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‘Difficult’ to Sustain Jobs Without Keystone, Welspun Exec Says

4 min read

U.S. Rep. French Hill, R-Arkansas, joined state economic development leaders and executives of Welspun Tubular LLC of Little Rock on Friday, aiming to raise pressure on the Biden administration for revoking the federal permit for the Keystone XL pipeline.

The 1,700-mile pipeline would have carried 800,000 barrels of oil a day from Alberta to the Texas Gulf Coast, passing through Montana, South Dakota, Nebraska, Kansas and Oklahoma. In his executive order revoking the permit last week, President Joe Biden said the project was inconsistent with his economic and environmental agenda.

Welspun employs 600 people at the Little Rock Port. In August, it announced a contract to make 1 million feet of 36-inch pipe for the pipeline. 

On Friday, Welspun COO Rajesh Chokhani said the move “negatively impacts hundreds of businesses across the United States,” including in Little Rock.

“It will be very difficult for us to sustain these jobs since the project is on hold now,” Chokhani said. “All of our business partners — railroad, offloaders, port authority — are directly impacted due to the hold on this project. Welspun strongly feels that this decision has been made without understanding how the Keystone project has evolved over the period of the last 10 years.”

Chokhani said Welspun was in “layoff mode” when it received the contract last year to make pipe for TC Energy of Calgary, the company behind the Keystone project. At the time, local executives said the deal would provide direct jobs for “over 500 workers” in Little Rock through at least this year. The company did not disclose the value of the order.

Chokhani didn’t say Friday whether the permit revocation meant the immediate loss of jobs in Little Rock. But he pointed to other fallout, including the miles of 36-inch pipe piled in the Welspun yard behind him that TC Energy bought for the project.

“Look at the bigger impact. Almost half a million tons of pipe is sitting on the ground, you know, for this project,” Chokhani said. “And if this project is completely canceled, all that pipe will hit the market, and then it will be so difficult for us to grab new opportunities, or grab new projects … So the impact is really far far bigger than what we see here today.” 

Since it was first proposed in 2008, the Keystone pipeline has faced lawsuits and political hurdles. The Obama administration rejected it, but President Donald Trump revived it and had been a strong supporter.

Hill said Biden’s use of executive orders “put a target on the energy industry” in the U.S., and that canceling the project would cost thousands of jobs. He lamented having to return to Welspun again to advocate for the Keystone project, having previously done so during the Obama administration.

Hill said the U.S. needs an “all of the above” energy strategy, one that continues to nurture projects like Keystone while also investing in renewable energy projects and technology. And he and Chokhani argued that transporting oil from Canada through the pipeline is safer than other methods and reduces carbon emissions.

“So in regard to renewable energy — a goal of the Biden administration — this project contains 1.6 gigawatts of renewable energy, part of a broader commitment by Keystone to have zero operation emissions, the first pipeline of its kind in the world,” Hill said. “And if that wasn’t enough, [TC Energy] has made that a commitment for every step of the way into the development of this pipeline.”

Hill said he is co-sponsoring the “Promoting Cross-Border Energy Infrastructure Act,” which supporters say would promote the construction of energy infrastructure across the borders of the U.S., Canada and Mexico. Led by U.S. Rep. Markwayne Mullin, R-Oklahoma, the bill, a response to Biden’s action, aims to replace presidential permit requirements for energy projects that cross the U.S. border between Canada or Mexico.

Hill said he would also seek to raise political pressure on the Biden administration to reverse the decision, citing work the House and Senate did in the Obama years to reroute and improve the project.

Other speakers, including Bryan Day, executive director of the Little Rock Port Authority, and Mike Nunnenkamp of Dun Transportation & Stringing Inc. of Sherman, Texas, and Fred Long, the port stevedore with Logistic Services Inc., talked about how the project’s cancellation threatens the tightly interconnected port.

Long said Welspun is the largest rail user at the port and relies heavily on barges to deliver raw materials to the plant. After those barges deliver their goods to Welspun, other port companies use them to export products. Less barge traffic could mean higher transportation costs for other port companies, he said.

Nunnenkamp said his company, a 111-year-old family owned enterprise that transports and strings pipe for the oil and gas industry, has lost months of work and millions of dollars in revenue because of Biden’s action. He said stopping the pipeline will only hurt American companies and workers.

“Eliminating the Keystone XL pipeline does not prohibit oil from being extracted,” he said. “Nor does it prohibit Canada from moving oil to the Gulf Coast and internationally. Therefore, the only ones that are hurt by the cancellation of Keystone XL are American companies that now don’t get to participate in the construction activities like my company.”

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