Bloomberg News

Keystone Pipeline Backers Press Obama for Decision in Week

January 12, 2012

(Updates with TransCanada comment in ninth paragraph.)

Jan. 12 (Bloomberg) -- Supporters of TransCanada Corp.’s Keystone XL oil pipeline stepped up their lobbying of President Barack Obama, urging him to approve the project before the State of the Union address in less than two weeks.

The American Petroleum Institute, a Washington-based group for energy producers, joined 104 associations yesterday in saying the project will “put thousands of Americans to work.” Senator Richard Lugar, an Indiana Republican, said in a Jan. 6 letter to Obama that a delay would slow U.S. efforts to reduce imports from nations such as Iran and Venezuela. Supporters are seeking a decision before Obama speaks to Congress on Jan. 24.

“Republicans have an opportunity to frame it so the question is asked immediately prior to the State of the Union speech and Obama has to answer,” said Kevin Book, managing director at ClearView Energy Partners LLC, a Washington-based policy-analysis firm. “Either the Republicans get to score an unanswered point or they get their response.”

The proposed $7 billion pipeline has put Republicans in Congress at odds with the Obama administration over jobs and the environment. The 1,661-mile (2,673-kilometer) project, which would carry 700,000 barrels of crude a day from Alberta’s oil sands to U.S. Gulf of Mexico refineries, also has split two Democratic constituencies, labor unions and advocates for the environment.

Congress last month set a 60-day deadline for the U.S. to issue a pipeline permit after the administration in November said it would delay a decision to study an alternate route. Republican presidential candidates may highlight the job- creating aspect of the project at a Jan. 19 debate in South Carolina. The primary vote is Jan. 21.

No Decision Date

Josh Earnest, a White House spokesman, said he had no update on the timing for a decision on the pipeline.

The lack of a plan for rerouting the pipeline in part of Nebraska “underscores the difficulty of evaluating and affirming this project within that 60-day window,” Earnest told reporters traveling with Obama to Chicago yesterday.

TransCanada is working with state officials and may settle on a new route across Nebraska by October, James Millar, a TransCanada spokesman, said in an interview. The change affects only 6 percent of the project’s length.

“What we’re essentially looking at is 100 miles of a 1,700-mile pipeline where we need an adjusted route,” Millar said. The environmental review on the rest of the line “hasn’t been thrown out.”

Republican Priority

Brendan Buck, a spokesman for House Speaker John Boehner, an Ohio Republican, included approval of the Keystone pipeline in an e-mail sent to reporters listing legislative priorities of the Republican-led House before lawmakers return next week.

“We all know this pipeline and the associated jobs have been put in jeopardy due to political calculations of the administration,” Buck wrote in the e-mail. “The president has said repeatedly that he wants to do everything he can to create jobs, but if he rejects this permit, that statement will demonstrably ring hollow.”

Tapping the Canada oil sands, building the pipeline and developing other infrastructure will create more than 500,000 U.S. jobs, and add $775 billion to economic growth by 2035, the trade associations said in their letter to Obama. According to TransCanada, the project will create 20,000 construction and manufacturing jobs.

“As the president has said, ‘we can’t wait’ to create jobs in this weak economy,” Jack Gerard, president of the American Petroleum Institute, said in a statement. “President Obama needs to show he is serious about job creation.”

TV Commercials

The American Petroleum Institute started airing a television commercial today in Illinois, Indiana, Iowa, Michigan, Nebraska, Ohio and in the nation’s capital, portraying Keystone XL as Obama’s chance to create jobs. Gerard plans to speak about the pipeline in Myrtle Beach, South Carolina, on Jan. 16.

Legislation extending the U.S. payroll-tax cut that passed Dec. 22 requires the State Department to issue a permit by Feb. 21, too little time a full review, White House spokesman Jay Carney said on Dec. 20.

“The president is going to say no,” Mike McKenna, an oil- industry lobbyist and president of MWR Strategies Inc. in Washington, said in an interview. “The only recourse the Republicans have is to make it painful, politically, for him.”

TransCanada applied for a permit in 2008. Advocates such as Lugar, who sponsored legislation to set a deadline, said further delay compromises U.S. efforts to import more oil from a friendly country.

Delay ‘Incongruous’

“The lengthy delay in permitting Keystone XL is incongruous with our country’s dire need to diversify oil sources and promote job creation,” Lugar wrote to Obama.

The Obama administration said it delayed action in response to the concerns of Nebraska citizens, state officials and some members of Congress that TransCanada’s proposed route across the state’s Sandhills area posed risks to the Ogallala aquifer, the drinking-water source for 1.5 million people.

“Every indication right now is saying the administration is going to deny the permit for the pipeline, given that the 60- day period is not enough time to complete the review,” Susan Casey-Lefkowitz, director of the international program at the Natural Resources Defense Council, said in an interview. “The public concerns in Nebraska are so deep that to really do it right and listen to the people of Nebraska, this will take some time.”

--With assistance from Margaret Talev, Kate Andersen Brower and Katarzyna Klimasinska in Washington. Editors: Steve Geimann, Daniel Enoch

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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