Keystone XL Review Hijacked by Activists TransCanada SaysLisa Lerer and Jim Snyder
TransCanada Corp. chief executive Russ Girling acknowledged that opponents of the Keystone XL pipeline have slowed its approval, though he said his company remains committed to the project.
“There’s no question that the noise outside is having an influence on the process,” he said today, in an interview in Washington. “The project has been hijacked by activists that are opposed to the development of all fossil fuels.”
Girling, who met with State Department officials about the project yesterday, expressed frustration with the five-year review by U.S. regulators, saying the process for evaluating cross-border energy projects must change. He said he has stopped giving the company’s investors an estimate of when the approval process will be complete.
“I think we have exhausted everything that could possibly be asked,” he said.
Still, he said TransCanada, which is based in Calgary, would continue pushing to build the $5.3 billion link between Alberta’s oil sands and refineries along the Gulf Coast, even if President Barack Obama eventually decides against approving the route. He did not elaborate on what steps the company would take if the project is rejected.
“Nobody is going to pack up their tent and leave,” he said. “We will get through these hurdles. The marketplace will determine whether these projects get done.”
Obama made his last public comments about Keystone in June, saying he would approve the remaining portion of the pipeline only if it would not “significantly exacerbate the problem of carbon pollution.”
Many environmentalists, including some of the president’s biggest financial donors, have turned the project into a litmus test on environmental issues. The decision, they argue, will set the parameters of the energy debate for years to come and determine Obama’s legacy on climate change.
Even so, Girling said he viewed the president’s comments as “positive,” saying that the pipeline would not increase oil consumption and would displace carbon-intensive heavy crude from Venezuela or elsewhere.
“The pipeline itself has no emissions and there’s no way that building it will cause an increase in consumption,” he said.
Keystone critics have been “very successful in creating the impression that the pipeline equals emissions, which is what this is all about,” Girling said. He likened the argument to “suggesting that if we stop building roads people will stop driving. They will just drive on bad roads.”
Opponents argue that the pipeline would increase carbon emissions by accelerating the pace of oil sands development, which releases more greenhouse gas emissions than the production and refining of more conventional types of crude.
“Tar sands are the dirtiest fuel source of oil, and Girling knows that investors will flock to Alberta if Keystone is approved,” said Daniel Kessler, a spokesman for 350.org, an environmental group that has led much of the opposition to the line. “So it’s not just about this pipeline but instead a larger signal that the tar sands are open for business if Keystone is approved.”
Previous pipelines built by the company took about two years to be approved by U.S. authorities. The longer regulators delay a decision on Keystone, said Girling, the more costs mount for TransCanada.
The company has $2 billion invested in the project already, he said. Unused pumps sitting in warehouses and pipes laying on the ground need to be maintained and labor agreements and construction contracts are coming due for renegotiation.
“We have a very expensive and complicated process of trying to manage a construction project that should have finished by now,” he said. “It’s the whole value chain that’s involved.”
The lower leg of the line from Cushing, Oklahoma, to the Gulf Coast, which TransCanada started building earlier because it didn’t require a presidential permit, is 85 percent complete and on track to start transporting crude at the end of this year, the company said. A lateral pipeline to Houston is forecast to be online in 2014.
Harold Hamm, the chief executive of Continental Resources Inc., has said the northern leg of Keystone that’s now under review is no longer needed with rail making up for a lack of pipelines to carry oil from the Bakken Field in North Dakota to markets to the east, west and south.
Canadian oil producers should focus on exporting the bitumen to Asia and elsewhere as domestic producers negate the need for oil in the U.S., Hamm said at a Bloomberg energy conference in Houston earlier this month.
The Oklahoma City-based Continental is the biggest owner of drilling leases in the Bakken, and competes with Canada’s oil sands producers among U.S. refiners.
Keystone would have the capacity to deliver 830,000 barrels of crude a day, including 100,000 barrels reserved for U.S. producers. Girling said oil companies operating in the U.S. remain committed to the project, including Continental.
“We haven’t had any of our shippers drop their contracts on our project,” Girling said. “In fact, we have folks that still want to get on the pipeline. What you are hearing from producers is we have to get on with our lives.”
Girling said there “wasn’t anything of material significance” discussed during his meeting with State Department yesterday. The agency has jurisdiction because the project would cross an international border.
The company would try to address any concerns that may arise, including safety improvements to reduce the risks of spills, he said.
“We have no issue with adding additional features that would allow us to be as safe as we possibly can,” he said. “That is our primary objective.”