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U.S. extends Keystone XL comment period, delaying final decision

Source: Reuters - Fri, 18 Apr 2014 20:22 GMT
Author: Reuters
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(Updates with reaction from Hoeven, Landrieu, Harper's office, adds more background)

By Patrick Rucker

WASHINGTON, April 18 (Reuters) - The U.S. State Department announced on Friday it is extending the government comment period on the Keystone XL pipeline, a move that likely postpones a final decision on the controversial project until after the Nov. 4 mid-term elections.

President Barack Obama has said he will make a final decision on whether to allow the pipeline connecting Canada's oil sands region to Texas refiners, and several government agencies had been given until May to weigh in. This had raised expectations of a final decision by mid-year.

However, on Friday officials cited uncertainty stemming from a dispute in Nebraska over the proposed pipeline route as reason to extend the federal agency comment period. They gave no new deadline, throwing into doubt the timing of a project that has been awaiting a U.S. permit for more than five years.

"The Permit process will conclude once factors that have a significant impact on determining the national interest of the proposed project have been evaluated," the State Department said.

The move was the latest in a series of delay to hit a project that has become a domestic flashpoint for Obama's base among environmentalists - who say the project would add to carbon emissions and worsen climate change - and a source of growing political friction with one of the country's closest allies, Canada.

Keystone XL has fired up both backers and foes, with the stakes getting higher as Obama leads his party into the mid-term elections. Republicans, seeking to bolster their hold over the House of Representatives and take control of Congress by winning a majority in the Senate, have portrayed Obama as depriving Americans of thousands of jobs by delaying the decision.

"Clearly he wants to get this past the mid-terms," said Senator John Hoeven, a Republican of North Dakota, of the fresh delays. "I'm not convinced that's a good strategy. Because people are going to see it for the political decision that it is."

Friday's move is likely to infuriate Canadian politicians who have grown increasingly irate over delays.

It may also upset some in Obama's own party. Just a week ago, 11 Democratic senators, many facing tough November races, urged him to make to make a decision by May 31.

Senator Mary Landrieu, a vulnerable Democrat from Louisiana, said that the decision was "irresponsible, unnecessary and unacceptable" and that she would use her role as chair of the Energy and Natural Resources Committee to "take decisive action to get this pipeline permit approved."

Canadian Prime Minister Stephen Harper's office was "disappointed that politics continue to delay a decision," his spokesman said.

Environmental groups hailed the delay as another sign the pipeline would be eventually defeated.

Friday's news "makes us even more confident that the harmful Keystone XL tar sands pipeline will ultimately be rejected," said League of Conservation Voters (LCV) Senior Vice President of Government Affairs Tiernan Sittenfeld

ALBERTA TO TEXAS

The move will have sweeping consequences across Canada's oil industry, potentially prolonging the deep discounts on cash crude prices for producers such as Suncor Energy Inc and Cenovus Energy Inc, while aiding oil-by-rail developers like Gibson Energy and Canexus Corp that are racing to fill a gap left by a lack of export pipeline capacity.

By linking Canadian fields to refiners in the Gulf Coast, the 1,200-mile (1,900-km) Keystone XL pipeline would be a boon to an energy patch where oil sands are abundant but that produce more carbon pollution than many other forms of crude.

Keystone opponents say that burning fossil fuels to wrench oil sands crude from the ground will worsen climate change, and that the $5.4 billion pipeline, which could carry up to 830,000 barrels a day, would only spur more production.

The uncertainty in Nebraska arose in February after Judge Stephanie Stacy struck down a state law that had allowed Governor Dave Heineman to approve the pipeline's path through the state. Some landowners had objected to the legislation, saying it disregarded their property rights. (Reporting by Patrick Rucker; Editing by Sandra Maler and Frances Kerry)

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