OIL AND GAS:

Keystone XL battle rages -- but only outside hearing room

Backers of a controversial $7 billion pipeline that would nearly double U.S. imports of crude from the Canadian oil sands got a pleasant surprise yesterday: two pro-environment Democrats holding their fire.

The Keystone XL pipeline is sparking a political conflagration from the Capitol to the Plains, as green groups partner with frustrated landowners to slam the project and labor aligns with the oil industry to tout its job-creation potential. But neither Rep. Eliot Engel (D-N.Y.) nor Rep. Albio Sires (D-N.J.) -- whose average League of Conservation Voters ranking in 2010 was 95 percent -- were siding with the pipeline's foes yesterday.

"I was concerned, I must admit at first, by the environmental impact" of Keystone XL, Sires said yesterday at a hearing of the House Foreign Affairs Committee's Western Hemisphere subpanel. After he evaluated the economic projections for the project, Sires added, he concluded that "this is something good for Canada and good for the United States."

Engel, the subpanel's top Democrat, stopped short of that full-throated endorsement but left the door open to supporting the pipeline.

"At this point, it is not my intention to launch into a fierce argument" for or against Keystone XL's construction, Engel said, noting that he has heard "sound" and "cogent" arguments from both detractors and boosters of the pipeline.

"I have to confess, my mind is not made up on this matter," he added.

The two Northeasterners are hardly the first members of President Obama's party to eschew the strong stance taken by environmentalists who oppose the pipeline. But their views left yesterday's hearing with only one committed critic of Keystone XL, National Wildlife Federation Senior Vice President Jeremy Symons, to parry a group of project supporters led by subpanel Chairman Rep. Connie Mack (R-Fla.).

The Florida lawmaker, who recently passed on a challenge to Sen. Bill Nelson (D-Fla.), couched his support for the 1,700-plus mile pipeline in a show of solidarity with President Obama's call this week to focus on "stable and steady" providers of imported oil, such as Canada.

"The result of the pipeline would increase productivity," Mack said yesterday, "but most importantly for me, it would force [Venezuelan leader] Hugo Chavez to realize that the United States is not beholden to fully funding his regime indefinitely."

While reiterating a host of concerns raised by opponents of Keystone XL, from its failure to address U.S. oil demand to the potentially harmful effects of oil-sands production on wildlife, Symons urged lawmakers to consider long-term overhaul of the nation's transportation infrastructure rather than "quick fixes" to increase the total oil supply.

"It's not that we don't want oil" to play any role in the American fuel mix, Symons said yesterday. "It's that we don't want to make a 50-year bet" on oil sands from Canada that carry a higher emissions footprint than conventional crude, he added.

Mack's entreaties for a quick approval of Keystone XL's presidential permit bid, which remains under review at the State Department, were tempered a bit by that agency's former envoy for international energy issues, David Goldwyn. Even as he pushed back at critics' issues with the pipeline, including the Nebraska aquifer that lies along its route, Goldwyn told lawmakers that the Obama administration's two-year process of evaluating Keystone XL has been beneficial.

"It's not obstructionism" behind the State Department's evaluation, "it's an abundance of caution," Goldwyn said. That review process was recently extended to allow for extra environmental analysis of the pipeline (E&E Daily, March 16).

Lobbying battle

As the State Department continues its analysis, however, the lobbying battle between environmental groups and the oil industry is raging on.

The American Petroleum Institute's Cindy Schild released a statement yesterday hailing Mack's hearing and calling on the administration to "acknowledge the significant benefits of the Keystone XL pipeline ... and allow for its construction to commence as soon as possible."

On the opposite end of the debate, 100 landowners living within the path of the proposed pipeline released a letter urging the State Department to thoroughly examine Keystone XL during its supplemental environmental review. The landowners, organized by the grassroots group Stop Tarsands Oil Pipelines, also charged the project's sponsor with threatening to use eminent domain to secure their consent ahead of construction.

"TransCanada is not only using deceptive practices to take away our property rights, but is also threatening precious drinking and farming water supplies by using conventional pipeline technology for a highly corrosive and acidic unconventional fossil fuel," the letter's signatories wrote.

They were not the only ones to sound off yesterday on Keystone XL. Two dozen mayors of towns from Texas to Colorado, writing under the umbrella of the advocacy group Ports-to-Plains Alliance, wrote to the State Department urging that the project be given a green light.

"We firmly believe that the Keystone [XL] pipeline will not only contribute to our national security by lessening our dependence on oil from unreliable foreign sources, but will also lead to job creation and growth," the mayors wrote.

Amid that activity from both sides of the Keystone XL battle, another player prepared to enter the fray further. House Energy and Commerce Chairman Fred Upton's (R-Mich.) office confirmed this week that he is planning legislation aimed at expediting a permit for the pipeline, a priority high on the panel's list since the Michigander first entered a four-way race for the gavel last year.

In a release yesterday, the Energy and Commerce panel argued that the State Department was holding up approval of the pipeline for "unexplained reasons" and promoted Keystone XL as a bid to "significantly lessen U.S. dependence on Middle East imports, create thousands of American jobs, and strengthen our ties to a trusted ally,"

Pipeline safety questions

Keystone XL's impact on the price of gas and U.S. oil consumption is not the only factor driving debate over its future. Pipeline safety groups have joined environmentalists in raising alarms that shipping oil-sands crude over land could pose a greater risk of leaks or other lapses.

Engel singled out regulatory scrutiny of the pipeline as a key priority, citing this summer's Gulf of Mexico oil spill and warning that policymakers should make sure a similar catastrophe "does not recur" in the Plains as a result of oil-sands crude lines.

TransCanada Corp. President Alex Pourbaix countered those safety qualms by touting his company's "great deal of experience building pipelines through the type of terrain we plan to be building XL through."

"Frankly, spill experiences in modern hazardous materials pipelines are incredibly, incredibly low," Pourbaix said.

Still, Symons' call for stronger federal pipeline safety regulations before the construction of Keystone XL could be met at the end of the day. Upton's district remains affected by an estimated 800,000-gallon oil leak from a pipeline that ruptured in July, and the Energy and Commerce chief is looking at introducing safety legislation in the coming weeks (E&E Daily, March 10).

On the Senate side, the Commerce Committee said it would mark up a pipeline safety bill later this month. That measure, offered by Commerce Chairman Jay Rockefeller (D-W.Va.) and Sen. Frank Lautenberg (D-N.J.), would mandate automatic shut-off valves for new transmission pipelines and increase the maximum civil penalty for companies that violate federal pipeline law, among other changes (E&E Daily, Feb. 4).

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