Bloomberg News

Nebraska’s Governor Plans to Urge Obama to Proceed With Keystone

January 26, 2012

Jan. 25 (Bloomberg) -- Nebraska Governor Dave Heineman said he will urge President Barack Obama to reverse his decision denying a permit for TransCanada Corp.’s Keystone XL pipeline and let construction begin in segments in U.S. border states.

Heineman, a Republican and chairman of the National Governors Association, said this approach would give his state time to conduct an environmental review without stalling the $7 billion project. He said in an interview yesterday in Seattle that he will raise the issue with Obama next month during an NGA meeting in Washington.

“The president should -- I call it a conditional yes -- say, ‘Yes, TransCanada, if you’re willing to move forward and take a risk that Nebraska will get it done,’ which we will, ‘you go ahead and start building from our northern border and our southern border,’” Heineman said.

Obama announced on Jan. 18 that he agreed with the State Department’s recommendation to deny TransCanada’s permit application because a deadline set by congressional Republicans prevented a full review of the pipeline’s health and environmental impact. His administration invited TransCanada to reapply, which the company said it would accept.

“I just want to suggest to the president that, let’s put American jobs first, let’s reduce our dependence on foreign oil,” Heineman said. “And if this pipeline makes sense, which I think it does, and we’ve certainly had some indication from the president that’s where he wants to head, let’s make the decision now, not 10 months from now.”

Clarity Needed

White House spokesman Clark Stevens said the decision on Keystone XL reflected the “arbitrary deadline” set by Republicans for issuing a permit.

The denial of a permit “does not prejudge any future projects, and any new proposal will be subject to the important safety, economic and environmental assessments that must inform any final decision,” Stevens said yesterday in an e-mail.

The pipeline, when completed, would carry 700,000 barrels of crude a day from Alberta’s oil sands to refineries on the Gulf of Mexico. It would run through South Dakota, Montana, Oklahoma, Kansas and Texas, which support the plan.

The State Department must issue a permit for the pipeline to proceed because it would cross an international border.

“We want to have a conversation with the Department of State,” Heineman said. “Who can we do a memorandum of understanding with that would continue to allow us to move forward with that environmental impact statement?”

Special Session

Heineman, who supports the project, sought changes to the proposed route that would steer the 1,661-mile (2,673-kilometer) pipeline away from the environmentally sensitive Ogallala Aquifer under the Sand Hills region. He called a special session of the state Legislature, which voted to conduct an environmental review of an alternate route.

The state will take “a timeout” from its review “to figure out how do we continue to move forward,” Heineman, 63, said yesterday during a break in an NGA meeting.

He said Calgary-based TransCanada had planned to propose an alternate route to Nebraska last week before Obama’s announcement and is willing to begin construction on the northern and southern portions of the pipeline.

“There are three states to go through to get to Nebraska on both ends, so we could have our process done,” Heineman said.

TransCanada applied for a U.S. permit in 2008.

‘Fully Committed’

“While we are disappointed, TransCanada remains fully committed to the construction of Keystone XL,” Chief Executive Officer Russ Girling said in a statement following Obama’s announcement. “Plans are already under way on a number of fronts to largely maintain the construction schedule of the project.”

Representative Lee Terry, a Nebraska Republican, has introduced a bill that would require the Federal Energy Regulatory Commission to approve the pipeline if it met safety requirements.

The House Energy and Commerce Committee’s energy and power subcommittee will hold a hearing on the bill today.

Max Weiss, a spokesman for Terry, said Republicans are considering attaching the Keystone measure to the highway bill that funds U.S. infrastructure projects.

“Keystone being tied to such a ‘must pass’ bill is an option,” Weiss said in an e-mail. Republicans have also said they might try to include it in an extension of the payroll tax cut.

Canada is the largest U.S. oil supplier at about 2.67 million barrels a day, compared with about 970,000 barrels a day from Venezuela, which ranked fourth in exports to the U.S. in the first 10 months of 2011, according to the Energy Department. Mexico and Saudi Arabia ranked second and third in shipments to the U.S.

--With assistance from Jennifer Oldham in Denver, and Jon Morgan, Jim Snyder and Jim Efstathiou in Washington. Editors: Daniel Enoch, Steve Geimann

To contact the reporter on this story: Alison Vekshin in Seattle at avekshin@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.


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