Embattled Keystone XL Pipeline Wins U.S. Construction Approval

The long-delayed Keystone XL oil pipeline has won approval for a key stretch of construction in the United States.

The U.S. Interior Department authorized construction across a swath of federal land in Montana, according to a news release issued late on Wednesday. While approval by the oil-friendly Trump administration was expected, the move is a sign of growing momentum for a project that ground to a halt under political opposition in 2015.

Progress on Keystone XL, which will boost shipments of crude oil from Alberta to refineries on the Gulf of Mexico, is a welcome sign for a Canadian energy industry that has been hamstrung by a too little pipeline capacity. The pipeline pinch has weighed on local crude prices and stunted explorers’ expansion plans.

But the $8 billion U.S. pipeline is still the subject of a legal challenge in Montana, and additional federal permits are still necessary. Calgary-based TC Energy Corp. (TSX:TRP), which owns the Keystone XL pipeline, has seen its share price rise 29% in the past 12 months, compared with a 6.8% gain for the S&P/TSX energy index.