Obama Delays Decision on Keystone XL

The U.S. Department of State announced Thursday afternoon that it will postpone making a decision on whether TransCanada's proposed Keystone XL Pipeline project is in the national interest until at least early 2013. 

Under Executive Order 13337, the State Department can issue Presidential Permits for transborder pipelines projects that it deems are in the national interest. The department has led what it calls a "transparent, thorough and rigorous" review of TransCanda's permit application for the Keystone XL project, and the executive order directs the secretary of state or a designee to consult with at least eight other federal agencies. The pipeline would carry crude oil approximately 1,661 miles from Alberta's Oil Sands to refineries along the Texas Gulf Coast.

This past summer, the State Department issued its Final Environmental Impact Statement (EIS) for the project under the National Environment Policy Act (NEPA). The agency found that the 36-inch-diameter pipeline would pose "no significant impacts" to most resources along the proposed route. Prior to Thursday's decision to delay making the national interest determination, the State Department accepted public comments during a 90-day review period. Click here for a timeline showing the agency's role in the permit review process.

Proponents of the project, which included a broad coalition of business and labor interests, touted its benefits in terms of job creation and energy security. According to some estimates, the project could generate more than 20,000 jobs. In addition, it would provide a conduit for refiners to receive crude oil from a close U.S. ally.

Opponents ranging from environmental groups to celebrities to Republican elected officials in Nebraska argued, among other things, that the pipeline would carry "dirty oil" (actually diluted bitumen, or "dilbit") from the Oil Sands that would threaten the environment. In the case of Nebraska, the opposition stemmed largely from fears that pipeline leaks would threaten the Ogallala Aquifer--an important groundwater source for much of the Great Plains region. Earlier this month, Nebraska's governor called a special session of the state's unicameral legislature to review the options it had to influence TransCanada to re-route the pipeline around the Sand Hills area above which the aquifer lies.

Citing the "concentration of concerns regarding the environmental sensitivities of the current proposed route" through the Sand Hills, the State Department said that it will now conduct an "in-depth assessment" of other routes that the pipeline could take in Nebraska. The agency also said that the lack of a legal or regulatory framework in Nebraska enabling state or local authorities to determine where a pipeline goes justifies its decision to postpone making a national interest call.

"Based on the Department's experience with pipeline project reviews and the time typically required for environmental reviews of similar scope by other agencies, it is reasonable to expect that this process including a public comment period on a supplement to the final EIS consistent with NEPA could be completed as early as the first quarter of 2013," the federal agency stated Thursday.

A Sampling of Responses

The response from project supporters and opponents was predictable.

In a public statement, TransCanada said that it will work with the State Department on new route options and remains optimistic that the project ultimately will be approved.

"This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed," said Russ Girling, TransCanada's president and chief executive officer. He cautioned, however, that the delay could hurt industry players both in Western Canada and the U.S. Gulf Coast.

"Supplies of heavy crude from Venezuela and Mexico to U.S. refineries will soon end," Girling continued. "If Keystone XL is continually delayed, these refiners may have to look for other ways of getting the oil they need. Oil sands producers face the same dilemma--how to get their crude oil to the Gulf Coast."

Another project backer, the National Petrochemical & Refiners Association (NPRA), fretted about the decision's impact on employment and energy security.

The decision "will strike a blow against American workers who need jobs, against American consumers who need energy, and against America's economic and national security," said NPRA President Charles T. Drevna. "Turning our back on our good friend and ally Canada will exponentially increase the odds that Canadian oil is shipped to China and other countries overseas and will harm American fuel manufacturers and their employers."

Also criticizing the decision was the American Petroleum Institute (API), which called the move "deeply disappointing and troubling." According to API, a recent poll found that nearly 80 percent of Americans favor receiving greater supplies of oil from Canada.

"Whether it will help the president retain his job is unclear, but it will cost thousands of shovel-ready opportunities for American workers," API President and CEO Jack Gerard noted. "There is no real issue about the environment that requires further investigation, as the president's own State Department has recently concluded after extensive project reviews that go back more than three years. This is about politics and keeping a radical constituency opposed to any and all oil and gas development in the president's camp in November 2012."

On the other side of the issue, project opponent the Sierra Club was pleased with the decision.

“Today's announcement is a death knell for the Keystone XL tar sand pipeline and lands a considerable blow to Big Oil, their lobbyists, and their campaign of lies to keep Americans addicted to oil," stated Michael Brune, Executive Director of the Sierra Club. Brune said that the organization believes that the additional review of what it calls the "true costs of this dirty project" will persuade the State Department to "reject this pipeline."

