US House passes bill to expedite Keystone XL permit decision

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, July 27 -- The US House approved a bill setting a Nov. 1 deadline for the Obama administration to decide on TransCanada Corp.’s application for a cross-border permit for its proposed Keystone XL crude oil pipeline project. HR 1938 passed by 279 to 147 votes on July 26 despite charges by Democratic energy leaders that it would raise US gasoline prices and facilitate sale of the imported oil to overseas customers.

Supporters argued that the bill does not specify, but only seeks, a decision from the Obama administration 3 years after TransCanada applied for the permit. “This is the single most studied pipeline in US history,” said Rep. Lee Terry (R-Neb.), the measure’s sponsor. “All we’re asking is that the president make his decision by Nov. 1. Enough time has passed.”

Energy and Commerce Committee Chairman Fred Upton (R-Mich.) noted, “Our northern ally Canada has discovered an oil resource comparable in size to Saudi Arabia, and they want to send the oil here to the United States. Five major labor unions have thrown their support behind the pipeline because it is going to create more than 100,000 jobs. Yet this administration has allowed the permit application to languish for nearly 3 years, even saying that they were ‘inclined’ to support it almost a year ago in October.”

Opponents responded that HR 1938 would interfere with an established process that is moving ahead, bypassing the proper reviews to ensure that it will be safe and not pollute the environment either with ruptures and leaks, or by promoting more US refining of heavy crude recovered from Alberta’s oil sands. “My concern is that Keystone XL will make us more reliant on the dirtiest source of oil available,” said Henry A. Waxman (D-Calif.), the Energy and Commerce Committee’s ranking minority member.

Hidden purpose
Democrats also charged that TransCanada would use the project to divert oil south and raise prices above the border. They alleged that it actually is designed to ship oil to the US Gulf Coast for export to global markets instead of refining for consumption in the US.

“There are no guarantees in this bill,” said Edward J. Markey, the Natural Resources Committee’s ranking minority member. Republicans refused to consider his amendment that would have required that all oil shipped in the pipeline be sold in the US, he said.

Republicans entertained 11 amendments from Democrats that would have reduced HR 1938’s impact. All were defeated, along with a motion to recommit.

Some Democrats supported the measure, including Gene Green (Tex.) who said it would give the five refineries in his district an additional supply source, and Nick J. Rahall (W.Va.), who said TransCanada already has negotiated construction labor agreements with major US unions. “I appreciate the Department of State’s recent statement that it is on track to issue a decision by Dec. 31,” Green said. “Maybe it wouldn’t have made that announcement if this bill hadn’t been in the House.”

Passage applauded
The bill’s prospects are uncertain since it would have to be passed by the US Senate and signed into law by President Barack Obama, who has indicated that it believes it is not necessary. Oil and gas trade associations and other business groups nevertheless applauded its passage in the House.

“The project has undergone extensive analysis and review and it is time to move forward so that we can create jobs and further strengthen our relationship with America’s No. 1 trading partner and largest source of imported oil, Canada,” said American Petroleum Institute Executive Vice-Pres. Marty Durbin. A Canadian Economic Research Institute report estimates that Keystone XL will immediately generate 20,000 new US jobs, and that investing in Canadian oil will support 600,000 American jobs by 2035, he added.

Keystone XL’s construction will provide the US with a dependable energy supply from a close friend and ally, along with desperately needed jobs and a major economic boost, National Petrochemical & Refiners Association Pres. Charles T. Drevna observed on July 26. “If America turns its back on Canadian oil, China will eagerly buy this precious resource, forcing our nation to turn to countries on the other side of the world for the energy needed to keep our economy running,” he warned. “The Senate should join the bipartisan majority in the House that voted today to approve this legislation.”

Karen A. Harbert, president of the US Chamber of Commerce’s Institute for 21st Century Energy, said that the project would bring another 1.1 million b/d of oil into the country as it created 20,000 US jobs almost immediately. “Given our current struggle to create jobs and reign in our debt, this project should be a no-brainer,” she said, adding, “It is disappointing that the administration continues to drag its feet on green-lighting this shovel-ready project, but I’m pleased the House acted to help move it along.”

Contact Nick Snow at nicks@pennwell.com.

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