Keystone XL decision may be first policy test in second Obama term

US President Barack Obama’s decision on the proposed Keystone XL crude oil pipeline project could be the first major policy test in the president’s second term, American Petroleum Institute officials said.

“It will be the first serious test,” API Pres. Jack N. Gerard said during a Nov. 14 luncheon at the IHS Forum. “If he denies the application, it will show climate and emissions matter more than jobs and economic growth to his administration.”

Obama should give voters what they asked for in the Nov. 6 elections and approve the project at his earliest opportunity, API Executive Vice-Pres. Marty Durbin recommend on Nov. 15.

“He has the authority to approve this [cross-border] permit tomorrow,” he told reporters during a teleconference. “Our view is that with bipartisan support in Congress and strong support from organized labor, the administration can accelerate the process.”

Nebraska’s Department of Environmental Quality completed its draft evaluation of the project’s proposed new route across the state on Oct. 30 and has scheduled a public hearing on Dec. 4. Durbin said that the NDEQ will sift through comments and possibly get a recommendation to Gov. Dave Heineman (R) by yearend.

“At that point, it’s uncertain how much additional review the [US Department of State] will go through,” Durbin said. “Our understanding is that it could take 3 months, so it’s possible we could see a decision by mid-2013.”

He acknowledged that environmental organizations are pressuring the Obama administration to shift its focus to climate issues in the second term. “There still are opponents, but we’re increasingly seeing that their opposition is not about the pipeline but about the continuing use of oil and gas,” Durbin said.

But the argument that allowing Keystone XL to be built would produce jobs, accelerate economic recovery, and improve US energy security is still compelling, he maintained. It also would help begin to move more Bakken shale crude oil, which currently is transported by rail from North Dakota to refining markets by pipelines that are inherently safer, Durbin added.

“This isn’t about a confrontational relationship,” he said, adding, “The administration is going to have to move where the voters are, and take advantage of the shale energy we have and the opportunities to bring more oil from Canada. We think there’s a great opportunity here. If this is the first decision out of the administration to create more jobs and economic growth, we’d be pleased.”

Contact Nick Snow at nicks@pennwell.com.

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