It’s time for the annual stocktaking on the Keystone XL, the sixth since the project that has no parallel in the history of energy pipelines that extend for hundreds of thousands of miles across North America.
And the bottom line is virtually indisputable.
The outlook is bleak, certainly bleaker than a year ago and unimaginably bleaker than when TransCanada formally launched the venture in 2008.
The shadow over the plan to ship about 700,000 barrels per day of mostly heavy crude from the Alberta oil sands and perhaps 100,000 bpd from the Bakken to refineries on the Gulf Coast extends from the Oval Office.
Entering 2014, there was a reasonable degree of hope that President Barack Obama might give a green light to XL, given that the State Department had issued a preliminary sign that approval and support for the project among Americans had remained robust.
Instead, Obama has portrayed the pipeline as a contributor to climate change.
He is now using the term “tar sands” rather than “oil sands” and persists in making a public case that XL crude would come largely from Canada, cross the United States and end up in markets beyond North America - a claim that has caused TransCanada Chief Executive Officer Russ Girling to accuse Obama of engaging in “pure fabrication.”
There were observers who thought Obama might seize a chance to dampen some Republican momentum heading into mid-term elections and approve the pipeline, but that was not to be.
As the year progressed Obama sounded progressively more negative, diminishing the chances that he will issue a Presidential Permit during his final two years in office.
Obama’s message
Obama’s well-honed message on XL gets delivered whether he is quizzed by reporters at a pre-holiday news conference at the White House or by the quirky host on the Colbert Report.
“There is very little impact, nominal impact, on U.S. (gasoline) prices - what the average American cares about - by having this pipeline come through (U.S. territory).
“It’s good for Canadian oil companies and it’s good for the Canadian oil industry, but it’s not going to be a huge benefit to U.S. consumers and it’s not even going to be a nominal benefit to U.S. consumers.”
He also scaled down his previous estimates of XL’s prospects of creating manufacturing and construction jobs, rating the $8 billion venture as a “blip” for the U.S. economy.
“The construction of the pipeline itself will create probably a couple of thousand jobs - those are temporary jobs,” he said.
“There’s probably some additional jobs that can be created in the refining process down in the Gulf. Those aren’t insignificant ... but when you consider what we could be doing if we were rebuilding our roads and bridges around the country, we would probably create hundreds of thousands of jobs.”
Obama also said claims that XL would wean the U.S. off Venezuela, Nigerian and Middle East oil have been exaggerated.
“There’s been this tendency to really hype this thing as some magic formula to what ails the U.S. economy. It’s hard to see on paper where exactly they are getting that information from.”
Industry doesn’t buy it
Having absorbed Obama’s latest assessment of XL, TransCanada and the American Petroleum Institute were left to reiterate their usual defenses of the project.
TransCanada said in a statement that moving crude on XL, apart from providing “thousands” of construction jobs for American men and women, would be “safer, produce fewer (greenhouse gas) emissions to get the product to a refinery and would be a much more efficient way to move these crude oils over longer distances.”
The API stressed that at least 2,400 U.S. companies in 49 states are already involved directly or indirectly in the oil sands.
“The president continues to talk about enhancing this nation’s infrastructure, yet for more than six years he has delayed the biggest shovel-ready infrastructure project out there: The Keystone XL pipeline.
“The president continues to ignore the findings of his own State Department and continues to side with the fringe anti-Keystone XL minority, whose only goal is to shut down fossil fuel development altogether - and the jobs, economic growth and energy security that comes with it.”
Matt Dempsey, a spokesman for the pro-pipeline Oil Sands Fact Check, said Obama “doesn’t seem to understand that oil from Canada is helping provide relief at the pump - right now.”
Canada’s Foreign Minister John Baird said only that he would press with efforts to persuade Washington of XL’s benefits, while continuing to “promote Canada’s interest.”
But Prime Minister Stephen Harper, who once said that approving XL was a “no-brainer” and that he would not take a “no” from Obama as an answer, has quieted on the project while facing pointed criticism at home that he has misread Obama’s resolve.
The carbon card
The Canadian government has also come under fire for failing to introduce strong environmental measures to reduce the carbon output from the oil sands.
Alberta Premier Jim Prentice, who was elected to lead his province only four months ago, is not helping matters by indicating that long-promised rules to cut greenhouse gas emissions need much more work to balance environmental performance and energy-sector competitiveness.
He said the existing regulations, which feature a C$15 per metric ton levy for carbon emissions from major industries, will remain in force through June 2015 - nine months behind schedule.
“I can tell you there is a lot of hard work going on,” Prentice said. “The policy isn’t yet in the condition that I want to have it.”
That stalling undermines Alberta’s efforts to lobby the Obama administration and Congress on the benefits of XL and to counter those who say the existing carbon levy is too low and does not cover all of the emitting facilities, or impose reductions as the oil sands sector expands - factors that will weaken the message Prentice hopes to deliver in Washington in January.
But Prentice is undaunted, promising that Alberta will be in the forefront of environmental initiatives provided other provinces join its efforts.
Amid all of this confusion and uncertainty there seems little reason for hope that XL will be any closer to resolution a year from now, other than possibly being closer to oblivion.
