Bloomberg News

Keystone Supporters See Weak Jobs Data Boosting Project

June 06, 2012

A sputtering U.S. job market is encouraging supporters seeking to force President Barack Obama to approve TransCanada Corp. (TRP)’s Keystone XL oil pipeline before the November election.

A report last week that U.S. employers added in May the fewest workers in a year underscores the need for the $5.3 billion pipeline, which would carry heavy crude from Alberta to Nebraska, according to Senator John Hoeven, a Republican from North Dakota. Hoeven is lobbying to include a measure in a transportation spending bill that would fast track the project.

The House and Senate have until the end of June to reconcile different versions of the $109 billion highway bill when the current law expires.

The prospect of thousands of construction jobs to build the project is tipping the political scales in Keystone XL’s favor, according to David Bookbinder, an environmental attorney and former chief climate counsel for the Sierra Club who opposes the project. Some Democrats in Congress and on the campaign trail have joined Republicans in questioning Obama’s decision in January to reject the company’s first proposed route due to environmental concerns, inviting TransCanada to reapply with an alternate.

“The political considerations both domestic and international outweigh the environmental ones,” Bookbinder said in an interview. “The president has explicitly put other concerns ahead of environmental ones. I think this will be another example of that sort of calculus.”

Obama Veto

White House spokesman Clark Stevens referred questions to the State Department, where spokeswoman Wendy Nassmacher declined to comment. Obama has said he will veto the transportation bill if it includes the Keystone XL provision.

“What that last economic report made crystal clear is that we need more jobs,” Hoeven said in an interview. “I absolutely think it helps makes the case,” for Keystone XL.

Protests last year in Nebraska and at the White House focused on the risks of a spill tainting the Ogallala aquifer in Nebraska, a drinking-water source for 1.5 million people. Obama said the pipeline shouldn’t threaten water supplies and in November, the State Department, which has jurisdiction over the project because it crosses an international border, said it would delay a decision until early next year.

Republicans say that move contributed to a Labor Department report June 1 that payrolls climbed by 69,000 last month, less than the most-pessimistic forecast in a Bloomberg News survey. The jobless rate rose to 8.2 percent from 8.1 percent.

Construction Jobs

Obama’s economy “isn’t working for the 28,000 construction workers who lost their jobs in the month of May,” Senator John Thune, a South Dakota Republican, said in a statement after the jobs report. “Yet President Obama continues to block job- creating projects like the Keystone XL pipeline, which would create 20,000 jobs, many in the construction industry.”

The project would have created 20,000 U.S. construction jobs, according to TransCanada. Permanent jobs to operate the pipeline may be as few as 20, according to the State Department.

Heidi Heitkamp, a Democrat and former North Dakota attorney general who is running for U.S. Senate, said Keystone XL is a “jobs program” that will also reduce U.S. dependence on Middle East oil.

“The pipeline is going to get approved eventually,” Heitkamp said in an interview. “It’s a missed opportunity to put Americans to work.”

Obama rejected the pipeline Jan. 18 after Congress set a deadline for a decision. In April, TransCanada proposed a new route through Nebraska and, in May, filed a new permit application with the State Department.

Senate Vote

Republicans have seized on Obama’s decision, claiming it cost jobs and led to higher gasoline prices. In March, Hoeven sponsored an amendment that would have authorized construction of the project and deemed it in compliance with environmental regulations.

Eleven Democrats joined 44 Republicans in support of the measure, which won 56 votes, falling short of the 60 needed for approval.

“At a time when we’re trying desperately to create more jobs and get America working again, there’s no reason for us to drag our feet on this,” Senator Claire McCaskill, a Missouri Democrat who voted with Republicans on the March amendment, said in an e-mail.

Meanwhile, polls show support for the project. In a March 8 through March 11 telephone survey of 1,024 adults by Gallup, 57 percent said the government should approve Keystone XL compared to 29 percent who said it should not.

Review Schedule

It’s unclear whether environmental reviews can be completed before the November presidential election. The Nebraska Department of Environmental Quality is reviewing the new pipeline route and is expected to release its findings around October, according to department spokesman Jim Bunstock.

The State Department has said its review of the new route may be complete by the first quarter of 2013. The department last year found that the original plan posed “no significant impacts to most resources” along its route. TransCanada initially applied for a permit in 2008.

“The route is no better,” Jane Kleeb, founder and executive director of Bold Nebraska, a group that opposes the pipeline, said in an interview. “It still crosses a major portion of the Ogallala aquifer. I think it will get denied.”

The original project, estimated to cost $7.6 billion, would’ve expanded TransCanada’s existing Keystone pipeline to carry as much as 830,000 barrels a day from Canada’s oil sands and North Dakota’s Bakken Shale along a 1,661-mile (2,672- kilometer) path to Gulf Coast refineries.

The current proposal covers a segment from the Canadian border to Steele City, Nebraska. TransCanada has applied to the U.S. Army Corps of Engineers for the pipeline segment from Oklahoma to the Gulf Coast.

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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