ENERGY POLICY:

Obama's pro-pipeline moment unites irate Republicans, splits alarmed enviros

With Gallup releasing a new poll showing a solid majority of Americans supporting government approval of the proposed Keystone XL pipeline, President Obama today launched the second day of this week's four-state energy tour by announcing his plan to fast-track the pipeline's southern leg.

Flanked by stacks of pipe along the proposed XL route in Cushing, Okla., Obama said his plan would spur the project's $2.3 billion southern leg -- 484 miles from Cushing to the Gulf Coast -- which the president called a valuable solution to the glut of domestic and Canadian crude now languishing at the Oklahoma oil-storage hub.

"The problem in a place like Cushing is that we're actually producing so much oil and gas ... that we don't have enough pipeline capacity to transport it to where it needs to go," Obama said. "Today, I'm directing my administration to cut through the red tape, break through the bureaucratic hurdles, and make this project a priority and go ahead and get it done."

Obama also took aim at critics who have accused him of wanting to stifle U.S. oil production, painting the conflict over the full Keystone XL project that has dominated the energy debate since last year as a local issue that was undermined by the meddling of Congress.

"Anybody who suggests that somehow we're suppressing domestic oil production, they're not paying attention," Obama said.

Obama said the real holdup for the XL project was a local dispute over the original pipeline route through the environmentally sensitive Nebraska Sandhills.

"Nebraskans of all political stripes ... raised some concerns about the safety and wisdom of that route," Obama said.

What Obama left out of his timeline is that environmentalists from across the country have objected to the project because it would supply oil from Canada's oil sands that is more carbon-intensive to produce than traditional forms.

The president said his administration rejected the project because Congress got involved and set an arbitrary timeline for him to make a decision before the project could be fully vetted.

"Not the company, not the experts, but members of Congress decided to make this a fun political issue and decided to intervene," Obama said.

The president's statements this morning were quickly followed by a release from the White House press office of a new executive order and presidential memorandum that direct agencies to take steps to expedite their review and permitting efforts for the Cushing-to-Port Arthur, Texas, project as well as other domestic pipeline infrastructure projects.

Those memos encourage agencies to improve coordination of their reviews and consultations and make better use of information from prior environmental reviews and studies for similar or overlapping infrastructure projects so as to avoid duplicating effort.

Angry environmentalists

But even before those documents were released, the environmental community was raising an outcry.

"President Obama has taken a dangerous wrong turn on energy," National Wildlife Federation President Larry Schweiger said. "Oil companies are drilling like never before, and spilling like never before, yet we are paying at the pump like never before. Rushing pipelines and drill rigs for rich oil executives will only delay the investments we need in renewable energy and create long-lasting damage to our waters and lands."

Energy Action Coalition Executive Director Maura Cowley, whose group organizes young voters, called Obama's move a capitulation to TransCanada, the company that is backing the Keystone XL project.

"In 2008, we mobilized in record numbers for a president who promised to free us from the tyranny of oil, but now he's committing to 'drill everywhere he can,' and is giving favors out to foreign oil companies," Cowley said. "President Obama needs to stop flirting with Big Oil and get back to fighting for a clean energy future."

But even as top environmentalists lamented Obama's move today, a schism continued to emerge among greens opposed to Keystone XL over how deeply injurious a fast-tracked southern leg would be to their cause (E&E Daily, March 22).

One of the pipeline's top congressional critics, Rep. Henry Waxman (D-Calif.), came down on the side of "giving the president the benefit of the doubt."

"I think this is a helpful move on his part to relieve the glut" of oil stored in Cushing, the Energy and Commerce Committee's top Democrat said today.

Interestingly, Republicans and environmentalists both found themselves arguing this morning that building just the southern 484 miles of the proposed 1,700-mile Keystone XL pipeline doesn't actually accomplish a whole lot for American oil transportation.

"The Keystone XL pipeline is designed to move costly Canadian tar sands, not domestic crude, to the Gulf Coast," Natural Resources Defense Council attorney and pipeline expert Anthony Swift wrote in a blog post this morning. "Not only are 90% of TransCanada's contracts to move Canadian crude, but Keystone XL only contains two spots where only limited quantities of domestic crude can be put on board."

Republicans have taken to calling the 1,200 miles of pipeline that isn't being fast-tracked the "Obama Energy Gap." House Republicans released a new chart today to illustrate their point. On a map of North America, they circled the Canadian fields where oil sands are being harvested, noting "energy here," and also circled Cushing, noting "pipeline here."

"There is only one permit that matters for this pipeline, and the president continues to block it," said Brendan Buck, a spokesman for House Speaker John Boehner (R-Ohio). "The approval needed for this leg of the project is so minor and routine that only a desperate administration would inject the president of the United States into the process."

'Important step'

Keystone XL's sponsor, Alberta-based TransCanada Corp., viewed today's presidential order as "an important step" toward ensuring that construction of the pipeline's southern leg can begin on schedule this summer, company spokesman Shawn Howard said.

With respect to the Nebraska controversy that Obama name-checked -- specifically, a still-undetermined new route through the state that the White House has used to help put the kibosh on GOP pro-pipeline bills -- Howard said TransCanada is still awaiting the passage of necessary technical legislation that would allow Nebraskans to alter the project's path.

"Once that [state-level bill] comes out, we're in a position to re-engage with them," Howard said of Nebraska environmental regulators.

The American Petroleum Institute (API), which serves as the main lobbying arm of the oil and gas industry in Washington, released a statement today noting its encouragement by the White House support of the southern leg of Keystone XL. API Executive Vice President Marty Durbin said he hopes the move will help speed up the approval of the entire project.

With the average price of a gallon of gas jumping 2 cents nationally since Obama began his "all of the above" energy tour yesterday, Durbin argued that approval of the entire project could lead to immediate relief at the pump.

"Approving the full project could help put downward pressure on prices at the pump by sending a strong signal to the markets that more supply is on the way, and it will create tens of thousands of jobs for the safest, most highly trained and productive workforce in the world," Durbin said.

Senior Republicans today cited Obama's personal entreaties to Democratic senators wavering on a proposal to immediately approve the complete XL line that fell four votes short of passage earlier this month (Greenwire, March 8).

"It's absolutely amazing that two weeks" after dissuading Democrats from backing that GOP amendment, Sen. John Thune (R-S.D.) said, "he would go to Cushing, Okla., and talk about approving 29 percent of the route -- the part that doesn't need his approval."

Sen. Roy Blunt (R-Mo.) suggested that the White House's gambit would backfire by keeping voters focused on an energy infrastructure project that most of them support, according to the new Gallup poll. "Ironically," he said, "I'd like to thank President Obama for calling attention to this for one more week."

As lawmakers played the short game of spinning the day's coverage from Cushing, however, some industry veterans backing the pipeline saw a broader political strategy at work.

"The campaign is taking the long view here, and that is that the conversation about gasoline prices will not be a factor by the time of the fall campaign," said Stephen Brown, a former top House Democratic aide turned lobbyist for refiner Tesoro Corp.

"Whenever the GOP screams 'high gasoline prices' and 'Drill, baby, drill,' the Obama campaign essentially pays lip service with something for fossil fuels ... and quickly pivots back to alternative energy scenarios because that is where the president's political salvation lies."

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