Keystone Q&A: Debate no longer limited to oil

WASHINGTON – Congress wasted no time this year getting back into the debate over the Keystone XL pipeline, despite last voting on approving the project in November. Now with firm control of the House and Senate, Republicans are eager to contrast their energy policy with that of President Barack Obama, who has questioned the need for and the importance of the pipeline.

But in the Senate, it’s nearly impossible to debate one energy issue without folding others into the mix, and Keystone is no longer just about infrastructure and oil production. Climate change, landowners’ rights and U.S. oil dependence are just a few of the issues on senators’ minds as they continue consideration of the bill.

Q.What is the Keystone pipeline and why is Congress spending so much time on it?

A.Much has been made of the 1,700-mile project extending from Alberta, Canada’s oil sands patch to Texas. But the heated political debate is now focused on the proposed 875-mile portion that would enter the United States in Morgan, Montana, and connect to an existing network in Steele City, Nebraska, before continuing to Gulf Coast refiners.

The Keystone system would have the capacity to transport up to 830,000 barrels of oil per day, mostly from the Canadian oil sands but with room reserved for lighter oil from the Bakken Shale play spanning North Dakota and Montana southward.

To Republicans, and some moderate Democrats, building Keystone is a critical step to making North America a dominant player in the global oil market by giving Canadian oil easy access to major American refiners and ports. But many Democrats believe constructing such a long pipeline system will lock the U.S. into decades of carbon-heavy oil at a time when the world’s nations are trying to curb greenhouse gas emissions to avert the worst consequences of climate change. On top of that, the Senate hasn’t passed an energy bill in several years, leading to pent-up demand for debate on a host of energy issues.

Q.Is the fight over Keystone affecting other pipeline construction?

A.Former Pipeline and Hazardous Materials Safety Administration head – and Keystone supporter – Brigham McCown said oil producers have been reluctant to commit to putting a certain amount of oil through other potential pipelines due to the controversy surrounding Keystone. Pipeline builders typically seek agreements with extraction companies for guaranteed minimum amounts of oil they plan to send through their systems so builders have locked-in demand for the infrastructure.

However, most pipeline projects don’t require the level of scrutiny Keystone has mustered because they don’t cross borders, leaving the president out of the final decision. The Federal Energy Regulatory Commission acts as the lead permitting agency for interstate pipelines, according to the Government Accountability Office. Sen. John Hoeven, R-N.D., says more companies are coming to the Bakken Shale to build out the pipeline network there, which has lagged behind the oil production boom that began in earnest in the late 2000s.

Q.What route would the pipeline follow? Which states would it touch?

A.The proposed route would cut through the northeast corner of Montana into South Dakota, and then extend southward along the eastern half of Nebraska. TransCanada altered the route after Obama rejected its original application in 2012, in part over concerns about its impact on an ecologically sensitive area of Nebraska called the Sand Hills.

The current route avoids the Sand Hills region as defined by the Nebraska Department of Environmental Quality, according to the State Department’s final environmental impact statement. However, the State Department report acknowledged the pipeline would cross areas with soil characteristics similar to those found in the Sand Hills.

Q.What is the administration’s role and why is the president opposed to legislative action? Is there any chance he might change his mind or be forced into approving Keystone?

A.The executive order outlining the presidential permit process for cross-border infrastructure projects gives the secretary of state the job of determining whether the proposal is in the national interest. Before he makes his decision, John Kerry will solicit input from eight federal agencies. Their comments are due by Feb. 2, and department officials have given no timeline for Kerry to issue his determination.

Under the order, a final decision would fall to the president if any of the consulting agencies disagree with the secretary of state’s finding. But given the political significance, Obama will ultimately decide the project’s fate. He has no desire to cede that power to Congress, which is why the White House threatened to veto a bill the House passed earlier this month to approve the pipeline.

Some observers have suggested Obama could be inclined to approve the project in exchange for something he wants to see enacted into law, and Republicans have acknowledged their best chances for seeing Keystone get the green light is by attaching a rider to “must-pass” legislation, like a spending bill. But given how long the Keystone fight has played out and Obama’s readiness to use his veto pen, it’s unclear right now what a path to “yes” might look like.

Q.Where would the oil go?

A.The first stop for the oil coming through the pipeline would be refineries on the Gulf Coast, mainly in Texas and Louisiana, which are outfitted to process heavy crude. Those refineries’ traditional sources for oil, such as Mexico and Venezuela, are declining. The pipeline would provide those refiners, which aren’t equipped to work with the light sweet crude that has defined the U.S. oil boom, with needed product while giving Canada access to the global market.

Keystone detractors argue the pipeline would only serve as a conduit for foreign oil to be sold and shipped to foreign buyers with little benefit to the United States, but the State Department report disputes that claim.

American refiners would have a competitive advantage over refiners abroad, since they wouldn’t have to pay additional transportation costs to get the oil, State said.

Whether products refined from the Canadian oil stay in the United States or are sold abroad depends on “domestic demand versus domestic refining capacity, the cost of natural gas, and refining capacity abroad,” the State Department said, and not one pipeline.