White House officials said Tuesday that President Obama intends to decide the fate of the Keystone XL oil pipeline during his tenure, rather than suspend the federal review process at the request of the project's sponsor.
On Monday, TransCanada Corp., which is seeking a cross-border permit for a 1,179-mile pipeline between Hardisty, Alberta, and Steele City, Neb., asked the State Department to suspend its review until the Nebraska Public Service Commission approved a revised route through the state. The completed pipeline would move roughly 830,000 barrels a day of heavy crude oil to U.S. Gulf Coast refineries.
But Earnest’s comments suggested that the administration — which has been under serious pressure for years from environmental advocates and major Democratic supporters to block the pipeline — has come to see the project as a litmus test on the United States’ commitment to tackling climate change.
Several other administration policies are likely to have a greater impact on global greenhouse-gas emissions, including the Environmental Protection Agency’s rule to limit carbon emissions from new power plants and its first-ever carbon limits on cars and light trucks. And experts have debated to what extent Alberta’s oil might be shipped out by rail if the pipeline’s northern route falters. But at a time when the president has identified climate change as one of his top policy priorities, an application that started as a routine regulatory matter has taken on outsize political importance in the United States.
On Monday, Earnest said Obama will decide “on the merits of the application” and could not say how the State Department intends to reply to TransCanada’s suspension request. “But given how long it’s taken,” he said, “it seems unusual to me to suggest that somehow it should be paused yet again.”
“I would venture to say that there’s probably no infrastructure project in the history of the United States that’s been as politicized as this one, although I wasn’t around for the intercontinental railroad,” he quipped a couple of minutes later. “Maybe there were some partisan politics associated with that.”
The extraction and processing of a viscous oil called "bitumen," excavated from vast formations of sand just below the surface of Alberta's northern region, has come under fire because it requires more energy than many other oil operations. Some residents living along the pipeline's route, worried about the potential impact of a spill on local waterways, filed lawsuits and launched protests far from Washington. One lawsuit in Nebraska effectively halted the permitting process for months.
But a majority of Americans, Republican lawmakers and construction union members welcomed the prospect of boosting reliance on a firm U.S. ally for new supplies of the heavy crude, which would be shipped by a pipeline built largely in this country and processed at Gulf Coast refineries uniquely capable of dealing with the low-grade oil. The State Department estimated the $8 billion project would generate about 1,950 construction jobs annually in Montana, South Dakota, Nebraska and Kansas over a two-year period and contribute about $3.4 billion to the U.S. gross domestic product.
Many proponents also argued that the pipeline would be cheaper and less hazardous than rail transportation. As oil-sands output has grown, so has the number of train-loads of oil — and rail accidents.
In an interview Tuesday, TransCanada spokesman Mark Cooper said the firm believes a delay is justified because the administration suspended its review last year after the Nebraska route was challenged in the courts.
“With the utmost respect to the administration and the State Department, we do believe there is a precedence for pressing pause,” he said.
Cooper said that none of the companies that have bid to ship oil through the pipeline have severed their contracts. “I think if you ask most of them, delayed new pipeline infrastructure is better for them than none at all,” he said, adding TransCanada has “no intention of withdrawing our application” if the State Department denies its request for a delay.
“We are focused on continuing to demonstrate that this project makes economic, environmental and geopolitical sense,” he said.
As the process has dragged on, however, the politics of the permitting decision have shifted.
In 2010, then-Secretary of State Hillary Rodham Clinton said she was “inclined” to approve the pipeline. But after elements of the Democratic base rebelled, it became a vexing question for the White House and a rallying cry for congressional Republicans. Obama has vetoed two congressional bills that would have approved the project, and Clinton announced in September that she opposed the pipeline.
Since winning reelection in 2012, Obama has become increasingly critical of the project. In a 2013 speech, he said he would approve it only if it “does not significantly exacerbate the climate problem.” Later this month, U.N. climate talks begin in Paris. Obama has spent months lobbying world leaders to set ambitious climate targets and demonstrating that the United States will take major steps to curb its carbon output.
Yet Americans have continued to strongly favor Keystone XL. A 2014 Washington Post-ABC News poll found that 85 percent thought the pipeline would create a significant number of jobs, while 47 percent thought it would pose a significant environmental risk.
The State Department has completed two environmental reviews of the project, ultimately concluding that it would not contribute to the global carbon output unless oil prices dipped to between $65 and $75 a barrel. Above that point it is worth spending the money to dig out the oil and even ship it out by rail, which is more expensive than a pipeline. Below that price, the agency concluded, firms might not extract bitumen.
Conventional crude oil prices are now below $50 a barrel, and last week Royal Dutch Shell cited “uncertainties” over pipeline shipments in canceling a $2 billion oil-sands project.
Canada’s recent election of Liberal Party leader Justin Trudeau as prime minister has also made U.S. rejection of the permit more palatable. Stephen Harper, a Conservative who had served as prime minister since before Obama took office, had campaigned hard for the project. But Trudeau, who spoke to Obama the day after his victory, told reporters, “Any relationship as important as Canada and the United States goes beyond a single project.”
Joby Warrick contributed to this report.