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Obama denies permit for Keystone XL pipeline

The Keystone Oil Pipeline was pictured under construction in North Dakota in this undated photograph.

Reuters/TransCanada Corporation/Handout

The Keystone oil pipeline was pictured under construction in North Dakota in this undated photograph.

President Barack Obama denied a permit for TransCanada Corp.’s Keystone XL oil pipeline and will let the company file a revised route that avoids an environmentally sensitive area in Nebraska.

The decision by the State Department today was praised by environmentalists, who said the pipeline would add to US greenhouse-gas emissions, and was decried by the US oil and gas industry and Republican lawmakers, who had pushed President Barack Obama to approve the project as a way create jobs.

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Obama acted before a Feb. 21 deadline Congress set after Obama in November postponed a decision while a revised Nebraska route is reviewed. TransCanada said the 1,661-mile project would carry 700,000 barrels of crude a day from Alberta’s oil to refineries on the US Gulf of Mexico coast, crossing six US states and create 20,000 jobs.

“I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy,” Obama said today in a statement. “We will continue to look for new ways to partner with the oil and gas industry to increase our energy security.”

TransCanada fell 47 cents to $41.27 at 3:24 p.m. in New York, and earlier today touched $39.74.

Canada Backs Pipeline

Canada will continue to support TransCanada Corp.’s plans to build the Keystone XL pipeline, Canadian Foreign Minister John Baird said, adding that it is in the best interests of both Canada and the United States.

“The Department of State recommended to President Obama that the presidential permit for the proposed Keystone XL Pipeline be denied and, that at this time, the TransCanada Keystone XL Pipeline be determined not to serve the national interest,” according to an e-mailed statement. “The president concurred.”

The denial of the permit application doesn’t preclude any subsequent permit applications for similar projects, according to the State Department’s statement.

Environmentalists said the pipeline will add to greenhouse- gas emissions tied to climate change and endanger drinking water supplies in Nebraska. They have staged demonstrations outside the White House and vowed to withhold financial support to Obama’s presidential campaign if he approves the pipeline.

‘Oil Spills’

“The entire purpose of the pipeline is to move Canadian oil to the crude refineries in the Gulf so that it can be shipped overseas,” Jeremy Symons, a National Wildlife Federation vice president, said today in a phone interview. “If the pipeline is built, Canada gets the jobs, China gets the oil and American families get the oil spills.”

Protests in Nebraska and at the White House focused on the risks of a spill tainting the Ogallala aquifer in the state’s Sand Hills region. TransCanada has discussed alternate routes with state officials that would pose less risk to drinking-water supplies.

“We’re glad Keystone hasn’t been approved, but we’d like to see the pipeline rejected outright,” said Noah Greenwald, endangered species program director for the Center for Biological Diversity, in a phone interview. He said producing petroleum from oil sands releases more greenhouse gases and requires more water than conventional oil production.

‘Big Oil’

Wendy Abrams, who raised from $50,000 to $100,000 for Obama in 2008, according to the Center for Responsive Politics, had said rallying her friends around the president would be hard if he approved the pipeline. She said Obama has since shown that he’s not “in the pocket of Big Oil.”

She said Obama’s decision to reject the pipeline makes it tough on him “either way because the energy folks that have money to be made, will spend a ton of money on ads and it’s a one-way street because the environmental groups don’t have the billions to spend on ads defending their position.”

The decision was “politically motivated” and will make the US more dependent on foreign nations “that don’t share our interests,” US Chamber of Commerce President Thomas Donohue said today. The decision shows job creation is not a high priority for Obama, he said.

“The president’s decision sends a strong message to the business community and to investors: keep your money on the sidelines, America is not open for business,” Donohue said. “By placing politics over policy, the Obama administration is sacrificing tens of thousands of good-paying American jobs in the short term, and many more than that in the long term.”

‘A Distraction’

Representative Edward Markey of Massachusetts, the senior Democrat on the Natural Resources Committee, said the pipeline wasn’t critical to US energy policy, and became “a distraction” from attempts to reduce the nation’s dependence on foreign sources of oil.

“This pipeline would have taken the dirtiest oil on the planet, sent it snaking across the Midwest in an already-leaky pipeline, only to be exported to foreign markets once it reached the Gulf Coast,” Markey said. “The United States shouldn’t be used as a middleman between the dirtiest Canadian oil and the thirstiest foreign markets, when what the American people get in return is environmental risk and higher gas prices.”

Decision Delay

The administration in November delayed approving the project until after the 2012 election, saying it wanted to study an alternate route that would take the pipeline away from environmentally sensitive areas in Nebraska. Congress last month set Feb. 21 for the US to issue a pipeline permit.

The State Department said the review could be completed “as early as the first quarter of 2013.”

Obama’s jobs council yesterday called for an “all-in” approach, urging an expansion of oil and gas drilling and an acceleration of projects including pipelines.

“We should allow more access to oil, natural gas and coal opportunities on federal lands,” the year-end report by the President’s Council on Jobs and Competitiveness said.

The American Petroleum Institute, the Washington-based group of oil and gas companies, plans to lobby Congress for legislation that would take away Obama’s power to make a final decision on the Keystone pipeline.

Creating Jobs

“The president’s decision today makes us question if he’s truly interested in jobs creation,” API President Jack Gerard said today in an interview before an appearance in Washington.

TransCanada applied for a US permit in 2008. Advocates such as Senator Richard Lugar, an Indiana Republican who sponsored legislation to set the February deadline, said further delay compromises US efforts to import more oil from a friendly nation.

“The studying time is done,” Lugar said today in an e- mailed statement. “The environmental concerns have been addressed. The job creation, economic and energy security arguments are overwhelmingly in favor of building it. The president opposing pipeline construction is not in the best interest of the United States.”

Patrick Parenteau, environmental law professor at Vermont Law School in South Royalton, said Obama has other options based on the fact that a new route through Nebraska has yet to be determined.

“The middle option is, ‘I can’t say it’s in the national interest based on what I know,” Parenteau said in an interview. “I don’t think he’s boxed in. He’s going to be in another one of these situations that makes him look indecisive.’

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