Canadian Manufacturing

Obama puts Keystone pipeline on fast track

TransCanada hopes Oklahoma-to-Texas stretch will be completed next year.



CALGARY—Proponents of TransCanada’s Keystone XL pipeline are quietly applauding the move by U.S. President Barack Obama to order federal agencies to expedite the approval process for the southern leg of the $7.6 billion pipeline.

But although the news is positive the one that thing that comes to mind is the missing link.

“I think the important thing to keep in mind is that it doesn’t help move incremental volume out of Canada so we still need the northern leg of the pipeline to be built or some other alternative,” said Dave Collyer, president of the Canadian Association of Petroleum Producers.

“Certainly it’s positive momentum relative to where we were two or three months ago with the denial of the permit and an extended process. I think anything that he does to demonstrate more support for the oil and gas industry is a good thing,” he added at an event Wednesday evening in Calgary.

The proposed pipeline, which would connect Alberta crude to refineries along the Texas coast, has become a major political flashpoint as Obama seeks re-election this November.

On Thursday the president directed the agencies to fast-track a 780-kilometre stretch of the pipeline from Oklahoma to refineries on Texas’ Gulf Coast on Thursday. He made the announcement from a storage yard in Cushing, Okla., where there’s a glut of Midwest oil that can’t easily get to refineries on the Gulf of Mexico.

“The need for pipeline infrastructure is urgent because rising American oil production is outpacing the capacity of pipelines to deliver oil to refineries,” the White House said in a statement.

American oil industry executives say Obama needs to greenlight the entire $7.6 billion pipeline, not just a portion of it.

Alberta Premier Alison Redford has avoided any criticism of the U.S. regulatory process but took her message on the importance of the project to Chicago and Washington, D.C. recently.

“We saw some indications about a month ago when I was in Chicago and Washington that he was saying this was an important piece of the link of the Keystone Pipeline,” she said Wednesday.

“We’re very pleased to see that because that’s always the argument that we’ve made — that this makes economic sense. We’re pleased to see that there is certainly an indication and an openness to working on the project and I’m looking forward to his comments.”

The U.S. State Department has yet to make a decision on the entire length of the proposed pipeline, saying it needs more time to conduct a thorough environmental review of a new route around an environmentally sensitive aquifer in Nebraska.

State Department officials are assessing the project because it crosses an international border.

In November, the State Department deferred making a decision on Keystone until after this year’s presidential election, citing concerns about the risks posed to the aquifer.

Pipeline proponents cried foul, however, accusing Obama of making a cynical political move aimed at pacifying the environmentalists in the president’s political base and improving his chances of re-election.

Outraged Republicans then successfully inserted pipeline provisions into payroll tax cut legislation in late December.

But within a month, facing a mid-February deadline imposed by that measure, Obama nixed TransCanada’s existing permit outright, saying there wasn’t enough time to thoroughly review a new route before giving it the green light.

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