The United States and Canadian governments have apparently decided there is no more room for diplomatic niceties when it comes to Keystone XL.
In a series of terse exchanges, U.S. Secretary of State John Kerry and Canadian Foreign Affairs Minister John Baird in Washington, D.C., forced the issue into its darkest corner yet.
Baird fired the opening salvo by demanding an early answer — even if it’s a “no” — from the Obama administration and Kerry quickly responded that the U.S. will not be forced into short-circuiting its decisions on the pipeline.
Kerry, known for his deep concerns about the impact of greenhouse gas emissions on climate change, told a news conference — with Baird standing alongside him — that the U.S. public has raised lots of questions and concerns about XL’s plan to deliver crude from the Alberta oil sands to Gulf Coast refineries.
“We are all accountable to our publics,” he said.
Baird said “the time for a decision on Keystone is now, even if it’s not the right one. We can’t continue in this state of limbo.”
He again resorted to Canada’s favored argument that XL is a “great project for the future economic prosperity of Canada, it’s a great project that will create a lot of jobs here in the United States; it’s a great project that will increase the energy security of our closest friend and ally.”
EIS, then determination
Kerry promised “our friends in Canada that all of the appropriate effort is being put into trying to get this done effectively and rapidly and my hope is that before long (the State Department’s final Environmental Impact Statement) will be available. Then my work begins.”
The release of that statement starts a 90-day national interest determination before the ultimate verdict is turned over to President Barack Obama, who has a full range of options, including further delay until after mid-term U.S. elections.
Baird, known as the pit bull of Prime Minister Stephen Harper’s cabinet, spent Jan. 22-24 meeting with White House officials and key members of Congress to press for XL approval.
The rail option
At the same time, TransCanada Chief Executive Officer Russ Girling stepped up his threat to use rail to ship oil sands bitumen to Gulf Coast refineries if the pipeline is rejected. Keystone XL is designed to carry about 730,000 barrels per day of bitumen and 100,000 bpd of Bakken crude.
He said that although pipelines are “by far a safer” means of shipping crude he is ready to build rail terminals in Alberta and Oklahoma if that’s what his customers want, adding those discussions are already taking place with shippers and rail companies.
In a speech to the U.S. Chamber of Commerce, one of the business groups strongly backing XL, Baird underscored the “success of the Canada U.S. relationship as well as the economic relationship” set forward in the North American Free Trade Agreement.
Baird also visited with three senators — North Dakota’s Heidi Heitkamp, Louisiana’s Mary Landrieu and Alaska’s Lisa Murkowski.
“I’ll tell you the frustration that many of us have,” Heitkamp told reporters at Baird’s news conference. “It has taken us longer to make a decision than it took us to defeat Hitler in the Second World War.”
Landrieu said the environmental impact report is overdue “and the decision is too,” noting that several train derailments over the past year provide further evidence that XL and other pipelines are the preferred shipping option.
“One of the reasons I support this pipeline is it minimizes the impacts of transporting oil in a more dangerous way, by either truck or rail,” Landrieu said.
Although Baird conceded he has received no indication of where Obama is leaning, he said the U.S. should recognize the strategic importance of Canadian crude.
“If the administration wishes to regulate oil, all oil, in North America, whether it’s produced or imported, that’s a conversation we’re more than willing to have,” he said. “But let’s not single our Canadian oil and treat it differently than American or Mexican or Venezuelan oil.”
CAPP position changes
The Canadian Association of Petroleum Producers dropped its guarded position on the future of oil sands development, partly in response to a crusading concert tour by singer-songwriter Neil Young, who accused operators of ignoring the rights of First Nations and again said the oil sands region looks worse than Hiroshima after the atomic bomb attack in the Second World War.
CAPP President Dave Collyer said Young was guilty of “irresponsible misrepresentations,” telling reporters the industry cares “more about what Canadians think (of the oil sands) than Young.”
He said First Nations are part of a “legal, consultative and constitutional process” that oil sands operators must follow, while Young’s comments would only foster conflict and division rather than lead to long-term solutions.
CAPP reported that aboriginal companies in the oil sands region earned more than C$1.8 billion in 2012 from work under contracts with oil sands companies, pushing the total over the past 14 years to more than C$8 billion.
Justin Bouchard, an analyst with Desjardins Securities, said CAPP has finally done “something it should have done earlier,” suggesting that by keeping quiet the industry conveys the impression that it accepts accusations that crude from the oil sands is “dirty.”
Girling said that projects such as Keystone XL are being put at risk because of allegations that are based on “fantasy ... putting Canada at risk of getting left behind in a competitive global market.”
