Will Obama/Kerry Kick Keystone Oil Can Down The Road?

November 5, 2013

(FORBES BLOGS) Now that the U.S. State Department has determined that the Keystone XL pipeline is safe following its supplemental environmental impact assessment (the project’s fourth environmental review), do you suppose that the president will approve it any time soon?

by Larry Bell

Feeling the crunch of being squeezed between his base camps on opposite sides of the issue, I wouldn’t bet a whole lot on that prospect. On one side, there are lots of union label jobs at stake if he nixes the deal. On the other, there’s a militant bunch of greenie meanies who will raise political climate-changing global warming hell if he doesn’t.

In the run-up to the 2014 mid-term elections the White House and fellow Democrat confederates in Congress are already facing lots of man-made heat from unions and other members of their base in connection with other contentious issues. Examples are mounting disfavor with the ObamaCare imbroglio and administration failures to close borders to competing immigrant jobs.

The State Department is accorded primary influence in the Keystone decision because the pipeline would cross the U.S. border, therefore requiring a presidential permit. The president’s decision, in turn, is supposed to be based upon whether or not the pipeline serves the national interest. The Department of Interior, EPA and other federal agencies will also participate in that assessment.

The plan calls for it to extend 1,700 miles from Canada’s oil sands to refineries on the Texas Gulf Coast. A southern portion connecting from Cushing, Oklahoma to Nederland, Texas is already 95% complete, and is expected to be transporting 700,000 barrels of crude per day by the end of this year.

Image by shannonpatrick17 via Flickr

But whose national interest, exactly? America’s, or China’s?

In June, Obama said “Our national interest will be served only if the project does not significantly exacerbate the problem of carbon pollution.” And according to the State Department’s latest environmental assessment, it won’t. State’s assessment also concluded that the project not only won’t cause global warming, it also won’t harm aquifers and natural habitats along its route. It will, on the other hand, create jobs and fuel economic growth which clearly are in the national interest.

The State Department’s draft report states that the pipeline’s construction will support 42,100 jobs during the one-to-two-year construction period, will bring about $2.05 billion in added wages plus another $3.3 billion in other spending, and will generate $2 million in annual Montana, South Dakota and Nebraska property taxes.

Even if the pipeline isn’t built, Canada certainly won’t leave those resources in the ground. Instead, they will be sent to an energy-eager China. As Kerri-Ann Jones, the assistant secretary of state for Oceans and International Environmental Affairs observed: “The approval or denial of any crude oil transport project, including this proposed project, really remains unlikely to significantly impact the rate of development of the oil sands or the continued demand for heavy crude in the U.S.”

And it’s not as if the project is being rushed through without careful attention to environmental safeguards. Keystone XL has met 57 specific pipeline safety standard requirements created by the State Department and the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA). It passed all with flying colors, including acceptance by the State of Nebraska where it passes over the sensitive Ogallala Aquifer.

But hey…not so fast there…let’s study it some more!

Right after Nebraska’s Department of Environmental Quality gave Keystone a green light, the State Department said it would still have to think about it. Spokeswoman Victoria Nuland said “We don’t anticipate being able to conclude our own review before the end of the first quarter of this year.” That was back in January, following an extensive three-year review.

Then in August, the Interior Department warned in response to the State Department’s March draft environmental assessment that Keystone could have long-term, damaging effects on wildlife near its route. The 12-page letter directly contradicted State’s conclusions that Keystone XL would have only short-lived effects on wildlife, and only during the project’s construction.

Interior’s letter said: “Given that the project includes not only constructing a pipeline, but also related infrastructure, access roads, and power lines and substations, impacts to wildlife are not just related to project construction. Impacts to wildlife from this infrastructure will occur throughout the life of the project (i.e. operation and maintenance phases).”

The letter catalogs a litany of ways Keystone could harm wildlife: “…species displacement, increased predation rates and predator travel lanes, increased parasitism, vehicle collisions with wildlife…invasion plant species, increased wildfire risk, lower wildlife density, increase in collisions with power lines and electrocutions on power poles…and increases in poaching.” And while the State Department draft analysis reported that a fish called the pallid sturgeon would not be affected by “temporary water withdrawals” from rivers…Interior’s letter called that statement unsupported, and also warned of hazardous spills.

The EPA slammed State’s draft environmental assessment as well, claiming that it failed to consider greenhouse gas emissions and risks to aquifers along its route. With regard to the four aquifers through which it would cross, the State assessment had found it “very unlikely” that the pipeline would affect water quality…and that in case of a large-scale spill, “these impacts would typically be limited to within several hundred feet over the release source, and would not affect ground water.”

TransCanada, the company that owns the pipeline, argues that all of these matters have been carefully addressed. Spokesman Shawn Howard said: “As our application shows, there are detailed steps we have taken to mitigate impacts on the environment, sensitive areas, wildlife and communities. There are 12,000 pages of technical review that have been published on Keystone XL, and they have stated that there will be minimal impact on environmental resources along the entire route.”

Time for environmental lobbies to cash in on the green they invested.

Some Keystone opponents carry big green clubs. As expressed by Tiernan Sittenfield, senior vice president of the League of Conservation Voters: “This is not just about LCV which spent nearly $1 million to help elect Obama in 2008, or any other group that engages in electoral politics in the upcoming election. It’s about people out there who care deeply about the environment, how much they volunteer, how many doors they knock on, how much they contribute directly. We have LCV voters who maxed out in the Obama campaign in 2008 who have told us they are not going to give this time around if the president approves this pipeline.”

