Alberta Premier Edward M. “Ed” Stelmach
Leaders in Alberta joined analysts in welcoming the State Department’s Aug. 26 final environmental impact statement on the proposed Keystone XL 1700-mile crude oil pipeline from Alberta, Canada, to Texas.
“While the FEIS from the State Department is not a final decision, we maintain our position that the pipeline will contribute to U.S. energy security and make a significant contribution to the American recovery,” said Edward M. “Ed” Stelmach, the premier of Alberta, which is also the home of TransCanada (NYSE-TRP), the company building the $7 billion pipeline.
In 2008, the company applied for a presidential permit to build the project across the border. Secretary of State Hillary R. Clinton is empowered to grant the permit only after the official process is completed, and then she makes a formal National Interest Determination in the affirmative. In its announcement of the FEIS, a State Department official said the NID should be issued by the end of the year.
While the FEIS agrees with TransCanada’s claims that the project will have limited environmental impact in the United States, the company accepted 57 specific conditions and restrictions on the pipeline in order to move forward.
“Alberta respects the U.S. right to apply its process and jurisdiction as we always have,” Stelmach said.
“While the next number of years will be challenging for all jurisdictions, working cooperatively with a friendly, democratic neighbor is in the best interests of the U.S. and Canada,” the premier said.
Ronald Liepart, the energy minister for the province said, “This pipeline will create jobs in the U.S. the day after it is approved.”
Liepart said the pipeline is a truly shovel-ready project. “The pipes are already laid out and ready to go.”
The energy minister, although he was not in contact with the State Department, said he has read it and agrees with its conclusion.
“The State Department’s environment impact statement is a balanced report. It said exactly what we have been saying for months, if not years,” he said.
Liepart said the next hurdle for the pipeline is to determine whether it is in the economic interest of the United States. “How can they say otherwise?”
In its own Aug. 26 statement, TransCanada said it will hire 20,000 Americans directly, and create 120,000 jobs indirectly during the construction phase.
The company also said that once operational, the pipeline will contribute $5 billion in local property taxes.
“This is good news to the extent that we have some effort from the administration pushing for great access to critical resources,” said David W. Kreutzer, a research fellow in energy economics and climate change at The Heritage Foundation in Washington, D.C.
“The pipeline will allow us to bring up to 800,000 barrels of oil a day from a friendly and reliable supplier to the north, and it will help to moderate the price of petroleum worldwide,” he said.
Kreutzer said he has been a strong supporter of the pipeline because it is a free-market solution to our economic problems without government subsidies, regulations or mandates. “This is a project that is being funded by the people who are doing it.”
Daniel Kish, a senior vice president for policy at the Washington-based Institute for Energy Research, said the next phase of the process is a series of public hearings and a public comment period.
The hearings will be held in Washington, Nebraska, Oklahoma, Montana and Kansas, and the comments from the public will be accepted until midnight Oct. 9, he said.
Kish said the significant environmental opposition to the pipeline is tricky for the administration because the organized environmental movement is a vital part of President Obama’s election coalition. “They have to do this dance.”
Environmental arguments against the Keystone XL pipeline have been disingenuous, he said. “The real issue is power.”
If the American people fully realized that there is an abundant and stable source of oil, then they would not accept rationing and price control, he said.
Robert Kwan, a Vancouver-based energy stocks analyst with RBC Dominion Securities, told clients in his July 29 research note on TransCanada that he expected two factors to drive approval by the end of the 2011.
The first was the pressure from the July bill passed by the Republican-controlled House to force decision on the permit request by the end of November. The second factor is the concern about energy security and jobs, he wrote.
There is one other significant factor that could end up the most important of all. The lead lobbyist on the project for TransCanada is Paul Elliot, who previously worked as the national deputy director of Clinton’s 2008 campaign for President.