Pressure builds on Obama with looming Keystone deadline

WASHINGTON – A looming deadline for a decision on the Keystone XL pipeline is ratcheting up political pressure on President Barack Obama, who will anger key supporters regardless of his decision.

Calgary-based TransCanada Corp.’s proposed 1,700-mile pipeline would carry tar-sands crude from Alberta to Texas refineries in Port Arthur and Houston.

It appeared late last year that the administration had found a way to delay the permitting decision past this year’s election. But the pipeline’s Republican supporters raised the stakes by negotiating inclusion of a 60-day decision deadline as part of the two-month payroll tax cut extension enacted Dec. 23.

The Feb. 21 deadline forces Obama to choose between the wishes of two key constituencies – environmentalists and some Democratic fundraisers who oppose the pipeline, and some labor unions that support it as a job-maker.

The decision on a permit technically rests with the State Department because the pipeline would cross the U.S.-Canada border, although Obama said last year that he might make the final decision himself. A decision had been expected by the end of 2011.

In November, the State Department said it would delay the pipeline decision until after the 2012 election, citing the need to study alternative routes that avoid a drinking- water aquifer in Nebraska.

Republican move

Republicans trumped that move by tying the Keystone deadline to the payroll tax cut extension and including a provision allowing Nebraska and TransCanada time to find an alternative route in the state if Keystone XL is approved.

TransCanada spokesman Terry Cunha said that if the pipeline is approved, the company could start building other portions of it during the selection and evaluation of its route through Nebraska.

But Anthony Swift, staff lawyer with the Natural Resources Defense Council, which opposes Keystone XL, said it would be illegal for the U.S. to approve the pipeline without knowing and studying the final Nebraska route.

State Department spokeswoman Victoria Nuland said last week that the department “will make an appropriate decision consistent with relevant law.”

TransCanada options

Cunha declined to say what TransCanada will do if the administration rejects the pipeline.

It could reapply, making changes to address the basis of the rejection, but the revised application would have to go through the same lengthy review process, said William Bumpers, a lawyer with Washington-based Baker Botts who has represented energy companies.

Republicans say construction of the pipeline would create 20,000 jobs and make America more energy secure.

The American Petroleum Institute, an oil-industry group leading an election-year campaign to push Americans to vote on the basis of energy issues, warned of major consequences for Obama if Keystone XL is rejected.

Pipeline opponents are running their own campaigns, contending the project would create at most 6,000 temporary jobs, promote an especially dirty form of oil and possibly pollute groundwater.

Swift, of the Natural Resources Defense Council, said pipeline opponents are spotlighting information that they believe is not getting enough attention – rejecting, for example, proponents’ contention that the pipeline would reduce reliance on foreign oil from the Middle East.

Effect on imports?

They point to a government study that found Keystone wouldn’t affect U.S. oil imports from Canada through 2030.

Swift also said Gulf refiners, such as San Antonio-based Valero, could export their refined products and enjoy tax benefits.

Valero spokesman Bill Day said, however, that crude from Keystone XL would be mixed with oil from other sources at Valero’s Port Arthur refinery, and that most of that refinery’s production goes to domestic uses.

“It’s unfortunate that it’s become a political issue rather than an economic issue,” Day said.

Simone Sebastian contributed to this story.

puneet.kollipara@chron.com

16 Comments

  1. Hey Bozo, do the freaking Country a favor just once? Approve this , then get the hell out of town!

    #1
  2. OnnaSinkinShip

    The concerns are way over-hyped. There are lots of pipelines even undersea that have had no problems for decades. We need less dependence on middle-east oil, and this is one piece of that solution.

    #2
  3. texdjd

    Looks like you don’t get to punt on this one Odumma. You’re gonna have to tie some popsicle sticks to that wimpy backbone of yours and make a decision! It should be an easy one btw if you’re really concerned about jobs and reducing our dependence on oil from countries that hate us.

    #3
  4. Peeper

    The Chevy Volt is doing great!

