Oil pipeline Keystone XL’s fate debated after Obama’s speech on climate change

In a recent speech addressing climate change, US President Barack Obama arguably tied the fate of the heavily debated, proposed Keystone XL oil pipeline to its impact on greenhouse gas emissions.

Halfway through his speech at Georgetown University in Washington, D.C., Obama singled out the pipeline project, saying a US energy strategy will be encompass many different sectors. “It’s certainly going to be about more than just building one pipeline,” he said.

TransCanada’s Cdn$ 5.3 billion pipeline project will only get a green light if the US State Department, required to grant approval since the pipeline will cross an international border, thinks the project serves the nation’s interests, the President said to applause, which means it must not significantly “exacerbate the problem of carbon pollution.”

“The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It’s relevant,” he added.

Canadian relations

The long-delayed project carrying oil from Alberta’s oilsands to refineries on the Gulf Coast has seen much opposition, with many environmental groups pressuring the President to veto the project. On the other side, Republicans, and business and labour groups, have urged the Obama administration to approve the pipeline as a source of jobs and a step toward North American energy independence.

Canada has said the project would be a welcome economic boost, and Canada’s Prime Minister Stephen Harper has warned that its rejection could tarnish relations with the US.

Canada has the world’s third largest oil reserves, with 170 billion bbls of proven reserves in the oilsands region alone. Canada needs infrastructure in place to export its growing production. The country relies on its southern neighbour for 97% of its energy exports.

Long-delayed decision

On 1^st March 2013, the US Department of State released a Draft Supplementary Environmental Impact Statement (Draft SEIS) on Keystone XL that reaffirmed “there would be no significant impacts to most resources along the proposed Project route.”

The report acknowledged that development of the oilsands in Alberta would create greenhouse gases, but it also made clear that other methods to transport the oil — including rail, trucks and barges — also pose a risk to the environment. For instance, a scenario that would move the oil on trains to mostly existing pipelines would release 8% more greenhouse gases than Keystone XL, the report said.

Reactions

In reaction to Obama’s speech, Canada’s Natural Resources Minister said he’s confident the oil pipeline will be approved because it meets President Obama’s requirement that it not lead to a significant increase in greenhouse gas emissions.

Minister Joe Oliver pointed to “Obama’s very own State Department” which he said concluded in a report this year “that there would be no increase in greenhouse gas emissions.”

“This pipeline has been the most studied pipeline in the history of the world,” Oliver added. 

Similar to most discussion related to the Keystone XL pipeline, reaction to Obama’s comments was sharply divided. Environmental groups have interpreted the speech as indicative of the pipeline’s impending rejection, where as energy industry representatives, including TransCanada, said they believe the pipeline will meet Obama’s criteria.

Renowned climate activist Bill McKibben said on Twitter, “So pleased that Barack Obama understands that the KXL fight is about climate.” Al Gore, on his blog, wrote that “This was a terrific and historic speech, by far the best address on climate by any president ever.”

However, the President did not reject the pipeline in his speech, nor promise to do so in the future. Forbes staff writer Christopher Helman has chosen to focus on the word ‘exacerbate’, which leaves a lot of wiggle room. “It means to aggravate, to sharpen, or to make a bad problem worse. The anti-Keystone crowd naturally thinks that the pipeline, or anything that aids in the transport of oilsands crude, would exacerbate carbon emissions. But that’s not what the State Department found [in its Draft SEIS],” he notes.

TransCanada, the Calgary-based company that has proposed the pipeline, said in a statement it was pleased with Obama’s comments setting out criteria for pipeline approval.

“The almost five-year review of the project has already repeatedly found that these criteria are satisfied,” said Russ Girling, TransCanada’s President and Chief Executive.

Political decision

After considering Obama’s speech, Greg Stringham, the Canadian Association of Petroleum Producers’ Vice-President of Oilsands and Markets, said he believes it is another step toward the oil pipeline’s ultimate approval when considered in conjunction with the State Department draft environmental review.

“It’s still a political decision so we’re looking for certainty and we’re hoping it will be sooner rather than later,” Stringham said. “But as we look at the process through this, as the State Department is working on their final environmental impact assessment, we don’t see anything that would have changed the conclusions they came up with in March.”

The pipeline would carry 800 000 bpd of oil across six US states to refineries along the Gulf Coast. A southern leg from Oklahoma to ports near Houston already has been approved, and construction is proceeding.

The Obama administration is expected to make a final decision on Keystone by the end of the year.

Edited from various sources by Cecilia Rehn.

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