Big buck Democrat contributor billionaire and climate activist Tom Steyer wrote an open letter to Obama threatening that he better reject Keystone or otherwise face an organized rebellion from some of his most loyal supporters.  Steyer, who has been targeting Keystone supporters through his NextGen action political action committee, wrote: “Given that none of the chief arguments being put forth by supporters of the pipeline remain standing, NextGen Action is going to be working with our friends and allies who are opposed to the development of Keystone XL to intensify our efforts in communicating what is the right policy choice to your Administration.” Leaving no doubt which side of the fence those friends and allies stood on, the letter said, “On June 20, in Washington D.C. we will announce a campaign that will specifically focus on communicating to those Americans across the country that supported your election in 2012.”

On the other side of Obama’s Democratic base, any direct pipeline veto would have brought wrath from unions who have been backing the project. Included are the International Brotherhood of Electrical Workers, the International Union of Operating Engineers, the Teamsters, the Labors’ International Union, the Building & Construction Trades Department of the AFL-CIO, and the United Association of Plumbers & Pipe Fitters for the U.S. and Canada. They want jobs, and so do other Americans who depend upon oil-fueled industries. Keystone XL represents an estimated 20,000 union job opportunities.

The unknown but concerning Kerry factor.

Approval of the project had seemed inevitable after former Secretary of State Hillary Clinton once suggested that she was “inclined” to approve the project.  A big question now regarding the Keystone XL fate has to do with unknown influence Secretary Kerry will have upon the outcome.  To the extent that his previous statements have any real meaning, they can be taken as hopeful for both camps.

In 2011, as chair of the Foreign Relations Committee which oversees the State Department, Kerry said, “There’s a lot at stake here and I’ll do my best to leave no question unanswered including every possible economic and environmental consideration before a final decision is made.” On the other side, during his confirmation hearings, Kerry called climate change a “life-threatening” issue, and endorsed “clean” energy options as an important job-creator. Although when speaking at CAP’s 10th anniversary event Kerry never specifically mentioned Keystone, he did comment that “Energy policy is the solution to climate change.” 

As a self-described “passionate advocate” for confronting climate change during his Senate tenure, Kerry led unsuccessful efforts to push greenhouse gas legislation through Congress.  The League of Conservation Voters gave him a perfect 100 percent scorecard in 2011.   And as Susan Casey-Lefkowitz of the National Resources Defense Council observed, “Senator Kerry has obviously been a strong leader on climate change, and we don’t think that’s going to change as secretary of state.”

Regarding a final decision before November 2014, don’t hold your breath.

Facing a contentious decision that would split his political base, we can expect the president to deftly draw upon his U.S. Senate experience to vote “present”, just as he did before 2012 when he avoided the political no-win Keystone controversy. Meanwhile, that $7 billion project which would deliver more than 800,000 daily gallons of Canadian crude oil, along with those estimated 20,000 union job opportunities, are on hold, at best, or very likely to go elsewhere—most probably to China.

Never mind that TransCanada has already invested $1.7 billion in pipe, along with many millions more to obtain right-of-way easements… multi-volume environmental impact statements have determined that it would have “no significant impacts”…and the State of Nebraska has approved a revised routing which will protect sensitive areas.  And ignore the fact that 50,000 miles of pipeline already crisscrosses the U.S., about half of which is in that contested Ogallala region, using technology that has proven to be safe.

But don’t imagine for a moment that the environment or creatures that inhabit it will be one bit better off if that oil can is kicked further down the road and ultimately falls over a cliff.  And many of those creatures who will be hurt the most are citizens who live here in the U.S.

Canada accounts for more than 90 percent of all proven reserves outside of the Organization of Petroleum Exporting Countries, and America currently purchases about 99% of all Canadian crude exports. TransCanada’s CEO Russ Girling points out that if crude delivery can’t begin as scheduled, “Those shippers will only wait so long, and then they will start looking for other markets. Similarly, the refiners can only wait so long for Canadian crude oil to come into their marketplace.”

TransCanada had initially anticipated that it would secure a presidential permit by the end of 2013. Yet in a recent statement filed with the Securities and Exchange Commission, the company no longer plans for that to occur.

So finally, just how good are things looking for Keystone approval right now? Consider that just two days after winning re-election, President Obama’s Interior Department issued a final plan to close 1.6 million acres of federal land in Colorado, Utah and Wyoming that was originally slated for oil shale development.  This Green River Formation contains technically-recoverable oil reserves estimated to be four times larger than the proven resources of Saudi Arabia.

On top of that, the EPA is working to curtail hydraulic fracturing (or “fracking”) that is providing access to America’s oil and gas resources on private land through a variety of regulatory mechanisms premised upon unproven instances of water contamination. In fact, fracking is not only under attack by EPA, but by more than a dozen other agencies as well. Included are the Department of Energy (DOE), the Bureau of Land Management (BLM), the Centers for Disease Control (CDC), the Department of Agriculture (USDA), and even the Securities and Exchange Commission (SEC).

But don’t worry. We probably don’t really need all of that oil after all, now that the Obama administration’s Interior Department has agreed to release 445 square miles of public (meaning our) land for solar and wind development. With all those fossil-free electric cars we are subsidizing, all we really need is a power outlet to recharge them.

Well, actually, there maybe is one other requirement. It might be helpful to have some other source of electricity connected to those recharging systems just in case it happens to be a time when sunlight and friendly breezes aren’t conveniently available…like most of the time, for example.

In any case, those decisions will have to wait. Right now, just as the Obama administration is, let’s concentrate more on those November 2014 mid-terms. The results are quite likely to determine Keystone’s future… and very certainly, America’s as well.

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