With President-elect Joe Biden's administration likely to favor more stringent permitting requirements for interstate oil and gas pipelines, industry observers expected some projects to face delays and even cancellation in 2021.

The Trump administration in 2020 revamped the National Environmental Policy Act to speed up energy infrastructure siting, setting a two-year time limit for federal agencies to complete an environmental impact statement and directing them to consider only limited effects of greenhouse gas emissions and not cumulative impacts. Analysts anticipated that Biden will prioritize rolling back that narrowed scope for environmental reviews.

"We believe the Biden administration can, and likely will, broaden those reviews to again explicitly consider upstream and downstream greenhouse gas emissions," analysts at energy policy advisory firm ClearView Energy Partners LLC told clients Dec. 14. "Sponsors seeking to complete reviews in 2021 would appear to be most vulnerable to delays and potentially new conditions arising from rules being revised while their project is under review."

Gas pipelines

Equitrans Midstream Corp.-led Mountain Valley Pipeline LLC has aimed to put a 2-Bcf/d gas pipeline between West Virginia and Virginia into service by Dec. 31, 2021. Mountain Valley's federal water crossing authorizations have been called into question during ongoing litigation between environmental groups and the U.S. Army Corps of Engineers after a Montana court in April vacated the Nationwide Permit 12 program that enabled pipelines to receive blanket water-crossing permits. Instead of waiting for the Trump administration to finalize its reissuance of those permits, Mountain Valley will probably opt for individual Clean Water Act Section 404 permits, according to Height Securities LLC analyst Josh Price.

"I do think the Biden administration will permit Mountain Valley through the 404 process and won't go out of its way to stop it," Price said in an interview. "But 2021 is likely off the table for in-service."

Environmental attorneys inflicted major setbacks for other major pipeline projects in 2020, including Dominion Energy Inc. and Duke Energy Corp.'s Atlantic Coast and Williams Cos. Inc.'s Constitution pipelines, which were ultimately canceled.

When it comes to authorizing new gas infrastructure, the Federal Energy Regulatory Commission may still be inclined to approve smaller-capacity additions even under the potential leadership of Democrat Richard Glick, who as commissioner has routinely dissented from FERC orders approving new pipeline and LNG projects.

"We anticipate that FERC with a Democrat majority could still sign off on incremental additions to increase existing pipeline system capacity, particularly if sited within and along existing infrastructure rights of way. The commission may also continue to approve laterals to end-use customers who seek them," Clearview wrote.

The Interstate Natural Gas Association of America is similarly encouraged by Biden's vision of natural gas as a key component of the energy transition, even as a flurry of building electrification lawmaking continued across the country and gas utilities pledged to target net-zero greenhouse gas emissions by 2050.

"I was very encouraged by the way President-elect Biden acknowledged the importance of natural gas during the campaign," Amy Andryszak, the pipeline trade group's president and CEO, said in an interview. "We're taking his words at face value, and we're optimistic that new natural gas infrastructure projects and improvements will continue to move forward under this administration."

Oil pipelines

TC Energy Corp.'s Keystone XL crude oil pipeline, on the other hand, faces a Biden campaign promise to rescind the project's presidential permit for crossing from Canada into the U.S., which Trump awarded in 2017. TC Energy has been building the pipeline's Canadian leg and doing preliminary construction work through Montana during the second half of 2020, but rejection of the presidential permit would end the company's decade-plus push to put steel in the ground in the U.S.

"I think it'll probably be the nail in the coffin," Height Securities' Price said. "I'm not holding my breath for Keystone XL to enter service."

Energy Transfer LP's Dakota Access LLC will also be under the microscope in 2021 after a federal court in July ruled that a Missouri River construction easement granted by the Army Corps violated the National Environmental Policy Act. The pipeline, which began service in 2017, has avoided being shut down and emptied as the U.S. Court of Appeals for the District of Columbia Circuit contemplates whether the Army Corps must complete a new environmental impact statement and if the easement should remain vacated pending that review. The U.S. District Court for the D.C. Circuit is concurrently considering an injunction to shut down Dakota Access, but Price believed the White House will instead direct the Army Corps to refer an enforcement action to the Department of Justice.

"We could get a headline in March that says, 'Army Corps directs DAPL to shut pipeline in 30 days as part of settlement,' which would be very scary, but I suspect that instead … to strike a political balance the Biden administration would probably require Energy Transfer to table their capacity expansion plans … and maybe even require reduced capacity," Price noted.

Energy Transfer has said it expects the expansion, which would increase flows from 550,000 barrels per day to up to 1.1 million bbl/d, to begin service during the third quarter of 2021, but Sierra Club senior attorney Nathan Matthews said he hoped that Dakota Access and other oil and gas pipelines will face heavier scrutiny.

"We are confident that under a Biden administration the agencies will be listening to their scientific staff a lot more and that in practice those staff will identify legitimate concerns with pipeline projects," he said in an interview.