What do Vladimir Putin, Lac-Megantic, the U.S. Atlantic offshore and Venezuela have in common?
Listen closely and you might hear the answer from President Barack Obama within the next two months when he’s supposed to deliver a final verdict on Keystone XL, unless, of course, he stalls again.
But if Obama is looking for a convenient hook on which to hang approval of the XL pipeline, after more than five years of pondering, any one or all four of these ingredients could provide him with a case to override opponents of the pipeline.
To them he would likely add the creation of jobs, meeting his earlier promise to shore up U.S. energy security and the provision of feedstock to keep refineries on the U.S. Gulf Coast operating at capacity.
If he wants to mount an even stronger case for XL, Obama could also draw on the U.S. State Department’s conclusions that the project would not significantly increase greenhouse gas emissions because the project accounts for less than 1 percent of emissions from the spider’s web of pipelines that span the Lower 48 states; that rejecting XL will not prevent development of the Alberta oil sands; and that forcing Canada to start exporting its crude to Asia and Europe could rebound on the U.S. at some later date.
The Putin factor
Putin could be the least likely friend of XL and offer Obama an “out” because of his actions in Crimea and his threatening gestures on the Ukraine border.
James Jones, a retired U.S. marine general and Obama’s national security adviser in 2009 and 2010, told the U.S. Senate Foreign Relations Committee in March that XL could be used by Obama to signal to Putin and other “international bullies who wish to use energy security as a weapon against us all.”
He argued that blocking the pipeline would “make Mr. Putin’s day and strengthen his hand” in his attempts to hold a club over the Ukraine and other European nations that rely on Russia’s natural gas to fuel their homes and businesses.
Obama has hinted he is prepared to help Europe reduce its dependence on Russian gas, which supplies about 20 percent of all the gas burned in the European Union (and much more in some countries).
If the U.S. had any desire to reduce Putin’s clout in that market, encouraging rather than blocking oil sands development could be an important counter-weight to Russia’s vast oil resources, while giving the U.S. “an important measure of national energy security, jobs, tax revenue and prosperity to advance our work on the spectrum of energy solutions that don’t rely on carbon,” Jones said.
Lending his credibility to the XL argument, Daniel Yergin, a leading energy analyst and Pulitzer Prize-winning author, told Toronto’s Globe and Mail that the Ukrainian tensions should lift XL’s chances by raising awareness in Washington about the geopolitical benefits of North American security.
Venezuela and Lac-Megantic
The U.S., meanwhile, has its own version of the Ukraine because of its dependence on oil imports from Venezuela, which could but cut off at any time if turbulence in the Latin American country leads to even greater civil unrest.
Lac-Megantic is the obvious byword for the dangers of forcing oil producers to shift from pipe to rail to move their crude.
In fact, as the Quebec disaster last July that claimed 47 lives showed, there is less proven regulatory control over the use of rail and no need to obtain Presidential Permits to allow oil shipments to cross the Canada-U.S. border.
An offshore political chip
Faced with what could be a potent green vote in the mid-term elections, undermining the Democrats current standings in Congress and their chances in the 2016 election, Obama might also be inclined to block seismic exploration for oil and gas in Atlantic waters off Virginia and the Carolinas, possibly extending as far as Florida.
Although the Interior Department has endorsed seismic work in the area and the American Petroleum Institute has estimated Atlantic offshore oil and gas production might create 280,000 jobs and generate $195 billion in private investment, Obama may welcome a chance to postpone decisions on opening up the region without eroding U.S. energy security.
The Obama administration is weighing whether to include mid- and south Atlantic oil and gas drilling in the next federal offshore leasing plan, which runs from 2017 to 2022 and likely extends the chances of any commercial development well into the 2030s.
For now, the environmental forces and about 50 members of Congress (including a few Republicans) say underwater seismic air-gun blasts would threaten the survival of whales, dolphins and other sea-life.
Since Obama postponed a decision on drilling off the coast of Virginia after the 2010 BP oil spill in the Gulf of Mexico, opposition to any offshore oil and gas development has solidified, with more than 55,000 public comments filed against Atlantic seismic work in submissions to the Interior Department.
Interior Secretary Sally Jewell is expected to make a decision in April on the seismic plan, but, as Obama has demonstrated in his deliberations on XL, nothing is ever quite final.
For now, however, the pro-Keystone XL factions are not without hope.
