How a pipeline was defeated: actors, activists and one key conversation – by Nathan Vanderklippe (Globe and Mail – November 12, 2011)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

CALGARY – In the end, it came down to a conversation between two of the most powerful people in the world.

Earlier this week, U.S. Secretary of State Hillary Clinton spoke with President Barack Obama about a pipeline set to run from Alberta’s oil sands down through the U.S. Midwest to reach refineries on the Texas coast of the Gulf of Mexico.

Pipelines are usually mundane affairs, but this one was different. A year ago, few had ever heard of Keystone XL. But in the space of just a few months, the quietly planned pipeline erupted into a high-profile international debate about the oil industry, the environment, and the role Canada’s oil sands plays in both.

Actors and activists whipped up support against the project, garnering national attention in the U.S. as they linked hands in a human chain around the White House in protest. Opponents from across the country descended on Nebraska, denouncing the pipeline as a serious risk to an environmentally sensitive area of the state, and winning state political support along the way. Many supporters were there too, with a rallying cry that the U.S. desperately needs secure oil and jobs, both of which Keystone XL offered.

But the talk between Mr. Obama and Ms. Clinton put the pipeline plan in the ditch. About an hour before the State Department issued a press release Thursday afternoon, Ms. Clinton called John Baird, Canada’s minister of foreign affairs, and broke the news.

The State Department, which has already spent 39 months reviewing the $7-billion project, concluded it will wait until the beginning of 2013 to render a decision on Keystone XL. First, it wants TransCanada (TRP-T40.810.962.41%) to come up with an alternate route through Nebraska.

The decision left Canada’s oil industry, which had viewed Keystone XL’s approval as a slam-dunk, alternately gasping and fuming. Keystone XL was a major element of Canada’s energy growth ambitions. The pipeline derailment raises questions about Canada’s trade relationship with the U.S., the world’s largest energy consumer. The timing of the decision also stung, coming just before an APEC meeting in Hawaii where Mr. Obama is scheduled to sit down with Prime Minister Stephen Harper.

Now industry players are wondering how a project whose approval was called a “no-brainer” by Mr. Harper has instead been left to founder.

Officially, the State Department called the decision non-political. A spokesperson said it arose from the growing anti-Keystone revolt in Nebraska that had made it difficult to say the pipeline, in its current form, was in the “national interest.”

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