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TransCanada’s third-quarter earnings call with analysts on Nov. 1 ought to have been a victory lap for Chief Executive Officer Russell Girling: profit at the Calgary-based energy infrastructure company was up 20 percent over the same period in 2010; total revenue had risen 11 percent to C$2.14 billion ($2.07 billion); and he had a fat dividend to announce. Instead of enjoying the good news, however, Girling’s presentation was dominated by the same thing that has dominated pretty much all news about the company over the last five months: the tortured approval process for TransCanada’s next big thing, the Keystone XL pipeline.
First proposed in 2007 as an extension to another TransCanada oil pipeline, the XL will be three feet in diameter, run 1,750-plus miles, mostly below ground, cost roughly $7 billion to complete, and transport up to 700,000 barrels of oil a day. Crucially, it will carry crude oil from Alberta’s tar sands region across Montana, South Dakota, Nebraska, Kansas, and Oklahoma and through to refineries on the coast in Port Arthur, Tex., that can handle the heavy crude that comes from oil sands. The pipeline, says Doug Cogan, a research analyst at New York-based financial services giant MSCI, “would be a huge win not only for TransCanada, but the Canadian oil sands industry generally, because it would mean building a new backbone through the center of the U.S. that would allow access to markets within the U.S.”
If only it were that easy. Any pipeline crossing a U.S. border needs an O.K. from the President, with the application process handled by the State Dept. According to money-in-politics watchdog Center for Responsive Politics, TransCanada has spent nearly $1 million lobbying the State Dept. ahead of President Obama’s final decision, expected by Dec. 31. Just a few years ago the XL’s predecessor, which runs from Canada to Oklahoma and branches into Illinois, breezed through the permit process during the Bush Administration with barely a whiff of concern from the public.
Not this time. Beginning in June with an open letter from former NASA climate scientist James Hansen calling on others to speak out in opposition, an unlikely coalition of environmentalists and cattle ranchers, the Republican governor of Nebraska, the Hollywood greener-than-thou crowd, and a Vermont college professor, among others, have turned Keystone XL into a symbol of ecological plunder, corporate arrogance, and political cronyism. Pipeline opponents contend that it might leak, poisoning portions of the aquifers of the Great Plains, and that it will commit the U.S. to increased greenhouse gas emissions and delay a transition to renewable fuels. Furthermore, the State Dept. Inspector General’s office announced on Nov. 7 that it will conduct an internal investigation into possible influence-peddling and conflicts of interest. The company hired by the State Dept. to conduct the main environmental impact study (EIS)—Cardno Entrix, in Houston—is a client of TransCanada’s, and TransCanada hired a former campaign staffer for Secretary of State Hillary Clinton as a lobbyist. Critics also accuse TransCanada of threatening landowners along the proposed route with eminent domain and taking them to court—all before it had a permit. “I find it appalling that a foreign company can dictate to Nebraskans how we can use our land,” one local fumed in September at a meeting held by the State Dept. to take public comments on the pipeline. (TransCanada declined requests for one-on-one interviews with Girling and other executives. In an e-mail, TransCanada spokesman Terry Cunha wrote: “Our commitment is to treat landowners with honesty, fairness, and respect, to work with them and come up with the best possible solution. We have reached voluntary agreements with over 90 percent of landowners along the pipeline route and we continue to negotiate with landowners.”)
