Keysone XL pipeline fate

SUBHEAD: Canada pledges to sell oil to Asia after Obama rejects Keystone pipeline. By Theophilos Argitis on 19 January 2012 for Bloomberg News - ( Image above: lanborer's International Union of North Anmerica members supporting KXL pipleline. From original article.

President Barack Obama’s decision yesterday to reject a permit for TransCanada Corp.’s Keystone XL oil pipeline may prompt Canada to turn to China for oil exports.

Prime Minister Stephen Harper, in a telephone call yesterday, told Obama “Canada will continue to work to diversify its energy exports,” according to details provided by Harper’s office. Canadian Natural Resource Minister Joe Oliver said relying less on the U.S. would help strengthen the country’s “financial security.”

The “decision by the Obama administration underlines the importance of diversifying and expanding our markets, including the growing Asian market,” Oliver told reporters in Ottawa.

Currently, 99 percent of Canada’s crude exports go to the U.S., a figure that Harper wants to reduce in his bid to make Canada a “superpower” in global energy markets.

Canada accounts for more than 90 percent of all proven reserves outside the Organization of Petroleum Exporting Countries, according to data compiled in the BP Statistical Review of World Energy. Most of Canada’s crude is produced from oil-sands deposits in the landlocked province of Alberta, where output is expected to double over the next eight years, according to the Canadian Association of Petroleum Producers.

“I am sure that if the oil sands production is not used in the United States, they will be used in other countries,” Fatih Birol, chief economist at the International Energy Agency, said in an interview before a speech at Imperial College in London today.

‘Profound Disappointment’

Harper “expressed his profound disappointment with the news,” according to the statement, which added that Obama told Harper the rejection was not based on the project’s merit and that the company is free to re-apply.

Canada this month began hearings on a proposed pipeline by Enbridge Inc. to move crude from Alberta’s oil sands to British Columbia’s coast, where it could be shipped to Asian markets.

Environmentalists and Canadian opposition lawmakers welcomed the Obama administration’s decision. Megan Leslie, a lawmaker for the opposition New Democratic Party, said the Keystone pipeline project was harmful to Canada’s energy security.

“What I’m opposed to is continuing the unchecked expansion of the oil sands,” Leslie said by telephone.

New Flashpoint

Enbridge’s pipeline may now become the new flashpoint between Harper and the opposition. Harper has said building the capacity to sell the country’s oil to Asian markets is in the national interest, and the government will review regulatory- approval rules for new energy projects so they can be done more quickly. Harper has also said he will look more closely into complaints that “foreign money” is being used to overload the regulatory process.

“We have to have processes in Canada that come to a decision in a reasonable amount of time, and processes that cannot be hijacked,” Harper said at a press conference Jan. 6 in Edmonton.

The Keystone decision is the latest of several U.S. moves that have irked Canadian policy makers. Canada objected to “Buy American” provisions in the Obama administration’s $447 billion jobs bill that was blocked by Republicans in Congress, as well as the restoration of a $5.50 fee on Canadian travelers arriving in the U.S. by plane or ship.

Approval of Keystone is a “no-brainer,” Harper said in a Sept. 21 interview with Bloomberg.

Cornerstone of Development

Yesterday’s rejection “certainly introduces new uncertainties into the economic relationship,” said David Pumphrey, deputy director of the energy and national security program at the Center for Strategic and International Studies in Washington. “This is a cornerstone of economic development for the country.”

The denial came before a Feb. 21 deadline set by Congress after Obama postponed a decision in November. TransCanada said the 1,661-mile (2,673-kilometer) project would carry 700,000 barrels of crude a day from Alberta’s oil sands to refineries on the U.S. Gulf coast, crossing six U.S. states and creating 20,000 jobs.

“I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy,” Obama said today in a statement. “We will continue to look for new ways to partner with the oil and gas industry to increase our energy security.”

Canadian policy makers said they remain optimistic TransCanada will eventually be able to proceed.

Still Supporting

Alberta Premier Alison Redford said in a press conference in Edmonton that it is still “entirely possible” the pipeline will be built and said it was good news that TransCanada planned to apply again.

Canada will continue to support TransCanada Corp. (TRP)’s plans to build the Keystone XL pipeline, Canadian Foreign Minister John Baird said, adding that it is in the best interests of both Canada and the United States.

“We strongly believe that Keystone’s in the best interests of both countries,” he said. “We’ll continue to be an active supporter of the project.”

By Kate Anderson on 18 January 2012 for Bloomberg News - ( Image above: Hippie generation baby boomer protests KXL pipleline. From original article.

President Barack Obama’s rejection of TransCanada (TRP) Corp.’s Keystone XL pipeline permit exposed a split in a core Democratic constituency and handed Republicans a new line of election-year attack.

Unions representing construction workers condemned the move while labor groups including the United Steel Workers, the United Auto Workers and the Service Employees International Union joined with environmental advocates in saying they support Obama’s decision. It also triggered swift criticism from congressional Republicans and the party’s presidential candidates.