An ABC television affiliate in Lincoln, Nebraska, quotes Gov. Dave Heinemann as calling the delay "'an exceptional moment for Nebraskans'" and proof that federal officials listened to pleas from him and other Nebraska officials opposed to the current route through the state.

The postponement of a Keystone XL decision until after the next election could also provide a political victory for President Obama with his base of supporters who are often against the growth of the oil and gas industry.

"Because this permit decision could affect the health and safety of the American people as well as the environment, and because a number of concerns have been raised through a public process, we should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood," Obama said.

Interestingly, despite the extensive public scrutiny the project has undergone to date, Obama added that the "final decision should be guided by an open, transparent process that is informed by the best available science and the voices of the American people."


Matthew V. Veazey has written about the oil and gas industry since 2000. Email Matthew at mveazey@downstreamtoday.com


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
R. Hewgill | Nov. 14, 2011
Opposition to this pipeline comes almost entirely from California where the treehuggers have destroyed their own economy. Big money contributors to Obama's campaign from California were calling Obama and threatening to cut off contributions if the pipeline was approved. The tables should be turned on these people and Canada should cut off all imports from California siting an environmental review of the state.

Brian VanDenBussche | Nov. 14, 2011
I also agree on rerouting the pipeline for environmental purposes, but when some people in the United States talk about Alberta oil sands oil saying that it is dirty oil what about California's oil it is a lot dirtier than Alberta's oil. TALK ABOUT THE POT CALLING THE KETTLE BLACK!!!!!!!!!!!!!!!

Brian Mielke | Nov. 12, 2011
The United States needs oil. And new leadership! This Canadian oil is going to be sold, if not to the U.S. - where it should go, it will go west. The backup pipeline plan to the west coast is gaining momentum, and China couldn't be happier.

Bob Harvey | Nov. 11, 2011
Obama is pandering to his base, as usual, without regard to what is truly important; crtical infrastructure to further the efforts of energy independence

Greg Novik | Nov. 11, 2011
It is a classic case of a politician putting his survival first and foremost.

David Hoffman | Nov. 11, 2011
This is another one of Obamas campaign ploys to feed off the PITAs and Sierra Clubs to harvest votes and not care about Americas needs and wants . Jobs and lower fuel costs what more does this man want? It would definatly enhance his campaign if he backed the project. Oh that is right he is on the fast track to Socialism and doesnt really care what our country needs and want. So the heck with is campaign. Wake up people and realize that this President is in it for him and not us! VOTE REPUBLICAN and we can derail this Socialistic train to poverty.

Bill Martin | Nov. 11, 2011
I have followed the news on this topic and Obama is putting his campaign interests (i.e. keeping political donations flowing) ahead of what is in the best interest of this country. I have no doubt that he is planning to approve this pipeline after the re-election. He just cannot afford to have some big political donors, that do not approve of the pipeline, close their checkbooks before he is re-elected. While not a pretty picture, no different than most politicians. Sucks dont it? Several "shovel ready" jobs that will be postponed. What a farce!!!! All you tree huggers guess what? This pipeline will ultimately go through - your man is trying to mimic Houdini (with his misdirection - I am clarifying for you because your infantile "democrat" mind may not understand otherwise).

Fred Martinez | Nov. 11, 2011
HMMMMMMM - I wonder how this prolonged/delayed/politically correct decision making process makes our neighbors to the north feel?? I can't help but wonder how it would make us feel if the Canadien folks decided that the Alaskan Pipeline was just too big of a concern and therefore must be shut down???? I also can't help but wonder what $10 plus per gallon of fuel is going to do to the cost of a loaf of bread/gallon of milk etc. etc. etc. At the risk of sounding paranoid, I have to ask, is this all by design?

Don Tuttle | Nov. 11, 2011
Has anyone found Obama's spine yet?

David layton | Nov. 11, 2011
Just goes to show, its all about politics & nothing about the good of the nation, or its citizens. Shameful!

Carlos Mateus | Nov. 11, 2011
This decision of president Obama needs to be heavily publicized throughout the USA. He is hurting the American people, the canadian interest for the benefit of the OPEC countries. The price of oil soon is going to get to $150/BBL mainly because the OPEC countries will not increase the oil supply. We, the americans, will suffer the most. The OPEC countries, the Sierra Club and President Obama once again dont care about AMERICA. The USA government is acting no different than the governments in third world countries. SHAME ON US!

Jay Baugh | Nov. 11, 2011
He did not say no. Pretty simple.

