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XL still alive and kicking although pipeline progress stopped for now
In President Barack Obama’s view, the Keystone XL pipeline proposal - after seven years of being studied and re-studied by his administration - has occupied an “overinflated role in our political discourse.”
But his decision on Nov. 6 to finally reject TransCanada’s plan to export 700,000 barrels per day of carbon-heavy oil sands bitumen and 100,000 bpd of conventional Bakken crude to the Gulf Coast is not likely to snuff out the debate.
Nor will it do much or anything to achieve his hope of keeping “some fossil fuels in the ground rather than burn them and release more dangerous pollution in the sky.”
TransCanada is not yet prepared to write off the US$2.8 billion it has so far spent on the US$8 billion venture.
Chief Executive Officer Russ Girling said his company and its customers “remain absolutely committed to building this important energy infrastructure project,” indicating that a new application for a pipeline to cross the Canada-U.S. border may be filed.
But a second chance for Keystone XL, or its successor, depends heavily on whether a Republican occupies the White House and the party dominates Congress after the 2016 election.
Republicans favor XL For now, leading Republican contenders for the presidential nomination are emphatic that if elected they will reverse Obama’s decision.
Marco Rubio said Obama’s “backward energy policies will come to an end” if he is president; Jeb Bush said rejection of Keystone XL “is a self-inflicted attack on the U.S. economy and jobs”; and Donald Trump rated the project as “good for jobs and the environment (with) no downside.”
Alaska Sen. Lisa Murkowski, who chairs the Senate Energy and Natural Resources Committee, said a “decision this poorly made is not symbolic, but deeply cynical. It does not rest on the facts. It continues to distort them. It is a triumph of fringe politics over sound policy.”
South Dakota Sen. John Thune, chairman of the Senate Republican Conference, said the Obama administration has spent seven years “delaying this commonsense project” while reviewing thousands of public comments and completing five environmental impact statements which found the pipeline would have no significant impact on carbon emissions.
He said the administration has “squeezed from this project’s unnecessary delay every last bit of political expedience that remained.”
House Speaker Paul Ryan said the decision was “sickening” in its rejection of tens of thousands of jobs, along with “the will of American people and a bipartisan majority of the Congress.”
He said that if Obama “wants to spend the rest of his time in office catering to special interests, that’s his choice. But it’s just wrong.”
Obama: Fighting climate change Obama based his argument on America’s role “as a global leader when it comes to taking serious action to fight climate change. Frankly, approving this project would have undercut that leadership. And that’s the biggest risk we face ... not acting.”
He said Keystone XL “has become a symbol too often used as a campaign cudgel by both parties (in the U.S. Congress) rather than a serious policy matter.”
“And all of this obscured the fact that this pipeline would neither be a silver bullet for the economy, as was promised by some, nor the express lane to climate disaster proclaimed by others,” he said.
In fact, the Canadian volumes on Keystone XL would have accounted for only 3.6 percent of current U.S. oil consumption, of which about 25 percent is primarily imported from Canada (at 3.1 million bpd), along with shipments from Saudi Arabia, Iraq, Nigeria, Venezuela and Mexico.
US pipeline business thriving Even without Keystone XL, the pipeline business has been thriving in the U.S. over the past six years, with the Washington, D.C.-based Association of Oil Pipe Lines estimating that 12,000 miles of oil transmission pipelines have been built.
“While people have been debating Keystone in the U.S. we have actually built the equivalent of 10 Keystones,” said a spokesman for AOPL. “And no one has complained or said anything.”
One of the sharpest rebukes directed at Obama came from Calgary Mayor Naheed Nenshi, a consistent advocate of measures to reduce carbon emissions.
“I am very disappointed that one pipe, nearly a meter wide, is being asked to bear all the sins of the carbon economy,” he said.
Girling: Symbolism over science Girling offered his most brittle observation after seven years of trying to get State Department and White House approvals.
“Misplaced symbolism was chosen over merit and science. Rhetoric won out over reason,” he said.
Girling noted that U.S. oil imports outnumber its domestic production by 7 million bpd and “will continue to do so for decades, despite U.S. production increases.
“It is disappointing the administration appears to have said ‘yes’ to more imports from Iran and Venezuela over oil from Canada, the United States’ strongest ally and trading partner, a country with a rule of law and values consistent with the U.S.,” he said.
Jack Gerard, president and chief executive officer of the American Petroleum Institute, said the Obama administration has turned its back on the jobs and economic benefits of Keystone XL, as well as U.S. energy security by placing “political calculations above sound science.”
Tim McMillan, president of the Canadian Association of Petroleum Producers, said Canada has demonstrated leadership in its greenhouse gas emissions policy and technology related to the oil and gas industry.
“Alberta’s producers have paid a levy on carbon for longer than Keystone XL has been under regulatory review,” he said.
CAPP said Canada’s oil and gas producers have reduced GHG emissions by 30 percent per barrel since 1990 and are investing C$1 billion to develop more technologies.
Trudeau: Understated criticism Canada’s newly elected Prime Minister Justin Trudeau, who had claimed to support Keystone XL, made only an understated criticism of Obama’s verdict, while Alberta Premier Rachel Notley, a constant critic over the years of oil sands expansion, delivered a surprising rebuke.
Obama acknowledged that when he called Trudeau to deliver the news “he expressed his disappointment, (but) we both agreed that our close friendship on a whole range of issues, including energy and climate change should provide the basis for closer coordination between our countries going forward.”
Trudeau - who predecessor Stephen Harper had said U.S. approval of the pipeline was a “no brainer,” souring his dealings with Obama - said he “look forward to a fresh start” with Obama, arguing the relationship is “much bigger than any one project.”
Notley said she, too, was “disappointed” and was especially unhappy over Obama’s statement that “shipping dirtier crude oil into this country would not increase America’s energy security.”
She said Alberta and the industry should get “credit for the work that we’re doing right now” on climate change.
- GARY PARK
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