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Obama Endorses OK-TX Pipeline

Friday, March 23, 2012

More items for Program/Project Management

Lauded, reviled, reviewed, approved, rejected, shifted, stalled, accelerated and then cancelled, the nation’s most controversial pipeline project is on again. Sort of.

After denying TransCanada’s permit for the $7 billion Keystone XL project in January, President Obama has not only endorsed the southern leg of the pipeline extension but says he will fast-track any needed approvals for the project.

‘A Priority’

Speaking Thursday (March 22) at a TransCanada facility in Cushing, OK—the self-proclaimed “pipeline crossroads of the world”—the President called the 485-mile segment from Cushing to Texas’ Gulf Coast “a priority.”

White House / Pete Souza

President Barack Obama delivers remarks on energy March 22 at the TransCanada Stillwater Pipe Yard near Cushing, OK.  The President highlighted the Administration’s commitment to expanding domestic oil and gas production.

Obama said the $2.3 billion project would help relieve a supply bottleneck, as domestic oil production has outstripped transmission pipeline capacity. Part of that oversupply is sitting in Cushing.

Work on the extension—tentatively renamed the Cushing Pipeline—is set to begin this summer.

The project has been scaled down dramatically from the original 1,700-mile route, which originated in Canada with the goal of providing Canadian oil throughout the United States.

Anatomy of a Controversy

Progress on the Keystone XL project has been whiplash-inducing. Phase 1 of the pipeline (from Alberta to Illinois), proposed in 2005, opened in June 2010.

While that construction was underway, TransCanada proposed the Alberta-to-Texas “XL” extension in 2008. Canada approved the extension in 2009; South Dakota, in 2010.

In mid-2010, however, the U.S. Environmental Protection Agency criticized the State Department’s oversight of the extension plan and rejected its draft environmental impact study as inadequate.

In February 2011, Phase 2 of the pipeline opened, from Nebraska to Cushing.

Critics of the extension project gathered steam throughout 2011 with the news of 14 spills on the new lines in just over a year. The extension, carrying heavy tar sands oil, would run through highly environmentally sensitive areas.

Nevertheless, the State Department green-lighted the project in August, and approval seemed imminent.

Then came public protests throughout the summer and fall, leading Obama to request in November that the line be rerouted around the most sensitive areas.

TransCanada agreed, but the new design would add at least a year to the project—a delay that infuriated Republicans in Congress. To try to force action, they attached a rider to the December payroll tax-cut bill that demanded a decision by the President within 60 days.

That effort appeared to backfire in January, when Obama said the deadline did not allow adequate time for review and indefinitely pulled the plug on the project. Even in doing so, however, he left the door open for alternative proposals—a door that TransCanada apparently stepped right through.

‘Encouraging Oil Development’

“The fact is that my administration has approved dozens of new oil and gas pipelines over the last three years, including one from Canada,” Obama said in an 11-minute speech in Cushing, part of a two-day swing to promote his “all-of-the-above” energy policy.

“And as long as I’m President, we’re going to keep on encouraging oil development and infrastructure, and we’re going to do it in a way that protects the health and safety of the American people.”

Bencochran / Wikimedia

The 485-mile southern leg of the pipeline will originate in Cushing, OK.

For example, Obama said, part of the northern route, which would connect the U.S. to oil supplies in Canada, potentially threatens water supplies in Nebraska, and must still be reviewed.

Reaction: ‘The Guy Can’t Win’

Obama’s announcement—the latest chapter in the gas-price war raging during the campaign season—immediately drew fire from both sides of the issue.

House Speaker John Boehner and other Republicans called the announcement meaningless because the southern end of the project is due to start construction in June anyway. And they continued to criticize Obama for blocking the northern part of the pipeline.

Boehner spokesman Brendan Buck compared Obama’s announcement to “the governor holding a press conference to renew my driver's license -- except this announcement still leaves American energy and jobs behind.”

Environmentalists, meanwhile, continued to object to any pipeline.

As one MSNBC anchor summarized: “The left doesn’t like it; the right doesn’t like it. The guy can’t win.”

Poll Shows Support

A new Gallup Poll shows solid support by Americans for the pipeline. Overall, 57 percent of Americans say the federal government should approve the entire XL pipeline, while 29 percent oppose it.

