Deal to divert Keystone XL pipeline puts heat on Obama – by Konrad Yakabuski, Shawn McCarthy and Carrie Tait (Globe and Mail – November 16, 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.

WASHINGTON, OTTAWA AND CALGARY— A compromise between top Nebraska politicians and TransCanada Corp. to reroute the Keystone XL oil pipeline around a critical state aquifer has injected new life into the Canadian-led project and upended President Barack Obama’s plan to bury a political hot potato until after the 2012 election.

TransCanada’s decision to divert the pipeline away from the Sand Hills region, which sits atop the Ogallala Aquifer, immediately won the support of Nebraska’s Governor and shattered the anti-Keystone coalition of state politicians and national environmentalists.

With leading Nebraskan legislators now calling on the U.S. State Department to “expedite” its approval of the controversial $7-billion (U.S.) project, the Obama administration faced new pressures from environmentalists to kill the pipeline altogether.

“Our most important objective all along was to move the route. So if we can expedite the supplemental environmental impact assessment and get moving on the construction of the pipeline, we’re all for that,” Nebraska Republican Governor Dave Heineman told a news conference in the state capital of Lincoln on Tuesday.

The U.S. State Department said last week that it would delay until 2013 a decision on the pipeline aimed at moving about 700,000 barrels a day of Alberta oil-sands crude to refineries on the U.S. Gulf of Mexico, primarily because of Nebraskans’ opposition to the proposed route through their state. It had previously promised a decision by year end.

The delay spared Mr. Obama, who has said the final word rests with him, from making a decision that could anger key Democratic constituencies as he seeks re-election. Many environmentalists and some key Democratic donors consider the Keystone a litmus test of Mr. Obama’s values that will determine whether they campaign for him in 2012.

Republicans in Congress overwhelmingly support the project, arguing it would create thousands of construction jobs and ensure American access to a secure source of energy from a friendly neighbour. Delaying the pipeline, they add, would damage bilateral relations and lead Canada to seek new markets for its oil, including in China.

Swift action by TransCanada to voluntarily reroute the pipeline on Monday, and an immediate proposal by Nebraska’s Speaker to pay for a state review of the altered trajectory, may have thrown a wrench into the Obama administration’s calculations.

What Mr. Heineman called “a Nebraskan common-sense solution” was quickly hailed as a “win-win” by Speaker Mike Flood and endorsed by other state politicians, including Democratic Senator Ben Nelson, who faces a tough re-election bid in 2012.

TransCanada maintains that a new environmental review might take no more than nine months, though State Department spokesman Mark Toner said Tuesday that the administration still expected a final ruling on the pipeline would not come before 2013.

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