Canadian Pipelines in Purgatory
By: Mike Doyle, CAGC
Keystone XL is a proposed 1,897-kilometre pipeline that would carry crude oil from Hardisty, Alberta to Steele City, Nebraska, where it would link up with other pipelines that run to the Gulf Coast and the U.S. Midwest.
The pipeline would carry an average of 830,000 barrels of oil per day to refineries in the Midwest and the Gulf Coast.
TransCanada (TSX:TRP) would develop the US$5.4 billion pipeline. In May 2012, the company filed a new application for a presidential permit — a requirement for any cross-border pipeline —after the U.S. State Department denied its first application.
The Canadian Energy Research Institute estimates that Keystone XL will add $172 billion to the United States’ gross domestic product by 2035.
Earlier this year, the State Department put off its decision again, pending the outcome of a court fight in Nebraska over the proposed route. A decision is not expected before next year.
However, last week’s midterm elections, which left the Republican party in full control of the U.S. Congress, could force the issue through expected legislation.
But there are potential pitfalls that could prevent progress on the pipeline.
Here are some of them.
— The Veto: A bill needs two-thirds support in Congress to override a presidential veto — which is 67 votes in the 100-seat Senate. The bill being pushed by Louisiana’s embattled Sen. Mary
Landrieu does not have those votes.
There’s already huge pressure on Obama from environmental groups to veto it, on the logic that he’d be tarnishing his own legacy on climate change by allowing the pipeline just after striking a historic emissions deal with China.
One columnist in the Washington Post pointed to another concern: the bill starves Obama of valuable leverage he might prefer using in two months.
The next Congress, to be sworn in early next year, will be dominated by Republicans. One of their biggest policy priorities — perhaps even their No. 1 issue — is pushing Obama to approve the pipeline. In exchange for that kind of political victory, Obama might have insisted on something in return from the Republicans.
—The Legal Issues: The pipeline doesn’t even have an approved route, at least not for now. In Nebraska, the courts have thrown out the existing route, declaring that the state’s Republican governor used unconstitutional methods to approve it.
The case is before the state’s Supreme Court. Dave Domina, the lawyer fighting the pipeline on behalf of holdout Nebraska landowners, said he expects a decision by the state Supreme Court
soon, possibly by the holidays.
Domina said lawmakers need to remember not only that there’s a gap in the route in Nebraska but also that the final decision belongs to the president, not Congress. A hasty move in Washington could prompt more lawsuits, he suggested.
Keystone XL is a proposed 1,897-kilometre pipeline that would carry crude oil from Hardisty, Alberta to Steele City, Nebraska, where it would link up with other pipelines that run to the Gulf Coast and the U.S. Midwest.
The pipeline would carry an average of 830,000 barrels of oil per day to refineries in the Midwest and the Gulf Coast.
TransCanada (TSX:TRP) would develop the US$5.4 billion pipeline. In May 2012, the company filed a new application for a presidential permit — a requirement for any cross-border pipeline —after the U.S. State Department denied its first application.
The Canadian Energy Research Institute estimates that Keystone XL will add $172 billion to the United States’ gross domestic product by 2035.
Earlier this year, the State Department put off its decision again, pending the outcome of a court fight in Nebraska over the proposed route. A decision is not expected before next year.
However, last week’s midterm elections, which left the Republican party in full control of the U.S. Congress, could force the issue through expected legislation.
But there are potential pitfalls that could prevent progress on the pipeline.
Here are some of them.
— The Veto: A bill needs two-thirds support in Congress to override a presidential veto — which is 67 votes in the 100-seat Senate. The bill being pushed by Louisiana’s embattled Sen. Mary
Landrieu does not have those votes.
There’s already huge pressure on Obama from environmental groups to veto it, on the logic that he’d be tarnishing his own legacy on climate change by allowing the pipeline just after striking a historic emissions deal with China.
One columnist in the Washington Post pointed to another concern: the bill starves Obama of valuable leverage he might prefer using in two months.
