Bloomberg News

Harper Says Canada Won’t Take ‘No’ for Answer on Keystone (2)

September 26, 2013

Canadian Prime Minister Stephen Harper said his government will continue to push for approval of the Keystone XL pipeline even if President Barack Obama rejects the project.

“My view is that you don’t take ‘no’ for an answer,” Harper said in New York today at an event hosted by the Canadian American Business Council. “We haven’t had that, but if we were to get that, this won’t be final. This won’t be final until it’s approved.”

Harper said he’s optimistic the U.S. will recognize the project is in the national interest, adding there’s an “overwhelming” case for it to be approved. He said he’s in regular contact with Obama about the proposed $5.3 billion pipeline, which would carry crude from the Alberta oil sands to U.S. Gulf Coast refineries.

“Ultimately, over time, bad politics make bad policies,” Harper said. “I believe that in strong advanced countries and economies like ours, bad policies ultimately get reversed.”

Obama has assured him “he’ll make a decision that’s in what he believes is the best interests of the United States based on the facts, and the facts are clear,” Harper said.

Harper, who has called Canada an emerging “energy superpower,” is seeking to secure new markets for the world’s third largest crude reserves.

New Route

The project entered its sixth year of U.S. review this month. Obama initially rejected the conduit in January 2012, citing concerns with its path through ecologically sensitive lands in Nebraska. TransCanada Corp. (TRP) reapplied with a new Nebraska route last year and split the project in two, proceeding with the southern portion that doesn’t require a permit.

Oil industry executives and trade groups including the Laborers International Union of North America have rallied around the project, calling it a job creator, while environmental opponents including the Natural Resources Defense Fund say it would increase oil-spill risks and exacerbate climate change by enabling higher oil-sands production.

Harper has offered to participate in joint efforts with the U.S. to cut greenhouse-gas emissions to win approval of the pipeline, a person familiar with the matter said this month.

The prime minister sent a letter to Obama last month as part of an effort to mollify U.S. concerns about the project, said the person, who asked not to be identified because he is not authorized to discuss it publicly.

Environmental Impact

In June, at Georgetown University in Washington, Obama declared in a speech Keystone shouldn’t be approved if it were found to “significantly exacerbate” carbon pollution. A March draft environmental impact statement found that the project wouldn’t significantly increase greenhouse-gas emissions because the oil sands would be developed without Keystone, and shipped out through other pipelines or by rail.

The State Department said it won’t complete its environmental-impact review until after reviewing and publishing 1.5 million public comments, a months-long process. Mandatory comment periods could push the decision to late this year or early next year.

TransCanada Chief Executive Officer Russ Girling said in July he hopes for a U.S. decision on the pipeline this year and that transporting the oil in the second half of 2015 as planned may be difficult amid approval delays.

Canadian oil producers are depending on new pipelines to export rising supplies of crude. Canadian energy companies have underperformed U.S. peers by 28 percentage points on Standard & Poor’s indexes during the past five years amid price discounts for the nation’s heavy oil relative to the U.S. benchmark crude as pipelines are delayed.

A more than doubling of oil-sands production, to 5.2 million barrels a day by 2030, hinges on construction of new pipelines including Keystone XL, the Canadian Association of Petroleum Producers said in a June forecast.

Canada’s oil sands are the world’s largest source of proven crude reserves after Saudi Arabia and Venezuela.

To contact the reporters on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net; Andrew Mayeda in Ottawa at amayeda@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net


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