates its own energy issues and options.

While the political world continues to debate the appropriate response to climate change issues and energy allocation, the economic markets have already begun to act.  Even without additional EPA regulation, the demand for U.S. coal product has dropped dramatically in recent years, as natural gas alternatives became more cost effective (more due to newly discovered supplies of domestic natural gas than to cost of environmental controls for coal).  And even as the cost of oil/refined gasoline fell significantly through 2015, overall U.S. consumption of energy (all forms of energy) also fell by roughly 1 percent as compared to 2014 (based on recent Energy Information Administration (EIA) data).  Ironically, the overall U.S. use of renewable energy also remained relatively flat through 2015 compared to 2014 levels.  That was due largely to the de-commissioning of several older hydropower sources of production, but solar and wind energy sources continue to grow relatively slowly, primarily because they are still not cost competitive as compared to traditional sources.

Widespread opposition to new pipeline infrastructure after Keystone is most unfortunate because those sectors of the American public who call for immediate cessation of the use of fossil fuels fail to recognize that there is no immediate alternative.  Fossil fuels (coal, oil and natural gas) currently account for over 81% percent of all U.S. energy consumption (based on 2015 EIA data).  Renewable sources combined (hydro, solar, wind and nuclear) only account for roughly 18% percent.

What seems most logical, and inevitable, is that natural gas will likely be the key ‘transition’ source of energy, or the “bridge fuel,” between America’s current power sources and a future where renewables provide the majority of power for the country.  Experts agree that even with government subsidies, that transition will take several decades.  There is simply no immediate option to completely forgo fossil fuels without power outages and dramatic lifestyle changes by Americans.

So what does this mean for oil and gas pipeline projects in the post-Keystone environment?  Companies need to understand how fundamentally altered the public environment has become regarding new pipeline construction projects.  While opposition may be inevitable, any large project will require more up front research, increased public outreach, and more communication and negotiation with public officials and regulators.  Enhanced communications should better inform stakeholders and policy makers regarding the advantages of pipelines over other forms of transportation.  In particular, these communications should emphasize a project’s ability to protect the environment and public safety, meet domestic energy needs, and provide economic benefits to states and local communities.  And it will be essential for operators to be more transparent and consistent in their efforts to explain applicable law as it relates to public safety and system integrity.  Industry and trade groups are already rising to this challenge.  It would help if government agencies and politicians responsible for overseeing public construction and safety and pipeline integrity joined that conversation.

Pipelines carrying oil and gas are necessary to fuel our country’s energy needs and to assist the United States in transitioning to more renewable forms of energy.  Construction of new pipelines not only assist in moving that transition forward, they also bring tangible safety benefits.  Opposition to these projects is both unrealistic and short-sighted in terms of this country’s current energy needs and its ability to successfully transition to renewable energy sources.