The next Congress, to be sworn in early next year, will be dominated by Republicans. One of their biggest policy priorities — perhaps even their No. 1 issue — is pushing Obama to approve the pipeline. In exchange for that kind of political victory, Obama might have insisted on something in return from the Republicans.
—The Legal Issues: The pipeline doesn’t even have an approved route, at least not for now. In Nebraska, the courts have thrown out the existing route, declaring that the state’s Republican governor used unconstitutional methods to approve it.
The case is before the state’s Supreme Court. Dave Domina, the lawyer fighting the pipeline on behalf of holdout Nebraska landowners, said he expects a decision by the state Supreme Court
soon, possibly by the holidays.
Domina said lawmakers need to remember not only that there’s a gap in the route in Nebraska but also that the final decision belongs to the president, not Congress. A hasty move in Washington could prompt more lawsuits, he suggested.
Northern Gateway
Northern Gateway is a proposed 1,177-kilometre twin pipeline that would carry diluted bitumen from Alberta to the town of Kitimat on the British Columbia coast, where it would be shipped overseas by oil tankers.
One pipeline would carry an average of 525,000 barrels a day of petroleum products west to Kitimat. The other pipeline would carry a daily average of 193,000 barrels of natural-gas condensate — used to dilute oilsands bitumen — east to Bruderheim, Alta., just north of Edmonton.
Calgary-based Enbridge Inc. would develop the $6.5-billion pipeline. The company submitted an application for the pipeline to the National Energy Board in May 2010. Consultations were then held with opponents and supporters of the project.
In December 2013, a federal joint review panel recommended approval of the project, subject to 209 conditions. The government approved the project, contingent on those conditions being met, and further consultations with affected aboriginal communities.
The Northern Gateway project is worth an estimated $300 billion in gross domestic product over 30 years.
One pipeline would carry an average of 525,000 barrels a day of petroleum products west to Kitimat. The other pipeline would carry a daily average of 193,000 barrels of natural-gas condensate — used to dilute oilsands bitumen — east to Bruderheim, Alta., just north of Edmonton.
Calgary-based Enbridge Inc. would develop the $6.5-billion pipeline. The company submitted an application for the pipeline to the National Energy Board in May 2010. Consultations were then held with opponents and supporters of the project.
In December 2013, a federal joint review panel recommended approval of the project, subject to 209 conditions. The government approved the project, contingent on those conditions being met, and further consultations with affected aboriginal communities.
The Northern Gateway project is worth an estimated $300 billion in gross domestic product over 30 years.
Energy East
The $12-billion, 4,600-kilometre Energy East pipeline would carry 1.1 million barrels of crude oil per day from Alberta and Saskatchewan to refineries in eastern Canada.
The project would involve converting an existing natural gas pipeline to oil, then building new lines in Alberta, Saskatchewan, Manitoba, eastern Ontario, Quebec and New Brunswick to extend the existing line. It would require construction of two marine facilities, on the Gulf of St. Lawrence near Quebec City and in Saint John, N.B.
The project would also deliver oil to existing Quebec refineries in Montreal, near Quebec City and in Saint John. New pipeline would be built in Alberta, Saskatchewan, Manitoba, eastern Ontario, Quebec and New Brunswick.
TransCanada filed its regulatory application for Energy East to the National Energy Board two weeks ago. Several environmental groups have vowed to fight the pipeline, raising concerns over the ecological harm that would result from a spill as well the project’s enabling role in oilsands growth.
Trans Mountain Pipeline
Kinder Morgan’s proposed $5.4-billion expansion of its Trans Mountain pipeline would nearly triple its capacity to ship petroleum products to 890,000 barrels a day along a 1,000-kilometre route to Burnaby, BC up from the current daily flow of 300,000 barrels.
The pipeline would enable crude exports to Asia through the Vancouver area, but opponents of the Trans Mountain project have warned of the potential impact of a spill, either from the pipeline itself or from increased tanker traffic.
The National Energy Board plans to begin oral hearings examining the Trans Mountain expansion in July of next year. A final report is due to federal cabinet in January 2016.
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