On Tuesday, his fourth day in office, President Donald Trump took steps to show he is serious about peeling back regulations and removing political roadblocks on critical energy infrastructure projects in the United States. Among the actions taken was an executive order designed to expedite permitting and environmental reviews of “high-priority infrastructure projects.”
Specifically cited as projects deemed “high-priority” were the Dakota Access Pipeline (DAPL) and the Keystone XL Pipeline. The Obama administration halted construction of DAPL in September of last year due to often violent protests by environmentalists and rejected the Keystone proposal in 2015. He also signed an order telling the Commerce Department to develop a plan to impose a requirement that all new pipelines in the United States be built using “United States Steel.”
These actions are significant for master limited partnerships (MLPs) that have been building or are intending to build new pipelines. Energy Transfer Partners, the MLP behind DAPL, led the sector higher Tuesday as reality set in that these executive orders would reduce the often costly and lengthy permitting process for new pipelines. Perhaps just as important, these actions from President Trump signal that the rule of law will be respected and he will not grant special treatment to protesters, activists, or organizations who oppose projects that have already been approved through the legal process. A pro-energy infrastructure administration will serve to remove much of the political risks that had become an increasing headwind for MLPs under the Obama administration.
These developments are yet more positives for MLPs as much-needed pipelines are now going to face a more efficient and swift permitting and approval process. This allows the MLPs that operate the pipelines to go from proposal to construction to earning revenue in what should be a significantly shorter period.