First pipeline plan draws ire of American oil

 22 Jul 2017 - 22:20

Bloomberg

Jennifer A. Dlouhy:  Donald Trump’s allies in the oil industry are warning the president that his bid to boost US steelmakers could backfire against their efforts to achieve his goal of “American energy dominance.”
The intense lobbying effort comes as the Commerce Department faces a Sunday deadline to give the president a plan to require oil and gas pipelines use American-made steel, an idea Trump embraced in the initial days of his presidency. While the U S has imposed “Buy American” rules on government purchases for decades, it would be unprecedented to force those obligations on privately funded, commercial projects.
The blueprint from Commerce Secretary Wilbur Ross will set the stage for further protests from the oil industry, the U S Chamber of Commerce and developers, including The Williams Companies Inc. and Energy Transfer Partners.
“A core feature of the U S free enterprise system” is that “private businesses should be free to make purchasing decisions on their own,” the Chamber of Commerce, the biggest-spending business lobby in Washington, said in its comments to Ross.
The effort illustrates how Trump’s “America-first” agenda pits his allies against one another and underscores the challenges of fulfilling the president’s protectionist stance. As with Trump’s promises to restrict immigration from Muslim-majority nations, rework former President Barack Obama’s health care law and overhaul the tax code, the reality of implementing this idea has been more difficult than the president initially posited.
Trump kicked off the pipeline-focused effort during his fourth day in office, issuing a presidential memorandum compelling the Commerce Department to determine how to require American material in all, retrofitted, repaired or expanded U S pipelines “to the extent permitted by law.” Under Trump’s directive, iron and steel only qualifies as American-made if it is fully produced in the U.S., from its initial melting to the later application of coatings.
The idea originated when union leaders suggested it during a meeting with the president; Trump ordered an aide to make it happen, sending advisers scrambling to draw up the directive before it was signed the next day.
While pipeline developers have praised Trump’s approval of projects that stalled under Obama, including TransCanada Corp.’s Keystone XL and Energy Transfer’s Dakota Access, they warn America-made requirements could undercut that progress. More than three quarters of pipe used in oil and gas projects begins as imported steel, according to one industry study.
“Fewer new pipeline projects would run counter to the Trump administration’s goal of expanding U S energy production and infrastructure to support the economy, job growth and national security,” said a coalition of oil industry trade groups, including the American Petroleum Institute and the American Gas Association.
Relying solely on U S-produced pipeline-quality steel and components “could lead to long construction delays and higher costs, potentially canceling planned pipeline projects or blocking new pipeline projects.”
Energy Transfer said that when it purchased pipe for three U S projects simultaneously, it effectively consumed the entire domestic capacity.
It’s not clear how the U S government could enforce the mandate, though multiple federal agencies can play a role permitting pipeline projects and scrutinizing their operations.
Steel Dynamics Inc., one of the largest domestic steel producers, recommended the Trump administration impose an American-made requirement through the Federal Energy Regulatory Commission, which reviews proposals to build interstate pipelines to ensure they comply with safety, security and environmental standards.