Keystone pipeline on the line
Jobs, security at stake as Canada awaits decision by Obama,
The Ukraine-Russia conflict is renewing calls for U.S. energy independence as Europe’s reliance on Russian gas is questioned. The European Union imports a third of its natural gas from Russia, much of it flowing through Ukrainian pipelines. But with Russian President Vladimir Putin controlling the spigot, the U.S. and Europe are watching for signs that the gas flow will be used as leverage.
President Obama says he’ll decide in the next few months whether to approve the Keystone pipeline. The 875-mile pipeline would carry oil from Alberta, Canada, into the Midwest and Gulf Coast.
Construction contracts, materials and support purchased in the U.S. would total about $3.1 billion, with an additional $233 million for construction camps. Some environmentalists are trying to block it. I caught up with Joe Oliver, Canada’s minister of natural resources — first on my new Fox Business Network morning show, then on the phone to see how long Canada is willing to wait for a decision be-
fore redirecting its oil to Asia. Our interview follows, edited for clarity and length.
Q: What are you expecting from President Obama on Keystone approval?
A: The arguments in the national interest in favor of approving Keystone are overwhelming. The U.S. State Department said 42,000 construction jobs would be created, (with) billions of dollars in economic activity, hun-
dreds of millions of dollars in revenue to governments to support critical programs and enhanced national security.
The environmental issues have been dealt with decisively by the final and fifth environmental-impact statement by the U.S. State Department. That report followed four others that were independent and science-based. They concluded that there would not be a significant impact on the environment, and that not building Keystone would increase greenhouse gas emissions by 28% to 42%, because the alternative forms of transportation by train and truck, would result in higher emissions, but also potentially higher accidents.
This pipeline would be safer than existing pipelines because of improvements in technology. The economic and national security advantages are very strong. If the facts and the science are taken into account, we would expect a positive decision.
Q: What kind of volume would you expect from this project in terms of oil shipments?
A: This project will transport 830,000 barrels a day; approximately 525,000 barrels will be from the Canadian oil sands crude. About 20% to 25% would be light oil from the Bakken formation, in Montana and North Dakota, (and) a very little bit from Saskatchewan. That would further contribute to energy security.
We are already the largest oil supplier to the United States, delivering 3 million barrels of crude and petroleum products every day, more than Saudi Arabia and Venezuela combined. By the way, Venezuela has threatened to cut off the United States five times in a recent period. It raises the issue of reliability and safety.
Q: How would this affect regular people?
A: All the oil coming down, which will come down to Texas, to the Gulf Coast, will be refined in Texas refineries. That is to say, all of it will be processed in America.
That is a big advantage because the Texas refineries process heavy crude, which is the crude oil that comes from the from the oil sands. That is why they are
very enthusiastic to see this pipeline built, because it means jobs and economic activity in Texas. That will be generating tax revenue for governments and employing Americans. The refined product, the gasoline or the diesel, mainly gasoline, will be used in the United States. Whether some of it is exported or not, I don’t know. But the job creation activity will happen in the U.S.
Q: Are those jobs largely in construction or engineering or something else?
A: The nature of construction jobs is that they’re temporary. You could start something, and you move on and construct something else. There will be blue-collar jobs, and there will be jobs for engineers, for geologists and or for people involved in manufacturing. Then there is the spillover of jobs that come from the services that are provided to these companies. It’s a full range of jobs that tend to be higher-paid, higherskilled jobs. Also a lot of union jobs, which is why the construction unions are very supportive of this.
The pipeline goes through quite a few states. That’s why this project is supported by the governors of every state through which the pipeline will go. Also, I believe
it was Gen. James Jones who recently concluded that not approving this would be a favor to Vladimir Putin.
Q: You’re saying this is an issue of national security?
A: It is an issue of national security because we’ve seen the additional reminder that energy insecurity can lead to political instability and political weakness. Conversely, energy security provides independence.
Q: This project was proposed in 2008, and you still don’t have an answer. How long are you and your government willing to wait for a decision?
A: It’s not a question of our taking our marbles and leaving. We
“If the facts and the science are taken into account, we would expect a positive decision.”
Joe Oliver, Canada’s minister of natural resources
want to see this approved. We believe strongly that it ultimately will be approved. We hope it’ll be approved soon, because this is a shovel-ready project, and we’d like to see the jobs created now and the economic growth start right away. The southern portion has already been built. We’re only talking about 875 miles.
But in the meantime, we are
pursuing other alternatives. We have to, as a matter of national interest, diversify our markets. There were a number of pipelines which would move oil to the west and to the east to the Asia-Pacific market, which has a huge need for energy. If Keystone isn’t built, the oil, or part of it, l will continue to be shipped into the United States, partly through through rail and and other pipelines. We are looking at other parts of the United States which have an interest in receiving the oil, and the oil can come through a combination of rail and pipe, which wouldn’t need presidential approval.
Q: The State Department has issued a report saying that this can be done safely. But we also know that mistakes happen. Knowing feelings after the Gulf spill, how can you assure people this can be done safely?
A: The oil spill in the Gulf was different. That was offshore oil. Accidents for pipelines are of a different order, because you can cut off the supply. You just turn it off, and the oil stops flowing. Our safety record in our country is 99.999% of all goes through safely. Actually, it’s higher than that. The percentage of accidents is very, very small. That’s a record that goes over quite a few years. There is no question that the safest form of transportation of oil is by pipeline.
Q: Have the incidents in Russia these last two weeks enforced this notion of energy independence?
A: The issue of energy security has become very top of mind now in the light of the crisis in Ukraine. Europe imports about a third of its gasoline from Russia, and Ukraine imports about 70% from Russia. Six or seven countries in Europe import almost all of their gas from Russia. That is clearly having a geopolitical impact. It is this vulnerability that Europe has to Russian energy, both gas and oil, that weakens it. (Putin) has threatened to cut off some European countries before over the last few years. And it just strengthens and encourages the rather thuggish behavior we’ve seen from Vladimir Putin.