Platts – The U.S. oil industry was quick to vilify the Obama administration earlier this month for delaying its critical go- or no-go permitting decision on a major crude-oil pipeline until 2013. But a key supporter of the proposed Keystone XL pipeline now says that TransCanada, the project's developer, must shoulder some of the responsibility for the lengthy delay that is now stalling its $7 billion endeavor.
U.S. Senator Mike Johanns, a Nebraska Republican, speaking to all-energy news and talk show Platts Energy Week (http://www.plattsenergyweektv.com/), said he met with officials from Calgary-based TransCanada last year and urged them to re-route the pipeline so that it would not cross the environmentally sensitive Sandhills region of his home state. The Sandhills sit atop a portion of the Ogallala Aquifer, an underground source of irrigation and drinking water for millions of people in Nebraska and other Great Plains states.
Johanns said he urged TransCanada to avoid the aquifer by moving the pipeline's route further east, perhaps even into the corridor that the company established for another, already operational oil pipeline. That project, dubbed simply Keystone, was built a number of years ago without much of the controversy and public opposition that has dogged Keystone XL.
However, Johanns said TransCanada officials rebuffed his request—in part because of the cost associated with re-routing the project.
"They just kept saying, 'We can't move it,' " Johanns said.”It's going to be too expensive, or too this or too that. There was always some explanation, which never made any sense to me."
Asked if the years-long controversy over the Keystone XL project could have been avoided had TransCanada agreed early on to change the route through the Cornhusker State, Johanns smiled and said, "Yeah, it could have been."
Terry Cunha, a TransCanada spokesman for the Keystone XL project, did not immediately respond to a phone call and an email message requesting comment on Johanns' statements.
The 1,661-mile-long Keystone XL pipeline would bring heavy crude from Alberta's oil-sands region to refineries on the U.S. Gulf Coast. Because it would run through a number of U.S. states, the U.S. State Department must determine if the pipeline is in America's "national interest."
The State Department had been expected to make that permitting decision in late 2011 or early 2012. But on November 10, the department announced that it would push back its decision until the first quarter of 2013, citing the need to study "alternate routes" that avoid the Sand Hills region in Nebraska. TransCanada, in response, agreed to work with the State Department and the Nebraska Department of Environmental Quality to find a more acceptable route for the pipeline. The Nebraska state legislature is expected to pass a bill soon to codify the process.
Johanns, on Sunday's broadcast, called that agreement a "major breakthrough," saying it should eventually clear the way for the Keystone XL project to be built.
"The biggest issues were the aquifer and the Sandhills, and TransCanada stepped up in the last few days and said, 'Look, we'll figure out a way to relocate this,' " he said. “So it looks to me like this should move along."
DECISION DELAYED BECAUSE OF ELECTION?
Johanns and other officials say that under the new siting agreement, a new route could be agreed to within six to nine months, far less time than the State Department's 2013 target date. Johanns said he hopes the State Department will respond by expediting its permitting decision, but noted he's "a little worried that they won't."
Like many Republican officials, Johanns believes the State Department delayed the decision until early 2013 so it would not cause political problems for President Barack Obama and other Democratic lawmakers in the run-up to the November 2012 Presidential elections. Johanns noted that two of Obama's biggest and most important constituencies--labor unions and environmentalists--virulently disagree with each other over the Keystone XL project. So the State Department's permitting decision is bound to anger one of those groups, Johanns said.
"Barack Obama is caught in the middle," Johanns said, noting that unions want to build the pipeline because of the jobs that it will create, while environmentalists oppose it on the grounds that it will exacerbate global climate change, among other things.
The Institute for Energy Research (IER), an industry-friendly Washington think tank, shares Johanns' view that the Obama administration delayed the Keystone XL permitting decision for election-related reasons. Late last week, IER sought to prove that theory by filing a Freedom of Information Act (FOIA) request for government documents related to the decision.
Tom Pyle, IER's president said his group filed the FOIA request because "there is growing evidence that this administration cares more about satisfying environmental extremists ahead of the president's re-election bid than it does creating jobs."
Also Sunday, Platts Energy Week featured the latest comments from new Director of the Bureau of Ocean Energy Management Tommy Beaudreau, who said critics of the Obama Administration’s new plan for offshore oil and gas drilling are missing the bigger picture. Platts Senior Writer Gary Gentile shared what Beaudreau told a Platts Energy Podium audience in Washington, D.C. last week.
In a program segment entitled, “U.S. Energy Secretary Chu Faces Critics Over Solyndra,” Platts Associate Editor Herman Wang reported the full details of last week’s U.S. Congressional hearing which focused on the bankrupt Solyndra and the government’s ill-fated loan guarantee to the to solar panel maker. Wang discussed how Chu fared in the Congressional crossfire.
This week’s “Market Spotlight” took Platts Energy Week to London where Platts Global Oil News Director Richard Swann and Platts Managing Editor Henry Edwardes-Evans addressed the latest impacts of the Japan Fukushima disaster on nuclear power in Europe.
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