Obama administration rejects Keystone XL permit application

US President Barack Obama’s administration rejected the cross-border permit for the proposed Keystone XL crude oil pipeline, saying that a deadline imposed by Congress does not give it time to properly determine if the proposed project is in the national interest in its current state. Denial does not preclude any subsequent permit application or applications for similar projects, the US Department of State said in its Jan. 18 announcement.

“This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the [DOS] from gathering the information necessary to approve the project and protect the American people,” Obama said as he announced his agreement with DOS’s rejection recommendation. “I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy that creates jobs and reduces our dependence on oil.”

Obama noted that in the coming months, the administration would look for ways to work with the oil and gas industry to increase US energy security, including potential development of a crude oil pipeline from Cushing, Okla., to the Gulf of Mexico, as it also sets higher fuel efficiency standards for cars and trucks and invests in alternatives to oil such as biofuels and natural gas.

The action immediately drew heavy fire from congressional Republicans and others who support the project, and praise from environmental organizations and others who oppose it.

US Sen. Richard G. Lugar (R-Ind.), the primary sponsor of legislation which set a deadline for a decision, said that the administration misled the American people on the pipeline. “In the face of Iranian threats against oil affordability, [it] once again is trying to blame Congress and the State of Nebraska instead of taking responsibility for American jobs and security,” he said during an appearance at a Greenwood, Ind., instruments and gauges manufacturer who potentially would be doing work for the project.

Dismisses energy realities

American Petroleum Institute Pres. Jack N. Gerard said, “This is not leadership. It’s a genuflection to extreme elements who somehow believe America will be stronger turning its back on secure supplies of oil the president’s own energy department says will be needed for decades to come. The president may dismiss these energy realities and may even believe keeping his job is worth the cost of the thousands of jobs that won’t be created. But we don’t think most Americans will agree.”

National Petrochemical & Refiners Association Pres. Charles T. Drevna said TransCanada Corp.’s proposed crude oil pipeline from Alberta’s oil sands to US Midcontinent and Gulf Coast refiners has been studied exhaustively for more than 3 years, and has been shown beyond any doubt to be safe and in the US national interest. “The United States already relies on a network of more than 168,000 miles of liquid pipelines to safely and efficiently transport oil, and the Keystone XL pipeline would be a valuable addition,” he said.

US Chamber of Commerce Pres. Thomas J. Donohue said, “This political decision offers hard evidence that creating jobs is not a high priority for this administration. By placing politics over policy, the Obama administration is sacrificing tens of thousands of good-paying American jobs in the short term, and many more than that in the long term.”

Under an attachment to a bill extending a payroll tax holiday, Obama had until Feb. 21 to act on the 1,600-mile pipeline. His administration earlier had deferred a decision on the project until 2013, but congressional Republicans hoped to force him to choose between labor union supporters, who back Keystone XL, and environmental groups, which oppose it.

In response to challenges by environmental groups to industry estimates of jobs associated with Keystone XL construction, TransCanada provided its own estimates on Jan. 10 of 13,000 US jobs in construction and 7,000 in manufacturing.

It said construction would require 17 US pipeline spreads with 500 workers each. The project’s 100 pump stations would require 100 workers each. And 600 jobs would be created at six construction camps and in tank construction at Cushing, Okla. Construction, management, and inspection oversight would create a further 1,000 jobs, TransCanada said.

‘Enormous mistake’

“Blocking the Keystone pipeline would be an enormous mistake by the Obama administration,” said National Center for Policy Analysis Senior Fellow H. Sterling Burnett. “We need the oil and we need the jobs it would bring. This is as ‘shovel ready’ as anything Obama has proposed, yet because his radical environmental constituency objects, he’s apparently halting the pipeline.”

The Industrial Energy Consumers of America, meanwhile, said, “We are strongly disappointed with President Obama’s decision. There is no excuse that this administration can provide that justifies this delay. The US government has been reviewing the Keystone XL pipeline since 2008. Delay-delay-delay is keeping 20,000 workers from a paycheck.”

The project’s opponents were pleased, however. “Today, the Obama Administration rejected a dirty and dangerous tar sands oil pipeline, refusing to be bullied by the oil industry into approving the project in 60 days without even knowing where it would be built,” said Henry A. Waxman (D-Calif.), the US House Energy and Commerce Committee’s ranking minority member. “Despite intense and misleading oil industry lobbying, Americans understand that what's good for the oil industry is not necessarily good for the American people.”

Natural Resources Defense Council Pres. Frances Beineke said, “The pipeline was rejected for all the right reasons. President Obama put the health and safety of the American people and our air, lands, and water—our national interest—above the interests of the oil industry. His decision represents a triumph of truth over Big Oil's bullying tactics and its disinformation campaign with wildly exaggerated jobs claims.”

Contact Nick Snow at nicks@pennwell.com.

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