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U.S. judge halts Keystone XL oil pipeline in blow to Trump, Trudeau

Reuters  |  WINNIPEG, Manitoba/NEW YORK 

By and David Gaffen

WINNIPEG, Manitoba/NEW YORK (Reuters) - A U.S. in has blocked construction of the designed to carry heavy crude from to the United States, drawing praise on Friday from environmental groups and a rebuke from

The ruling of a in late on Thursday dealt a setback to , whose stock fell 1.7 percent in Shares of companies that would on the pipeline also slid.

TransCanada said in a statement it remains committed to building the $8 billion, 1,180 mile (1,900 km) pipeline, but it has also said it is seeking partners and has not taken a final investment decision.

The ruling drew an angry response from Trump, who approved the pipeline shortly after taking office.

It also piles pressure on Canadian to assist the country's ailing sector by accelerating crude shipments by rail until pipelines are built. Clogged pipelines have made discounts on Canadian oil even steeper than they were earlier this year when warned that they may cost the country's economy C$16 billion.

wrote that a U.S. State Department environmental analysis of Keystone XL "fell short of a 'hard look'" at the cumulative effects of and the impact on Native American land resources.

"It was a political decision made by a I think it's a disgrace," Trump told reporters at the

The ruling was a win for environmental groups who sued the in 2017 after Trump announced a presidential permit for the project. groups and ranchers also have spent more than a decade fighting the planned pipeline.

"The tried to force this dirty pipeline project on the American people, but they can't ignore the threats it would pose to our clean water, our climate, and our communities," said the

The State Department is reviewing the judge's order and had no comment due to ongoing litigation, a said.

The pipeline would carry heavy crude from to Steele City, Nebraska, where it would connect to refineries in the and Gulf Coast, as well as Gulf export terminals.

Shares of Canadian Ltd and lost 2.7 percent and 2.2 percent respectively.

is the primary source of imported U.S. oil, but congested pipelines in Alberta, where tar-like bitumen is extracted, have forced to use costlier rail and trucks.

Two pipeline projects have been scrapped due to opposition, and the line project still faces delays even after the purchased it this year to move it forward.

"You have to wonder how long investors will tolerate the delays and whether the will intervene again to protect the industry," said Morningstar

Ensuring at least one pipeline is built is critical to Trudeau's plans, with a Canadian election expected next autumn.

"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," told reporters in Edmonton,

has felt the financial pressure, and an industry source said the last month solicited proposals from companies on ways to move crude faster by rail. The source said proposals included ideas such as buying rail cars and investing in loading terminals.

"I've never seen (the Alberta government) so active on this front," said the source, who asked not to be identified because the matter is politically sensitive. "That is a shift."

said the province has sent a proposal to to move crude faster by rail that includes making more tank cars available.

"We're giving away our resources cheap," she told reporters. "We need market access."

Neighbouring stands to lose C$500 million in annual royalties if the discount for Canadian crude remains steep, said.

"People have placed quite a lot of hope in that (Keystone) project, so it's a major setback," she said in an interview.

Morris, in his ruling, ordered the government to issue a more thorough environmental analysis before the project proceeds. He said the analysis failed to fully review the effects of the current on the pipeline's viability and did not fully model potential spills and offer mitigation measures.

The ruling likely sets Keystone back by up to one year, said Dan Ripp, of Research.

(Reporting by in Winnipeg, in New York and Brendan O'Brien; Additional reporting by and in Washington, Julie Gordon in Vancouver and David Ljunggren in Ottawa; Editing by Jeffrey Benkoe, and Cynthia Osterman)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sat, November 10 2018. 03:03 IST
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