OIL AND GAS:

With Obama poised to tout southern leg of pipeline, Dems still fret about oil sands

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Gas price politics yesterday continued to roil the raging controversy over the Keystone XL pipeline, as Democratic concerns over the environmental fallout from tapping new sources of Canadian crude threatened to shift focus from President Obama's planned endorsement of the pipeline's southern leg tomorrow.

At a hearing of the House Energy and Commerce Committee's energy and power subpanel, top Democrats remained skeptical about the merits of expanding Canadian crude imports through projects such as the XL link -- a message distinct from and just as nuanced as the pitch Obama plans to make tomorrow about the domestic production benefits of that pipeline's southern leg, connecting Oklahoma with the Gulf Coast.

The GOP, by contrast, was very much on message yesterday as it promoted the Canadian oil sands rush as a prime example of the economic benefits that North American fuel booms can bring. "Canadian regulators seek to make energy production safe," subpanel chief Rep. Ed Whitfield (R-Ky.) said, "while the Obama administration's regulators often seek to make it impossible."

Whitfield spoke for his fellow Republicans by declaring that there is "much that we can learn from the Canadian experience," looking to witnesses such as Murray Smith -- a former energy minister of the oil sands-rich province of Alberta, which would link to the Gulf Coast if Keystone XL were built -- to attest to the economic fruits Canadians reaped thanks to their rapid pace of oil sands development.

Smith spoke of six-figure salaries for oil industry employees in his province. Eddy Isaacs, chief of the government-backed oil sands technology consortium Alberta Innovates, suggested that the United States follow Canada's example in prioritizing domestic oil development.

"Canada and the U.S. are the only developed countries that can dramatically increase oil production -- not only from oil sands but from tight shale oil reservoirs (Bakken type) found in North Dakota, Montana, Texas, California and the Canadian provinces of Manitoba, Saskatchewan and Alberta," Isaacs said in his prepared testimony.

Energy and Commerce Committee Democrats followed the GOP's lead in declining to build the hearing around the already-heated debate over Keystone XL but continued sounding alarms over the environmental costs of refining and exporting the emissions-heavy Canadian oil sands crude it would carry.

"This is dirty stuff," Rep. Kathy Castor (D-Fla.) said of the Canadian crude that would flow through the $7 billion XL link. "It's not clear at this point that we should be going gangbusters, full speed ahead, until we can really address the economic and environmental impacts of tar sands."

The top Democrat on the committee, Rep. Henry Waxman of California, went a step further by disseminating a memo that argued against GOP claims of a gasoline price downturn should the United States approve Keystone XL.

Even as Canada pushed a significant expansion of mining its domestic oil sands resources, Waxman said, its gasoline prices fell largely in line with the fluctuating ones seen in the United States "because they are both driven by the same thing -- world oil prices."

"More drilling, building a new tar sands pipeline, or developing oil shale hasn't reduced gasoline prices in Canada, and it won't in the United States either," Waxman added.

While Obama rejected a permit for the full 1,700-mile length of Keystone XL in January, citing a GOP-mandated deadline for a decision but undoubtedly pressured by large environmentalist demonstrations against the project, the president has spoken favorably of the U.S. oil production benefits that the southern leg of the XL line would bring.

CNN reported late yesterday that Obama would go so far as to announce an expediting of that southern, Oklahoma-to-Texas leg during a trip to the Sooner State tomorrow. But the White House confirmed nothing of the kind, saying in a statement last night that "the president will reiterate his administration's commitment to expediting the construction of a pipeline from Cushing, Oklahoma to the Gulf of Mexico, relieving a bottleneck of oil and bringing domestic resources to market."