Trump boost for Keystone XL pipeline may hit snags, oil-friendly Democratic senator says

Sen. Heitkamp: US oil is going to move

New executive orders expediting the approval and construction processes for oil pipeline projects may create jobs, but issues of sourcing and exports could slow negotiations for TransCanada's extension of the Keystone pipeline, Sen. Heidi Heitkamp of North Dakota said Wednesday.

"I think there's going to be a lot of pressure on the sourcing of the pipe," the Democratic senator said on CNBC's "Squawk Box," referring to the long-delayed Keystone project. "We don't know what the source of that pipe is. That's going to be an issue."

On Tuesday, President Donald Trump signed two executive orders making it easier to build the Keystone XL and Dakota Access pipelines. Trump said the projects would create thousands of construction jobs.

Trump also signed an order insisting that pipelines built in the United States use American materials, adding that the terms of agreement with the two companies will be subject to negotiation.

The Keystone pipeline begins in the oil sands of Alberta, Canada, flows to Nebraska, then out to Texas and Illinois. The proposed extension of the project would create a direct route from Alberta to Nebraska, with an additional terminal where the oil is extracted in Montana.

"I also think it might be an issue on whether that oil gets exported, which is something we considered," Heitkamp said. She said an existing contract with Texas-based refiner Valero Energy to export the Canadian crude could complicate talks with TransCanada because though the pipeline is meant to lessen U.S. dependence on foreign oil, and Valero plans to export a sizeable amount overseas.

"It remains to be seen with this leg what the contract relationships are, but obviously TransCanada is very interested in engaging," she continued. "They said they're going to reapply. We look forward to that reapplication, and look forward to get American construction workers working again."

The Dakota Access Pipeline, built by Energy Transfer Partners, is nearly complete. TransCanada's Keystone project was denied a presidential permit in 2015 by former Secretary of State John Kerry. Trump's executive order will allow TransCanada to re-apply for construction in the United States.