Washington Watch

Politics Puts Keystone XL Pipeline in Limbo

American Association of Petroleum Geologists (AAPG)

I first wrote about the Keystone XL pipeline in this column back in September 2010. At the time, the project was nearing the end of a review by the U.S. Department of State for a Presidential Permit.

Fast forward nearly 1½-years later, and not only has the permit not been approved, but the project has become a rallying point for environmental groups opposed to oil development, particularly from Canada’s oil sands.

The White House’s denial of the proposal in mid-January did not scuttle the pipeline, and President Obama said, “This announcement is not a judgment on the merits of the pipeline but the arbitrary nature of a deadline …”

While not dead, any timeline for the pipeline proposal is certainly muddled.

Meanwhile TransCanada’s chief executive officer, said in a statement, “Plans are already under way on a number of fronts to largely maintain the construction schedule of the project.”

Thus, the conversation continues.

First proposed by TransCanada in September 2008, the 36-inch diameter Keystone XL pipeline is designed to bring crude oil from Canada as well as U.S. producing regions to refineries along the Gulf coast. It is an expansion of the existing Keystone pipeline system. And after completion the entire system will carry 1.3 billion barrels of oil per day – more than double its current capacity.

Canada is the largest supplier of crude oil to the United States by a significant margin. This is a mutually beneficial relationship that underpins the world’s largest trading partnership.

The Keystone XL project requires a Presidential Permit, because it crosses the U.S.-Canadian border. And part of the review involves preparing an environmental impact statement (EIS).

The EIS, released in April 2010, was criticized by the U.S. Environmental Protection Agency for being too narrowly focused on the pipeline itself and not considering the potential impact of both the production and consumption of the crude oil in the pipeline. Of particular concern to EPA was the impact on greenhouse gas emissions.

This sentiment was echoed by congressional critics and environmental groups, and their collective efforts forced the postponement of a decision while the State Department gathered additional data.

After nearly one year of review and nine public meetings in Texas, Kansas, Montana, Nebraska, South Dakota, Oklahoma and Washington, D.C., the State Department announced last November that it needed yet more information before rendering a decision. It revised its target date to the first quarter of 2013.

The announcement drew howls of protest from Republicans and supporters of the pipeline project. They charged that the Obama administration was intentionally stalling to appease environmental groups, as well as avoid the issue until after the 2012 election.

Politics certainly played a role in the decision to delay the permit. That’s not a criticism, but rather a characteristic of the policy-making process. And in this instance the president really does face a thorny political problem, with two important constituencies on opposite sides of the issue: labor unions support it and environmental groups oppose it.

But the core reason for the delay articulated by the State Department was growing concern in the state of Nebraska about the pipeline running through the Sand Hills, which federal officials described as including “a high concentration of wetlands of special concern, a sensitive ecosystem, and extensive areas of very shallow groundwater.”

This public concern was real. And the Nebraska legislature convened in special session to review the matter. It passed a law requiring the Nebraska Department of Environmental Quality to review and certify all pipeline projects to be built through the state. It also was clear from the debate that the pipeline would have to be rerouted away from the Sand Hills.

TransCanada publicly supported the legislature’s action and indicated its desire to work cooperatively to find a suitable route for the pipeline.

Meanwhile, back in Washington, D.C., tempers were running short as policy makers labored to pass a payroll tax relief extension before leaving for Christmas. In an attempt to force the president’s hand, congressional Republicans inserted a provision in the bill that required him to decide on the Keystone XL permit by Feb. 23.

If the president had granted the permit it would have delivered a victory to the project’s supporters – but a political one, as opponents would have filed a blizzard of lawsuits claiming that the federal review process was short-circuited.

Denying the permit avoids that court battle, but provides the president’s political opponents with a ready-made sound bite in an election year. And one that is particularly potent if oil prices spike.

And so, once again, the Keystone XL pipeline is in limbo.

But if you can tune out the clamor and din of the debate and see past the political posturing and point scoring, your focus is drawn to a pipeline project that generates jobs, economic activity and enhanced energy security. All of that wrapped up with a heightened sensitivity to prudent and necessary environmental safeguards.

It’s time to get on with it.

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Director's Corner

Director's Corner - David Curtiss

David Curtiss is an AAPG Member and was named AAPG Executive Director in August 2011. He was previously Director of the AAPG GEO-DC Office in Washington D.C.

Policy Watch

Policy Watch is a monthly column of the EXPLORER written by the director of AAPG's  Geoscience and Energy Office in Washington, D.C. *The first article appeared in February 2006 under the name "Washington Watch" and the column name was changed to "Policy Watch" in January 2013 to broaden the subject matter to a more global view.

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