Keystone XL fate far from decided, observers say
TransCanada ‘fully committed’ to pipeline despite Barack Obama vetoing bill allowing work to begin
Delayed but not dead.
That’s the verdict on the fate of the Keystone XL pipeline after U.S. President Barack Obama vetoed a bill to allow construction of the $8-billion cross-border project to go ahead.
The future of the proposal by Calgarybased TransCanada Corp. to carry hundreds of thousands of barrels a day of Alberta oilsands to refineries in Texas is far from decided, observers said.
Obama rejected the Republican-sponsored congressional bill Tuesday, saying he’s reserving judgment on the pipeline until a U.S. State Department review of the project is completed.
“It is not a question of if this project will be approved; it is a matter of when.” GREG RICKFORD NATURAL RESOURCES MINISTER
The six-year review is expected to wind up in a matter of weeks.
TransCanada’s president and chief executive Russ Girling said in a statement the company remains “fully committed” to the project and “will keep working in good faith” with U.S. regulators, including the Environmental Protection Agency.
Canada’s Natural Resources Minister Greg Rickford said the federal government, a pipeline proponent, believes the project will eventually get the go-ahead south of the border.
“It is not a question of if this project will be approved; it is a matter of when,” Rickford said in a statement.
But environmental activists and Midwestern U.S. landowners and native groups opposed to the project said the interim veto is another encouraging sign that Obama will ultimately reject the proposal outright.
“The President has all the evidence he needs to reject Keystone XL now and we are confident that he will,” Michael Brune, executive director of the Sierra Club, said in a joint statement issued by multiple groups.
“President Obama just stood up with farmers, ranchers and Tribal Nations to protect our land and water. We call upon the President to use that same courage and leadership by rejecting the KXL permit once and for all,” Jane Kleeb, of Bold Nebraska, said in the statement.
Canada’s ambassador to the U.S. said he predicts a wild ride ahead in the Keystone XL debate. “We expect a roller-coaster here and we expect setbacks,” Gary Doer said in an interview.
He said lawmakers will probably move on to other issues for a while, then return to Keystone. Congress is in a dispute over immigration rules — which has gotten so bitter that it’s prompted a standoff that could throttle funding after this week to the Department of Homeland Security.
Soon, Doer said, there will be more occasions to discuss the pipeline. He said there’s already talk in Washington of attaching a pipeline provision to a big infrastructure or budget bill. It could be a lot more difficult for the president to veto that kind of legislation.
“We believe people are going to work toward getting broader proposals,” Doer said, adding that he didn’t want to wade into a domestic political debate.
First proposed eight years ago as an extension to the existing Keystone pipe- line, XL would deliver 830,000 barrels a day of oil from Alberta’s oilsands and from the U.S. Bakken shale oil district to refineries on the Gulf Coast of Texas.
TransCanada has said the project will create up to 40,000 jobs, provide a safer alternative to other methods of transportation such as rail and road, and reduce America’s reliance for oil on regimes that are fundamentally opposed to U.S. values.
But a coalition of environmentalists, farmers and Hollywood celebrities warned again this week that the pipeline will become a conduit for the “dirtiest oil in the world,” contributing to global warming and other health and safety risks.
A shortage of pipeline capacity has hurt western Canadian oil producers in recent years, at times resulting in significant price discounting as they are forced to sell into already oversupplied markets in the U.S. Midwest, analysts at CIBC World Markets noted in a recent report.
The situation is starting to change with the start up of Enbridge’s Flanagan South and Seaway Twin pipelines and completion of associated Mainline expansions, the report notes.
The recent plunge in the world price for crude oil could also ease the pressure, according to the report, called “From Shortage to Surplus.” The price of crude oil has fallen by half since June 2014 on lower demand and increased U.S. output, forcing producers to cut spending plans.