Coming Soon to Great Plains: Keystone XL Pipeline
It's easy to see why Russ Girling, the chief executive of TransCanada Corp., is optimistic that his company's controversial Keystone XL pipeline will soon get a green light from the U.S.
"You have to believe that the world is logical, especially around something as important as this," he told a group of Bloomberg News reporters and editors this morning. For the State Department to reject the pipeline would be "the craziest thing I could think of for the largest consumer of oil on earth," Girling said.
It also seems extremely unlikely, despite loud opposition from some environmentalists. When President Barack Obama denied TransCanada's first application last year, he made it clear it was only to give TransCanada time to work out a slight route change to skirt the sensitive Sandhills region, as demanded by state leaders in Nebraska. The president no doubt would have only delayed the application, rather than rejecting it, if Republicans in Congress hadn't demanded a quick decision.
Republicans did this in the hope that it might hurt Obama's chances for re-election. If they hadn't, the pipeline might already be approved, or at least be closer to it, which raises the question of whether anyone in government truly cared about moving quickly.
At the same time, the president signaled his basic support for the project by encouraging the company to go ahead and build the southern part of it -- from Cushing, Oklahoma, to the Gulf Coast -- which did not require new permits. He also invited the company to submit a new application for the northern section, from the Saskatchewan-Montana border to Cushing.
Now, Nebraska has accepted a revised route, and the Obama administration is expected to make a decision this spring. Yes, some environmentalists still furiously fight the pipeline, including by staging another rally in Washington on Feb. 17. Their argument has always been convoluted -- an indirect attack on the Alberta oil sands -- and not that well thought out. While it's true that emissions from extracting oil-sands crude are greater than drilling for other kinds of oil, most of the oil's emissions come from burning it.
What's more, as an editorial last month in the scientific journal Nature pointed out, the oil sands are not as dirty from a climate perspective as their reputation would have it. "Some of the oil produced in California, without attention from environmentalists, is worse," Nature said.
In any case, Keystone or no Keystone, the oil sands crude will be unearthed. The oil market won't have it any other way. Girling showed Bloomberg News a map of Canada with a pipeline crossing it west to east. This now runs only from Alberta to Montreal, but plans are under way to extend it to Saint John, New Brunswick, where crude can be loaded onto ships bound for the U.S. Gulf Coast.
If the Obama administration assesses the pipeline based on its safety and potential to benefit the U.S. economy and energy security -- as it should -- approval is only a matter of time.
(Mary Duenwald is a member of the Bloomberg View editorial board.)