Two Nominees, Two Opportunities for Growth
This opinion piece presents the opinions of the author.
It does not necessarily reflect the views of Rigzone.
In the coming months, President Obama will have to make two huge decisions about the future of American energy policy: whether to permit the Keystone XL pipeline and whether to allow Shell to move forward with its Arctic offshore drilling program. Coincidentally, both decisions may be influenced by the President's new appointments at the State Department and the Interior Department.
With Nebraska Governor Heineman's approval this week of the new route through Nebraska, the stage is set to bring more than 4 years of wrangling, delay, and political posturing on the Keystone XL pipeline to a close. Once the State Department conducts an environmental review that is already underway, there will be nothing preventing President Obama from making a final decision on the project - finally.
The President's decision to reject Keystone XL's application for a permit last January, despite the fact that the Department of State has affirmed that Keystone XL would be the safest pipeline ever constructed, was a political move meant to allay environmentalists until after the election. After suffering significant blowback from labor groups and the majority of Americans who support the project, the President enthusiastically supported construction of the southern leg of the pipeline and invited TransCanada to reapply for the permit that they need to cross the border from Alberta into Montana.
The delays and route changes that TransCanada has been forced to endure have added more than a billion dollars to the cost of the project, suspended tens of thousands of high paying jobs, delayed relief at the pump for millions of American drivers and prevented the project from pumping more than $20 billion into the U.S. economy.
As the State Department makes its final Environmental Impact Statement and National Interest Determination, supporters of the pipeline should make clear to both the White House and to the President's nominee for Secretary of State, Massachusetts Senator John Kerry, the importance of the project to the U.S. economy. Members of the Senate should ensure that Mr. Kerry pledges not to inject politics into the Department's review of the project in his confirmation hearings.
At the other end of the country, another energy company is wading through arbitrary delays and red tape in its efforts to develop resources off the Alaskan coast. In 2005 and 2008, the federal government sold Shell leases in the Beaufort and Chukchi Seas with a good faith agreement that the company would be able to explore the leases for oil and natural gas. In 2007, a federal court prevented Shell from drilling wells in the area due to a lawsuit by environmental groups. It happened again in 2009 and 2011 when baseless lawsuits aimed at the federal approvals process stopped the project from moving forward. Despite years of insisting that Alaskan offshore energy is part of the President's "all of the above" energy strategy, Secretary Salazar and the Department of the Interior has failed to permit the project in a timely manner.
Now, Mr. Salazar is departing Washington for the family ranch in Colorado, leaving the future prospects of the Alaska project in limbo. President Obama and his new nominee for Secretary of the Interior must understand the consequences of imposing further delays on the Alaskan offshore project. Beyond simply setting a standard of bad business on the part of the federal government, delay by the Interior Department would also jeopardize efforts by other energy companies invested in the region and would diminish the United States' ability to lead in Arctic energy development.
The potential energy and economic benefits of the Keystone XL project and Shell's Arctic development are staggeringly large. The pipeline project would create 20,000 jobs and pour $20 billion into the U.S. economy. Offshore Alaskan energy development will create more than 54,000 jobs annually for 50 years and generate $300 billion in revenue for the U.S. Treasury. We cannot afford further delay.
President Obama and Sen. Kerry should move quickly to give final approval to the Keystone XL pipeline. Meanwhile, Congress should ensure that his nominee to lead the Interior Department understands the importance and benefits of energy development off Alaskan shores. It would be a boon for the U.S. economy, and the U.S. energy consumer.
Michael Whatley is the executive vice president of Consumer Energy Alliance in Washington D.C.
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