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With U.S. President Barack Obama’s extreme decision Wednesday to deny a permit to the Keystone XL oil sands pipeline, Canada’s oil-sands industry, one of the few engines of investment and job creation in North America, stands on the brink of a slowdown.
Export pipeline capacity is expected to run out by around 2016, throwing today’s growth strategies into serious doubt.
Keystone XL, and its all-Canadian alternative, Northern Gateway, were supposed to be the main solutions to transporting growing oil sands production to new markets.
Both are stuck. To be sure, Keystone XL proponent TransCanada Corp. has been invited to apply for a new permit with a revised route that avoids environmentally sensitive areas in Nebraska. But the reality is that there will be no pipeline decision — and it could still be a ‘no’ — until at least after the November presidential election, and possibly longer.
“It’s back to the drawing board,” said Washington policy analyst Fred Cedoz, vice-president of Global Water & Energy Strategy Team. “It’s anybody’s guess, I suppose, when they reapply, what new hurdles they might have to jump.”
Meanwhile, Enbridge Inc.’s Northern Gateway, the only other significant option to accommodate oil-sands oil, already seems a long shot due to First Nation and community opposition.
“I am extremely disappointed with today’s decision by the State Department to reject the Keystone XL pipeline application,” Alberta Premier Alison Redford said in a statement. “We believe the project provides the United States with energy security and thousands of job opportunities.”
But that was not the conclusion of the U.S. president, who deemed Keystone XL was not in the public interest.
“I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy,” Mr. Obama said in a statement. “We will continue to look for new ways to partner with the oil and gas industry to increase our energy security.”
Of course, there’s more to Mr. Obama’s strange conclusions.
Fears of a Green Party Presidential candidate are running high in Democratic circles as a result of the environmental movement’s disapproval of Mr. Obama’s performance on environmental issues, particularly his lack of progress on climate change legislation. The disenfranchised movement is now taking a last stand on fossil fuels.
For the rest of this article, please go to the National Post/Financial Post website: http://business.financialpost.com/2012/01/18/things-getting-sticky-in-oil-sands/?__lsa=dffff7f7