KEYSTONE PIPELINE DEBATE STRETCHES OVER 6 YEARS.
With no end in sight, industry has moved on
Friday marks the sixth year to the day TransCanada Corp. filed an application with the U.S. State Department to build the 1,900-kilometre Keystone XL pipeline. Since then it has become not only the most polarizing energy project in North America, but has taken on a life of its own almost separate from the Calgary-based company that proposed the project.
“Keystone XL is a political phenomenon that has gone to a place that no company would want — it is symbolic of a lot of different things,” said Sarah Ladislaw, director and senior fellow in the energy and national security program at Washington, D.C.-based Centre for Strategic and International Studies. “It is used now as a shorthand … to signal ideological divisions.”
For the industry, the controversial project is seen as an efficient access point to its key market in the Gulf Coast; for environmentalists it is a portal to climate hell. For others it is neither an access
issue or environmental cause
célèbre.
For David Domina, a lawyer and Democratic candidate for the U.S. Senate, it is about reenforcing landowners’ rights. Mr. Domina has been making the case for landowners against the Nebraska governor’s approval of the pipeline’s route in front of the state’s Supreme Court in Lincoln, Neb.
“All of my work in this lawsuit has been focused on protecting these landowners,” Mr. Domino said in a phone interview from Lincoln. “That’s what this case is about — it is a siting and landowner’s rights issue. There is no environmental dimension to my work as a lawyer here.”
But environmental issues do loom large over the project. It has been waylaid by environmentalists’ pressure on President Barack Obama who must make the final call on the project, as it crosses an international border.
“In those six years, more than 10,000 miles of oil and natural gas pipelines have been built in the U.S. That’s enough pipe to cross the country nearly four times,” Cindy Schild, spokeswoman for the American Petroleum Institute, a U.S. oil and gas lobby group, said at an event in Washington marking the application’s sixth anniversary.
“But for Keystone XL, what should have been a routine approval process lasting less than two years has been politicized into six years of squandered opportunity.”
After 17,000 pages of research produced by the State Department, the president decided in April to delay a final decision, citing a legal dispute in Nebraska, where the northern portion of the pipeline ends.
That dispute can be traced back to 2012, when the Nebraska legislature gave Governor Dave Heineman the authority to approve a revised route for the pipeline in that state. But last February, a lower court declared the legislation unconstitutional. That case is currently with the Nebraska Supreme Court and the effect of the lower court’s decision has been stayed pending the outcome of that appeal.
Despite the drawn-out legal process, the industry has moved on. Since the Keystone XL application was filed, Canadian production has risen by a million barrels of oil per day and U.S. production has increased two million barrels per day, TransCanada says.
“Keystone XL has the ability to transport up to 830,000 barrels of oil per day, so with or without Keystone XL, there is still a shortage of pipe transportation capacity and the industry still needs to move significant volumes,” said Mark Cooper, spokesman for TransCanada.
Indeed, the pipeline’s southern leg has been operational since January, quietly pumping 300,000 barrels per day into U.S. Gulf Coast refineries.
The company had to refile a petition for certification with the South Dakota Public Utilities Commission on Sept. 15 as its permit had lapsed. Such delays have doubled the cost of building the pipeline in the state to US$1.9-billion.
“We won’t know the final cost estimate for the project until we receive our permit,” Mr. Cooper said in an email, noting that increased costs will be borne from inflation, fluctuating currency rates, labour contracts, materials storage and additional conditions placed by the Department of State. “These pressures may differ from state to state, but we expect the overall magnitude of the increase to be similar in other states.”
Ramping up the pressure on politicians, environmental groups, meanwhile, are planning a spectacle at the United Nations Climate Summit in New York on Sept. 23, at which 100,000 people are expected to join the “People’s Climate March.”
For their part, three Republican and a Democrat counterpart introduced a new bill this week to fast-track projects like Keystone XL.
“The North American Energy Infrastructure Act eliminates the presidential permit requirement for projects crossing the national boundary between the United States and Canada or Mexico and puts the decision-making into the hands of appropriate agencies,” the senators said in a joint statement.
Senate GOP leader Mitch McConnell believes the chamber will vote on Keystone XL next year if Republicans take control of the senate in November elections.
The political heat around Keystone XL simmers along, although not to the extent lobbyists from other side would like to believe.
“It’s not a top-tier issue,” Ms. Ladislaw said, noting that it’s unclear that funding by some U.S. billionaires has advanced the case of the green groups. “I don’t think it is more or less important than, say, the issue of big government, small government and foreign policy.”
Even Mr. Domina admits climate change is not on the radar in his state.
“In Nebraska the climatechange issue is not a first-tier issue,” he said. “Landowners’ rights are. And the behaviour of TransCanada as a company is certainly an issue. I haven’t made [climate change] an issue in the Senate campaign at all, and few people have brought it up as an issue to me.”
“There are certainly some [Senate] races focused on climate change and environmental issues, and there will be more of those with each election cycle,” Mr. Domina said.
As TransCanada prepares to jump over various regulatory and legal hoops, Mr. Domina thinks the Nebraska court is unlikely to make a decision before Nov. 4, the day of the mid-term elections. “I suspect we should start watching closely on Friday mornings — they always announce these decisions on Friday — starting probably mid to end of November.”
Even that, however, would not mark the end of Keystone XL’s journey through the longwinded regulatory process.