“The Republicans’ argument that he’s trying to run a populist campaign firing up the liberal base and that this is all politics at the expense of jobs is going to be an important continuing issue through much of the campaign,” said David Gergen, director of Harvard University’s Center for Public Leadership in Cambridge, Massachusetts, and an adviser to presidents of both parties.

Obama is heading into his re-election campaign with the U.S. still rebounding from the worst recession since the Great Depression and an unemployment rate that has been stuck above 8 percent for almost three years. The economy will be a prime focus of Obama’s State of the Union address on Jan. 24.

The jobs promised by the building of the Keystone pipeline were central to union support for the project originally and the focal point of Republican criticism of Obama. TransCanada said the 1,661-mile (2,673-kilometer) project would carry 700,000 barrels of crude a day from Alberta’s oil sands to refineries on the U.S. Gulf coast, crossing six U.S. states and requiring as many as 20,000 workers to build.

Big Decline

TransCanada fell 33 cents to $41.41 at 4:15 p.m. in New York, and earlier today fell 4.8 percent, the biggest intraday decline since June 2009.

Republicans joined in criticism by the oil and gas industry and the U.S. Chamber of Commerce, saying the president is sacrificing the nation’s energy independence and the creation of U.S. jobs to win the election.

Senate Minority Leader Mitch McConnell of Kentucky said in a statement yesterday the president’s “decision shows a fundamental disconnect with job creation in this country, and sadly, that his focus is on appealing to his liberal environmental base rather than taking steps that can lead to thousands of jobs and energy security for our nation.”

‘Lack of Seriousness’

Former Massachusetts Governor Mitt Romney, the front-runner for the Republican nomination, released a statement saying Obama’s decision shows “a lack of seriousness” about unemployment, economic growth and U.S. energy independence.

“He seems to have confused the national interest with his own interest in pleasing the environmentalists in his political base,” Romney said.

Another Republican contender, former House Speaker Newt Gingrich, called it “a stunningly stupid thing to do.”

“Maybe when they’re unemployed in November, they’ll figure out that jobs matter,” he said while campaigning in Warrenville, South Carolina.

Gergen said the Republican presidential candidates will “pounce” on the issue at their debate in South Carolina tonight, two days before the state’s Jan. 21 primary.

Obama blamed Republicans for forcing the action by setting a deadline as part of legislation that temporarily extended a payroll tax cut. Obama in November had postponed the pipeline decision until after the election while the State Department reviewed a revised route that avoided a Nebraska aquifer that is the drinking-water source for 1.5 million people.

‘Arbitrary Deadline’

“The rushed and arbitrary deadline insisted on by congressional Republicans prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment,” Obama said in a statement after the rejection was announced.

The issue had pitted unions and environmentalists, two groups Democrats rely on for campaign cash and volunteers, against each other. The White House reached out to labor groups, as well as the business community, to try to smooth over tensions, according to an administration official who spoke on condition of anonymity to discuss internal deliberations.

The effort was partially successful as the steel and autoworkers and the SEIU joined with two other unions to express support.

“President Obama has acted wisely,” they said in a statement. “Addressing global climate change, establishing sustainable and secure energy sources and creating and retaining safe and family-supportive jobs are keys to a positive future.”

Environmental Groups

Environmental groups also hailed the decision. Michael Brune, the Sierra Club’s executive director, called the announcement “a huge victory” and said it will energize the Democratic base.

“We’re confident that the Sierra Club volunteers who were working and volunteering countless hours in 2008 will feel the same way,” he said in an interview.

Wendy Abrams, who raised $50,000 to $100,000 for Obama in 2008, according to the Center for Responsive Politics in Washington, said rallying her friends around the president would have been hard if he had approved the pipeline. She said Obama’s decision shows that he’s not “in the pocket of big oil.”

The support wasn’t universal among Democratic supporters.

The administration should “hug a jobless, construction worker” instead of “hugging a tree,” Terry O’Sullivan, president of the Laborers Union International, said in an e- mailed statement. “Blue collar construction workers across the U.S. will not forget this.”

Money Commitment

Susie Tompkins Buell, a co-founder of clothing maker Esprit Holdings Ltd., said she won’t be raising money for Obama until she hears more about his commitment to environmental concerns in the State of the Union.

“I put my money where my mouth is,” Buell, who has raised at least $20 million for Democratic candidates and causes over the last decade, said in an interview. “I want to support people that I believe in and are doing the right things and I come from a very concerned environmental perspective; for me it’s much bigger than the economy.”

Jared Bernstein, former chief economist for Vice President Joe Biden, said the timing of the announcement yesterday suggests Obama “doesn’t want to fight about Keystone for the next month.”

Gergen said he thinks the White House wanted the decision made before the president’s address next week “so they can counter the idea that they are against jobs by having a strong State of the Union on jobs.”


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