Steve Jones | Nov. 11, 2011
Once again, this is proof that if a liberal, who is flailing to be re-elected is given an opportunity to demonstrate their bias, they will do so. This is a personal attack on the American economy, and our national interest. It is also another example of our President's disdain toward capitalism. When are we going to learn that the best way to fight back is to take it to the source? President Obama needs to be exposed for the person he is, for that matter so does Michael Brune. Oil industry officials must have allies at high levels who are concerned about this behavior, what its doing to our national sovereignty, and the compound effect it has on jobs. The gloves need to come off, and come off now, if the XL Pipeline project is going to happen. It will only happen if there is a national uprising of 85% of capitalists in our country who are be railed against by the 15% of socialists.

Doug Croyle | Nov. 11, 2011
What I dont understand is how people can complain about a project that will not only provide thousands of jobs for many American citizen in multiple states, but could also make the costs of fuels more affordable to all the citizens of the United States. To President Obama, I would like to say "Grow a pair and show the people of the United States that you have THIER interests at heart." There is an old military saying: "The needs of the MANY outweigh the needs of the FEW." If Nabraska is the only state objecting to this project, put your foot down and push the project through. To those who try to break "the addiction to oil", if you do not drive a completely electrical car and you do not use either wind or solar power... SHUT YOUR MOUTHS as you are all a group of hypocrites. Where do you think most of your electricity comes from? This new project would bring thousands of jobs to the american citizens. It would bolster local economies and reduce the strain on public budgets.

Philippe | Nov. 11, 2011
The decision to not make a decision is a political statement. It is taking care of the unions and the environmental lobby. This decision does not support the US economy which needs jobs and less oil from unfriendly OPEC countries. This government does not first support the US interest, but is in an ideological cull de sac, that is not pro American. This administration is Obaminable, nothing more to say.

Jeff Taska | Nov. 11, 2011
How long must we consider the benefit to the many that out weighs the prolonged interests of the few? The balance of the scale will eventually show that delaying a decision is in no ones best interest. It shows the masses a reasonable amount of time and study apparently is not enough time for this government to get on with job creation. I, and hundreds of thousands alike, are waiting for work while the well connected delay the American dream to us! We vote and we will eventually win! Like it or not we will find a way to protect the water the air and the land and the pipeline that will benefit the masses will be built here in our America! We live to be blessed with a better life. We shall work to get there! LETS GO TO WORK! Build the conduit to the American dream for the masses. Please let us build the pipeline. Thank you!

Joe Redinger | Nov. 11, 2011
Big Oil should ask the last company to leave Nebraska to turn out the lights.

Dwight Breland | Nov. 10, 2011
I think it is very easy to tell a tree by the fruit that falls from it. Either this man, that ignorant people voted for, has no earthly idea that our survival as a nation depends on fossil fuels, or he does know and intends to create another third world country which would make it easier for the USA to submit to a One World Government. Energy is the ONLY key that will alow us to crawl out of this mess we have allow our elected officials to create. We need to clean house on election day 2012, nearly all DEMOCRATS and some of the spineless Republicans need to ousted, tarred, and feathered.

West Houston | Nov. 10, 2011
Once again BHO puts his interests ahead of his county. This is psychotic behavior. To him, the rest of humanity are just cardboard cutouts, not real people like him. Canada was willing to pay for this pipeline and it would create thousands of high paying construction jobs and tens of thousands of secondary jobs. BUT...NOOOOOOOOOOOOOOOOOOOOOO!

| Nov. 10, 2011
THE TREE HUGGERS STRIKE AGAIN????? Let's kill jobs and continue to spend hundreds of billions of dollars on forgien oil. These people MAKE ME SICK!!! A perfect time to get this country moving towards getting away from forgien oil. Now this! Can someone PLEASE use some common sense???


Our Privacy Pledge

More from this Author
Matthew V. Veazey
Senior Editor | DownstreamToday & Rigzone
 -  COLUMN: How to Get Noticed by Young Re... (Oct 13)
 -  Shell Suspends Pacific Northwest Crude... (Oct 7)
 -  BLOG: An Appalachian Spring? (Sep 21)
 -  Analyst: Northeast NGL Supply/Demand a... (Sep 9)
 -  The $10 Billion Petchem Growth Engine ... (Sep 6)

Most Popular Articles

From the Career Center
Jobs that may interest you
Project Manager
Expertise: Engineering Manager|Project Engineer
Location: Orlando, FL
Branch Manager for Heavy Equipment Dealership in Mississippi
Expertise: Facilities Management|Mechanic
Location: Mississippi, United States, MS
Project Manager
Expertise: Engineering Manager|Project Engineer
Location: Chicago, IL
search for more jobs

Brent Crude Oil : $51.78/BBL 0.77%
Light Crude Oil : $50.85/BBL 0.83%
Natural Gas : $2.99/MMBtu 4.77%
Updated in last 24 hours