    #4
  5. Frank Bowers, FIC. Austin, TX 100% DAV, FIC

    How sad so few must disagree with our president the fact is that over 51% of the citizens did and put him in office. At least he did not drag our nation into 12 trillion of indebtedness to China and two wars.

    #5
  6. whirlwind

    its going to happen. just look at the amount of icebreaker, deep sea drilling ships that EVERYONE in the world is building. the treaty of not drilling in the artic is ending. its going to be a mad dash for oil in the up north.

    #6
  7. Greg

    @Peeper,
    All we need is to add millions of electric cars to an already over taxed power grid. The EPA is shutting down more plants too.

    #7
  8. Robert F.

    What I don’t get is why they need to ship it all the way across the country to refine it in an area thats prone to hurricanes and subsequent price spikes. Seems to me that it would be easier to refine it up north then ship finished product directly to markets. This is a different type of crude oil and not the light crude the Gulf refineries are built to refine so they will need extensive refits to deal with it.

    Unless of course the Canadians just want to sell crude to China and India then this is the most direct route to that market without having to cross the Rocky mountains.

    Are we getting the full story?

    #8
  9. Greg

    Robert, the refineries already exist on the gulf coast. To pipe it somewhere else would require massive costs in addition to the pipeline:
    - hundreds of milliions of dollars for the refineries
    - all the infrstructure to move raw materials into the refineries and product out (refineries do many things, so the one pipeline for crude from Canada won’t do it)
    - relocation of workers, and building communities to support them

    #9
  10. Robert F.

    Not all refineries are located on the Gulf. Indiana, Kansas, Minnesota, Montana, North Dakota and Ohio to name a few, not to mention refineries within Canada itself. Ft. McMurray which is the origin point already has all the needed infrastructure plus a half dozen bitumen processors already operating.

    They seem extremely eager to bypass all of them to get to the Gulf and all the inherent problems there.

    #10
  11. Big Pappy

    Robert F., the refineries you mention are not equipped to run this type of crude (heavy). The expansion in Port Arthur (Motiva) was to be able to run the cheaper, heavy crude. The refineries in the states you mention DO NOT have the capability to run heavy crude at the rates needed to reach economies of scale, or at all.
    .
    Pappy

    #11
  12. Robert F.

    “are not equipped to run this type of crude (heavy)”

    I addressed the issue of the heavy crude in my first and second posts. Plus if Port Arthur needed an expansion then the same could have been done to any of the more northern refineries.

    Its OK. You guys can go ahead and admit to why its important for them to have a pipeline all the way from Canada to the Gulf ports. There’s a reason why that’s attractive to them and it sure isn’t the hurricanes.

    #12
  13. David Gower

    Isn’t part of the situation to have a replacement for the heavy Venezuela crude? Cousin Hugo is not the most stabile person in the world. I think his bud from Iran was just down there for a visit.

    #13
  14. Land_of_the_free

    The towers at refineries are designed and build to take a 500mph+ wind. They may shut down for a day or so during a hurricane, but come back up, unless they are below sea level like the one in New Orleans. The refineries are mainly in Texas and Louisiana because they can get the permits to build and expand there. Having the refined products “landlocked” in the middle of Alberta doesn’t solve the basic problem of distribution. At least crude takes just one pipeline, but refined products take multiple lines. What about the huge refineries in California with those earthquakes?

    #14
  15. Fred

    Robert F…the problem is nobody can get permits to build new refineries with this EPA. It’s hard enough getting permits to as built existing refineries. We haven’t built a new refinery in the U.S. since the 70′s.

    #15
  16. Robert F.

    “the problem is nobody can get permits to build new refineries with this EPA. It’s hard enough getting permits to as built existing refineries. We haven’t built a new refinery in the U.S. since the 70?s.”

    Bull hockey. There have been no refineries built since the 70′s because the industry didn’t want or need them. They closed refineries because they upgraded others for efficiency combined with less consumer demand.

    Trying to blame that on the EPA is a model straw man argument. Gimme a break.

    http://www.usnews.com/opinion/blogs/energy-intelligence/2011/07/29/no-new-oil-refineries-since-the-1970s-but-capacity-has-grown

    #16