Keystone XL is dead for now. What’s next?

As Juliet Eilperin and Steven Mufson report, the Obama administration is nixing the Keystone XL pipeline, which would’ve carried oil from Canada’s tar sands down to the Gulf Coast. So why did Obama reject it? And what happens next?

(Joshua Roberts - Reuters) White House officials have long blamed Republicans in Congress for imposing an arbitrary deadline on the project that made a proper review all but impossible. Back in November, President Obama said that the Keystone pipeline should be rerouted in response to concerns that leaks could taint Nebraska’s water supplies. That process would’ve stretched into 2013. In last month’s payroll tax cut extension, however, Republicans included a provision that forced the administration to make a final decision by Feb. 21 of this year. White House officials bristled at what spokesman Jay Carney called “an attempt to short-circuit the review process.” And, in the end, the administration blocked the permits altogether.

Now, this doesn’t mean the pipeline is dead and buried. TransCanada is planning to reapply for permits once it comes up with an alternative pipeline route that doesn’t run through Nebraska’s Sandhills. This will delay the project even further, because the company will have to grind through the permitting process all over again, but it’s possible that the company could eventually win approval. TransCanada’s stock price initially plunged when rumors of the rejection first emerged, but has since slowly recovered.

Environmentalists are — understandably — hailing this as a huge, hard-fought victory. They’ve pointed out that exploiting Canada’s carbon-intensive tar sands would be an enormous setback in the fight against global warming. Tar-sand production is already leading to rapid deforestation in Alberta, and, as University of Chicago climate scientist Raymond Pierrehumbert has detailed, there’s enough carbon locked beneath the Athabasca oil sands field to warm the planet considerably (though it would take many centuries to burn all of that oil at current extraction rates).

One counterpoint that’s worth observing, however, is that even if the Keystone XL pipeline never gets built,  there are plenty of ways  that Alberta’s oil could conceivably get to refineries on the Gulf Coast and elsewhere. Enbridge Inc. recently announced plans to reverse the flow on the Seaway pipeline between Oklahoma and Texas, which will accomplish a portion of what the Keystone XL pipeline would’ve done. Not only are there a few other pipelines on the drawing board, but oil companies could even start shipping by rail if they found it profitable to do so. As one analysis commissioned for the Energy Department noted, “It would take a total moratorium on new pipeline — and also rail — capacity” to stop the development of Canada’s oil sands.

Just this past Tuesday, meanwhile, the president’s independent job council called for an “all-in” approach to energy that advocated expanded gas, oil, and coal production, as well as faster approval of key pipelines (though it didn’t mention Keystone XL by name). So this story is far from over.