Oilsands News: A slippery subject

U.S. President Barack Obama will decide the fate of the Keystone XL extension project by the year-end. Are we gearing up for a major project, or a huge rejection?

The die on dealing with oilsands appears to have been cast in Europe, and now all parties question how the conclusions made by the European Union (EU) will affect big project considerations in the U.S. Setting aside the arrests, rumours, letters and arguing in the press, what are the big questions facing decision-makers as resource abundance, energy requirements and geopolitical advantages are weighed up for the final say-so on the Keystone XL pipeline project?

Oilsands news - A slippery subject

The grapevine on the pipeline

The Keystone XL oilsands pipeline—totalling 2,700-kilometres (1,700-miles) stretching from Alberta through Montana, on to the Gulf Coast—didn’t crop up overnight. Its extension, proposed in 2008, is preceded by the US$5.2 billion Keystone project originally proposed by natural gas transmission and power services provider, TransCanada, in 2005 and operational as of June 2010. The existing project took two years for the necessary permitting and approvals to be granted and two years to construct. The ‘XL’ extension, costing US$7 billion, is due to receive project final decision from U.S President Obama by the end of 2011. Fate depending, it may then move to construction in line with completion in 2012-13. If approved, the additional 510,000 barrels per day granted passage by Keystone XL will take the total project capacity up to 1.1 million barrels per day; meeting approximately five per cent of U.S. oil demand.

For the past two months, environmental campaigners have occupied the front of the White House. Reports reveal that around 1,000 individuals have been arrested in the process, and it is now down to Obama to weigh up whether Keystone XL is hot or not in the eyes of U.S energy needs, risk and partnering, and for the people.

One of the many to be taken into custody is prominent NASA climate scientist and go-to commentator James Hansen. He describes U.S. consideration of the project as “a drug addict reaching for a dirty needle from a fellow addict” and urges Obama to “exercise leadership and reject the pipeline” because it is “crazy”.

His opinion—like the US$790,000 TransCanada has spent on lobbying expenditures in this year alone (according to the Center for Responsive Politics)—characterises quite how polarised views are on the project.

According to Charles K. Ebinger, a senior fellow for energy at the Brookings Institution, Keystone XL has now become “a test case for the Democrats”. A spokesperson named P.J. Crowley from the approvals process overseers, the State Department, who participated in the reviews process (and since resigned over an unrelated issue) told press that the project “represents a collision of multiple national interests and multiple political interests”.

The Keystone XL plot has continued to thicken, but now it’s crunch time. Some have reacted angrily to reports that Canadian officials have been stopping by Capitol Hill and distributing factsheets on oilsands. Some have said that emails released by climate change groups—purportedly exchanges between the authorities and Paul Elliot, the man TransCanada has brought in to lobby federal agencies—are embarrassing and revelatory. And there’s the very well-publicised comments made by Secretary of State Hillary Clinton, last October, where she told a San Francisco audience that her team were “inclined” to green-light Keystone XL.

Big project, bigger picture

While events in Europe are brought to a close, political point-scoring inside and outside of EU decision-making ensues. News reports fluctuate between support and vehement rejection of plans on a day-to-day basis, and upon publication the latest skirmish to hit newswires came from 33 House Democrats, who raised doubts about TransCanada’s role in proceedings in a letter sent to Clinton on October 17. They demand a high-profile review of the part the company plays in the approvals process, suggesting that the State Department acts “as little more than cheerleaders for the company’s bid”. Their comments have been attributed largely due to a feature run by U.S. newspaper, The New York Times, in which it was said TransCanada had played a questionable role in selecting the company tasked with carrying out the environmental reviews part of the approvals process. TransCanada has previously defended the appointment of firm Cardno Entrix, stating that it has been done “at the sole direction of the Department of State.” In short, the letter requests that lawmakers either reject the project’s proposal outright, or at least reconsider its terms of assembly. It also demonstrates the significant clout media reports may wield as the final word is formed.

Concurrently, Canadian ambassadors supporting the project remain in the spotlight. Alberta’s tar sands spokeswoman, Minister of International Relations Iris Evans, and Gary Doer, Canada’s social-democratic ambassador to the United States, continue to crop up.

However, the project subtext is what it means to the future of tar sands. In press, Kenny Bruno from advocacy body Corporate Ethics International stated that the organisation has targeted Keystone XL because “it’s an infrastructure linchpin for the expansion of the tar sands”. Andrew Leach, from the Alberta School of Business at the University of Alberta, was recently quoted as saying “It’s debate over a pipeline, but it’s really a debate about the oilsands.

“On both sides of the debate, the proponents and the opponents, there are a lot of levered numbers.”

A big project with bigger implications for the oilsands industry, Keystone XL’s U.S. decision is eagerly anticipated by both sides of the fence. Throughout the mishap addresses, letters, protests and corporate partnering, the powers-that-be have done all they can to remain behind closed doors as concluding opinions are formed. It is possible that insight may be garnered from EU findings, but it by no means leads the U.S. in its own choices. Like the wider industry, the project is an inherently political issue and always has been, but in the surrounds of comments and anguish from every direction, little concrete predictions can be formed despite the clock ticking swiftly down to the decision deadline.

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