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Thursday, January 26, 2012

Keystone XL oil pipeline battle has only just begun

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Keystone XL oil pipeline battle has only just begun

View Photo Gallery — ?The controversial Keystone XL pipeline has been under review for more than three years. Environmental groups have argued that the extraction of oil sands contributes to climate change and the pipeline poses leak risks. Supporters of the project say it will create jobs and enhance energy security. Here’s a look at some of the key players in the pipeline plan and the protests against it.

Text SizePrintE-mailReprints By Steven Mufson and Juliet Eilperin,

When it comes to the fate of the 1,700-mile Keystone XL pipeline, proponents and foes agree that the fight did not end with President Obama’s decision Wednesday to reject the pipeline’s permit application. The question is how the battle will be waged in the months to come.

A war of words is being fought on the campaign trail. And some House Republicans vow to again seek legislation to clear the path for the controversial pipeline. Environmental groups say they will fight not only new Keystone proposals but also other major oil pipelines that would carry crude from Canada’s oil sands region.

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Raising the stakes in a bitter election-year fight with Republicans, President Obama on Wednesday rejected a Canadian company's plan to build a 1,700-mile pipeline to carry oil across six U.S. states to Texas refineries. (Jan. 18)

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Meanwhile, TransCanada, which proposed the pipeline, said it will not only file a new permit application but also might pursue a truncated system within U.S. borders that would not require State Department approval. Such a pipeline could serve the growing output from the Bakken shale oil fields in Montana, ease the bottleneck of crude oil at the major terminal in Cushing, Okla., and later hook up with cross-border lines.

“We think that the Keystone pipeline will get built,” said Jamie Webster, a senior manager at the Washington consulting firm PFC Energy. “The caveat is that it might not be called the Keystone pipeline. The point is that there will be a way for these barrels to find a way to the United States.”

Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, said in an interview Thursday that “we’re going to look for every opportunity to pass legislation” to ease the way for the pipeline’s construction. He said he supports a measure introduced by Rep. Lee Terry (R-Neb.) that would take the permit decision “out of the hands of the State Department” and give it to the Federal Energy Regulatory Commission.

Upton said it would be possible to again attach a Keystone provision to an extension of the payroll tax reduction, which expires in late February, though he said the GOP leadership was “just getting organized in terms of priorities we’re going to pursue.”

Other energy experts said, however, it is unlikely that the Terry bill could pass the Senate (it failed to last year) or that the Republican congressional leadership will risk a showdown over a payroll tax cut rather than simply make political use of Obama’s decision.

“There are some Republican members who really wanted to get the pipeline approved this year and thought this legislative strategy would work and they are dismayed,” said Robert McNally, an energy consultant who served on President George W. Bush’s National Economic Council. But he said there are others “who believe that the defeat on Keystone will pay dividends in the election this year.”

TransCanada and the province of Alberta took a pragmatic stance.

“There is a regulatory process in place, and we have to respect that process,” Alberta Premier Alison Redford said. “The good news is that the president said he wasn’t making a decision on the merits of the project. It does allow for reapplication.”

“There are a lot of options that are being looked at right now,” TransCanada spokesman Terry Cunha said. “At the end of the day, we’re interested in building a pipeline that will move additional crude oil into the U.S. Gulf Coast.”

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