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Trump on Track to Revitalize Keystone & Dakota, MLPs Gain

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President Donald Trump has already taken office and his surprise victory is being seen by many as a boon in disguise for the energy sector.

The billionaire real estate developer, who never held an elected office before, came out with promising proposals for the revival of both the Dakota Access Pipeline and the Keystone XL pipeline developments that faced strong opposition from environmentalists and the Obama administration.

Trump's Pledge to Revive Keystone & Dakota

During his presidential campaign Trump said that he is in favor of the completion of the $3.8 billion Dakota Access Pipeline project. According to initial plans, the pipeline development was to stretch over 1,172 miles and carry crude from the Bakken shale out to the U.S. Gulf of Mexico. However, the project was delayed due to protests from environmentalists as well as the tribes residing in and around the area. According to conservationists, the pipeline - expected to pass under a lake near the Standing Rock Sioux reservation - is likely to pose a serious threat to water resources.

Trump also proposed the extension of the Keystone XL pipeline to carry oil from Alberta, Canada to the U.S. refineries. The initial phase of the pipeline project was finished in 2011. The proposed pipeline extension will add another 1100 miles to the over 2100 miles it already covers. However, the proposed extension plan has not been supported by environmental groups and politicians. This is because bitumen, which might be transported by the pipeline system along with crude to the U.S., might emit greenhouse gases.

Progress So Far

The 45th U.S. President has already started to take measures to revive the fate of the two controversial oil pipeline developments. Trump has inked two executive actions to expedite the review activities related to the approval for Keystone XL and Dakota Access projects.

The main reason behind the pipeline developments was to spread out infrastructure, primarily to support the advancement of crude in North America. However, both the projects were straight away rejected by the Obama administration amid strong opposition by environmentalists.

Investors should know that the Dakota Access project, upon completion, will be able to transport almost 570,000 barrels of oil every day to Illinois from North Dakota. The Keystone XL pipeline, on the other hand, would be able to transport 830,000 barrels per day of crude from the oil sands of Canada to the Steele City, NE, once completed. From Steele City the pipeline is expected to connect to the present pipelines to the refineries of the Gulf Coast.

Welcomed by the Energy Industry, Opposed by Environmentalists

As expected, the energy industry and the fossil-fuel firms have cordially welcomed Trump's move as they firmly believe that both these pipeline developments are the pillars of the country's energy securities and also could revive the economy.

However, the environmentalists are extremely unhappy with the move and have been organizing rallies across some major U.S cities. Bill McKibben, one of the prominent figures related to Keystone protest commented, "It's a dark day for reason, but we will continue the fight."

Who Will Benefit?

Trump's progress in this front is definitely good news for TransCanada Corporation TRP - an energy infrastructure player in North America. This is because this Zacks Ranks #3 (Hold) company is the owner and operator of Keystone pipeline system. You can see the complete list of today's Zacks #1 Rank stocks here .

Energy Transfer Partners LP ETP is also expected to benefit from the advancement in Dakota Access Pipeline project. This is because Dakota Access LLC, which is involved in the construction of Dakota Access Pipeline, is an affiliate of the Zacks Ranks #5 (Strong Sell)partnership.

It is to be noted that the shares and units of TransCanada and Energy Transfer Partners improved considerably following the developments. Both these stocks gained 3.5% in the NYSE. Other energy infrastructure master limited partners (MLP) that moved north after Trump cleared roads for the pipeline developments include Sunoco Logistics Partners LP SXL , Plains All American Pipeline LP PAA and TC PipeLines LP TCP . Sunoco Logistics and Plains All American improved 3.8% and 3.2%, respectively while TC PipeLines units jumped 3.5%.

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Plains All American Pipeline, L.P. (PAA): Free Stock Analysis Report

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TC PipeLines, LP (TCP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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