The pipeline has the support of 81 percent of Republicans, 51 percent of independents, and 44 percent of Democrats, according to Gallup.

Support was also strong in the Midwest and the South, along the pipeline’s route. Nearly 7 in 10 Midwesterners favored approval of the project, as did 61 percent of Southerners, Gallup reported.

Comment from Dory R. Tabuena-Salyers, (3/26/2012, 7:49 AM)

he just wants votes..

Comment from Tom Schwerdt, (3/26/2012, 8:24 AM)

For the past 5 years or so, Crude oil in Cushing (WTI benchmark) has been worth about $15-$20/barrel less than world-market crude (Brent benchmark) largely because there isn't enough pipeline capacity to move it to refineries or to a seaport. This leg of the pipeline IS important.

Comment from Jerry Trevino, (3/26/2012, 9:10 AM)

I thought obama did not the authorization to block the building of this section of the pipeline. So what is is fast tracking? is he fast tracking not to attempt to block it? Does not make sense, but then nothing he does make sense unless you are trying to ride the current of some success despite he attempt to shut down all coal, natural gas, and oil production. Maybe he can blow wind and pump it to the coast, or can we attach solar panels to the pipe and declare it an Obama success. This sounds more like a campaign speech.

Comment from Jerry LeCompte, (3/26/2012, 9:50 AM)

Having a difficult time in determining the President's position on energy. Pick a side, any side, but pick a side!

Comment from Mike McCloud, (3/26/2012, 9:53 AM)

Can you say "FLIP-FLOP"

Comment from Jerry Trevino, (3/26/2012, 12:16 PM)

I got tongue twisted when I previously commented. It just blows my mind when logics do not seem to work with this President. He tries to be on both sides of every issue. It seem as he does the opposite of what he says. He has single handedly closed coal mines, held back approvals for more drilling, sides with environmentalist, yet is not concerned about the health and well-being of the American People. More oil, more coal, cheaper energy prices is healthy for Americans. I agree we should further develop solar and wind, however, we did not al blow out all the candles and kerosene lamps when electricity was discovered. It took a long time before the entire county has access to affordable electric power. It will be a long time before solar, wind and electric cars take over oil, nat gas and coal.

Comment from peter gibson, (3/26/2012, 12:25 PM)

Can you say a vacuous fool with no intellect;who just plays politics. This is what happens,when there is no leadership. The Green Movement is destroying the country.

Comment from Gary Burke, (3/27/2012, 8:33 AM)

Anything we can do to add more to the supply, decrease demand or our consumption, will help drive prices down. Trouble is, developing countries are demanding more like China, India etc and the oil companies use any excuse possible, like we have an early spring and we are scared of the Iranian stuation, so let's jack the prices up! Their real reason is CORPORATE GREED! The fact that they make 10 - 20 billion in profit per quarter, is not enough! Jack it up some more greed mongers, let's drive the US and World economies back into recession, more lay-offs and more burden on the middle class! If everyone would take a week or 2 off, all at once and stop buying gas, prices may drop! How many billions are enough???????????????

Comment from Samuel Cadena, (3/27/2012, 12:25 PM)

Gary, your anger is misdirected, true, developing nations are are increasing demand for oil, but speculators drive up the price of oil based on situations like Iran. Also, the lack of refining capacity has an impact on gasoline prices- I believe only one refinery has been built in the U.S. in the past 30 years and government regulation has been cited as a major hindrance to new construction. As far as corporate greed, you used a key word, corporate, they pay dividends to stock holders, employee thousands, invest in research and development, and pay taxes- they're not owned by a single greedy oil baron. Besides, do you know who makes the most "profit" from a gallon of gasoline- the federal government with the gasoline tax- no investment/risk in production, employed no one in the production process, but yet make the most on the sale of a gallon of gasoline.

Comment from Tom Schwerdt, (3/27/2012, 1:22 PM)

Samuel, I can't think the feds are making the most off a gallon of gasoline. As of Monday, gasoline is now $3.90/gallon (average) nationally in the USA. The feds take $0.184 of that as tax. Less than 5%. The other 95% of what you're paying at the pump goes somewhere else. Here in Texas, $0.15 goes to the highway trust fund (some is then diverted) and $0.05 goes to schools. The remaining $3.516 goes to the local gas station, the distributor, the refiner, the pipeline/shipper and the oil companies. A good chunk of the $2,300,000,000 Cushing-Houston segment of the Keystone XL is being paid for out profits from that gasoline you are buying.

