Environmentalists, industry leaders renew fight over Keystone XL

With President Barack Obama’s re-election last week, the battle over Keystone XL is back on.

Supporters and opponents have renewed their fight over the $7 billion project, as the Obama administration heads toward a decision early next year on whether to approve a border-crossing permit for the pipeline that would carry oil sands crude from Alberta, Canada to the Gulf Coast.

Both sides are painting the issue as an early test of Obama.

American Petroleum Institute Executive Vice President Marty Durbin noted that on the campaign trail, Obama pledged to support domestic energy development and policies that would help revive the U.S. economy. Approving the Keystone XL pipeline, Durbin said, would achieve both goals.

“We have an important opportunity to create jobs, generate government revenue and strengthen energy security,” Durbin said in a conference call with reporters. “If we have more of an opportunity to source more (oil) from right here in North America while creating jobs and generating revenue, approving the Keystone XL pipeline should be a no-brainer.”

API President Jack Gerard said the Keystone XL permit application gives Obama a chance to show whether he’s serious about North American energy development and his stated support for  “all of the above” in tapping energy sources.

“Keystone will be the first test if the president was serious about his message during the campaign — he’s for all of the above, he wants oil production, he wants to put people back to work,” Gerard said at a Politico energy policy event.

Environmentalists, meanwhile, are preparing to protest the pipeline outside the White House on Sunday — the first big rally since Obama was re-elected.

Nearly a year after Obama first rejected a permit to allow the pipeline to be rerouted in Nebraska around the Ogallala Aquifer and fresh environmental reviews of the new path, environmentalists insist the project is still a bad idea.

Environmentalists say the pipeline would expand the marketplace for oil sands crude, which  produces more greenhouse gas emissions from production to combustion than alternatives because of the energy-intensive techniques generally used to harvest it. Companies typically extract the tar-like hydrocarbon bitumen from Canada’s oil sands by open-pit mining and in-situ techniques involving underground injections of steam that liquefy the otherwise hard fossil fuel.

“Keystone XL is still a crazy idea, a giant straw into the second-biggest pool of carbon,” said environmentalists organizing the march, including 350.0rg’s Bill McKibben, Sierra Club’s Michael Brune and Erich Pica of Friends of the Earth. “We simply need to let the president know we haven’t forgotten and that our conviction hasn’t cooled.”

TransCanada Corp. worked with Nebraska leaders to fashion a new route for the pipeline through that state and filed a new permit application last spring. After a public meeting in Nebraska on Dec. 4, state officials are expected to provide a recommendation to Gov. Dave Heineman, who is then expected to make a decision on whether to reject or approve the new path by early January.

The Obama administration has signaled that it will subject the project to additional environmental review early next year, finally arriving at a decision in the first quarter or early in the second quarter of 2013.

Most of the pipeline project — all but its rerouted path through Nebraska — has already survived three environmental studies, Durbin noted, saying that should streamline the administration’s decision.

TransCanada broke ground on Keystone XL’s southern leg in August, beginning work a stretch of pipeline that will connect the oil hub of Cushing, Okla., with the Texas Gulf Coast. The company won final Army Corps of Engineers permits for the southern project in late July.

In addition to bringing oil sands crude across the U.S.-Canada border, the northern leg would provide a new channel for sending landlocked oil sucked from the Bakken formation in Montana and North Dakota to refineries in the Midwest and Gulf Coast. That oil now generally is sent to other markets by rail and truck.

“We can’t lose sight about the fact that this pipeline is not just about bringing in Canadian oil,” Durbin said, stressing that Keystone XL is an “opportunity to bring increasing production from the Bakken to market. Clearly with the enormous increases in production just in North Dakota alone, we need to provide greater capacity to move that to markets around the country.”

TransCanada has said that about a quarter of the pipeline’s capacity would be made available for Bakken production.

Company representatives and industry analysts have predicted a pipeline permit will be approved in the wake of last week’s election. Speaking at an investor conference, TransCanada’s energy and pipelines president, Alex Pourbaix, said the company continues to believe Keystone XL will win approval.

In an investors report earlier this week, Moody’s analysts said they believe the White House will back the pipeline, but only after a “prolonged” process.

Energy leaders and environmental leaders in Washington are not convinced.

Frances Beinecke, president of the Natural Resources Defense Council, predicted Obama will  reject the pipeline.

“I don’t think it’s in the national interest,” Beinecke said, noting that with a surge in domestic oil development, the pipeline and the oil sands crude it would carry, may not be necessary. Amid bullish forecasts of U.S. oil production, Beinecke asked, “why do we need the Keystone pipeline?”