Comment from Jerry Trevino, (3/27/2012, 1:51 PM)

The Chevy Volt, with Solyndra solar panel on its roof rack, will not need any of this polluting fossil fuel from this pipeline. Ohhh wait, how are going to make the electricity to charge the Volt, since the solar panel does not work. Fossil fuel from Iraq? God forbid, we do not want to use any Canadian Oil. These darn greedy greeny technology opportunists and lobbyists sharing our wealth.

Comment from Samuel Cadena, (3/27/2012, 11:19 PM)

Tom my point is that people place a disproportionate amount of blame on oil companies and almost make them out to be evil when in reality they provide a much needed service. Also, when people see the price of gasoline they think every penny is profit for the oil companies. Do you think the feds want us to follow Gary's advice and take a two-week break from driving, of course not, they have too much to lose. The following can be found in the link below, "ExxonMobil is now reporting that for its retail gasoline operations in the U.S., it made an average profit of 7 cents per gallon during the first quarter of 2011." http://mjperry.blogspot.com/2011/04/gasoline-taxes-per-gallon-vs-exxon.html

Comment from Paul Graham, (3/28/2012, 5:59 AM)

The only growth in the Oil business has all been on Private Land. Nothing to do with the Federal Government. As soon as the election is over, The President will work through the Nebraska issue, and the pipeline will be built. That is politics.

Comment from Tom Schwerdt, (3/28/2012, 8:12 AM)

Samuel: "retail gasoline operations" means the profit made by the individual gas stations themselves on the gasoline. It's pretty widely known that the moneymakers at the gas station is in the Quickie-Mart, not at the pump. That number doesn't include profits extracted at all the other stages. Plenty of costs too, of course!

Comment from John Bennett, (3/28/2012, 8:46 AM)

"It just blows my mind when logics do not seem to work with this President. He tries to be on both sides of every issue." Yeah, it's almost like he wants to carefully approach each issue and weigh all the options before attempting to craft a compromise which both sides of our terribly partisan legislature can find tolerable.

Comment from James Johnson, (3/28/2012, 10:13 AM)

The government makes far more than 8.4 cents per gallon. They get fees or royalties when a lease is issued, more fees when a drilling permit is issued and a royalty on every gallon of crude as it is pumped out of the ground. All adding to the cost of gas. Then they is the tremendous cost to fill out forms, keep tracking records, answer government inquiries because they did not understand their own forms, then the cost of legal fees to review every document, etc. The list goes on and on. In the end the oil companies are making about a 9% profit. Yes, it is a lot of money because it is based on big dollars, but if you owned a business and made a 9% profit would you consider that excessive profit? I rather doubt it. I am not defending the oil companies, but am only commenting that when examining the numbers they do not make as much as one would think.

Comment from James Johnson, (3/28/2012, 10:26 AM)

I am surprised no one has commented on the article itself. The article fails to explain that the federal EPA and all the state agencies had given their approval to the XL and it was ready to be built. Because it crossed an international boundary the State Department had to give approval. At that point had it not crossed the border to Canada it would have been under construction. But..at the direction of obama the State Department refused to approve it. So have no doubt, obama did not sit on both sides, he flat stopped it. Also the article states that "Then came public protests throughout the summer and fall, leading Obama to request in November that the line be rerouted around the most sensitive areas." There were no protests to speak of. Did hundreds of thousands protest such as protested the obamacare law? No. Were there even thousands protesting? No. There were a few dozen environmental extremists who complained, but there were no widespread protests as the article would lead one to believe. In reading the entire article one can easily see the bias of the author. It does pretty well explain though that obama added his endorsement of a portion of the project, though his approval was not required.

Comment from Gary Burke, (3/29/2012, 3:38 PM)

I know the oil companies are providing a much needed resource to us and I can understand it costs them, or any other business, $ to provide a good or service to us, as the consumer. It just sucks for those of us who can least afford it and do conserve still have to pay an excessive amount. As long as auto manufacturers build the big gas hogs, we will have people over consuming and driving prices up! It seems that there are a lot who make profits and rely on crude!