American Oil and Gas Reporter - January 2012 - 30

they were given only 60 days to look at
alternative routes in Nebraska and do the
serious environmental and health reviews,
that would not be enough time and would
almost certainly make it impossible to
extend that permit."
Retired Congressman Martin Frost,
D-Tx., a shareholder at the Washington
law firm of Polsinelli Shughart LLC, disagrees that a 60-day window is too tight.
"This thing has been kicking around for
a very long time," he reflects. "This
project involves a lot of jobs and certainly
would help the economy. Plus, this would
make it easier for the United States to
become self sufficient on energy produced
in North America. Regardless, at least
the project's proponents should have a
decision and the president will be on the
record before the election."
Nevertheless, some published reports
suggest the administration still could attempt to punt the matter to 2013 by issuing
a temporary approval contingent on further
processes-such as a State Department review of alternative routes-or by denying
the project, but inviting TransCanada to
submit an alternative plan.
Independent Connection
Many U.S. independents have a direct
interest in Keystone only inasmuch as it
includes plans for a leg that would move

crude from the storage hub in Cushing,
Ok., to the Gulf Coast, Fuller observes.
"The issue for independents is the ability
to move crude oil out of Cushing and debottleneck the crude oil constrained in
northern tier refineries," he relates. "Most
of the discussions I have about Keystone
center on the effect it has on the West
Texas Intermediate price, and how it
affects operators' contracts."
Nevertheless, he adds, the project's
transformation into a cause célèbre for
anti-oil activists seems to have bolstered
independents' support for it and made
Obama's State Department increasingly
uncertain. "It is the intensity of the environmental opposition to fossil fuels that
is getting such a response politically from
the administration," Fuller remarks.
He adds, "The administration has focused on renewables, criticized oil and
gas tax provisions, and constricted permitting in the Intermountain West and
federal lands. The Keystone example
really crystallizes how intensely those
factors play in the administration. It has
such a concern about the environmental
voter base that it does not want to make
this decision until after the next election.
Yet that delay is putting tens of thousands
of jobs in abeyance and is affecting relations with Canada."
On that last matter, Canadian Prime

Minister Stephen Harper in late December
expressed doubt that Obama would approve
the pipeline and indicated he planned to
look at markets beyond the United States.
"I am very serious about selling our oil
off this continent . . . to Asia. I think we
have to do that," Harper is quoted.
Political Optics
The election-year political calculus
appears mixed. Fuller again points to the
bill's text, noting that because it essentially
removes EIS issues from the determination, rejecting Keystone as contrary to
the national interest will visibly elevate
environmental concerns as the president's
foremost priority.
"Energy in a regulatory context probably will draw significant attention during
the campaign because of the economic
implications," Fuller predicts. "Although
people argue about the exact numbers,
Keystone construction clearly would be
a job creator. It would provide a source
of oil that can be refined in Gulf Coast
refineries. It would come from a friendly
North American ally and reduce U.S. dependence on tenuous foreign sources.
That is a fairly significant set of factors
in a world in which Iran is threatening
military maneuvers in the Strait of Hormuz."
House Republicans' ended the year

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30 THE AMERICAN OIL & GAS REPORTER

Society of Petroleum Engineers
American Oil and Gas Reporter - January 2012

Table of Contents for the Digital Edition of American Oil and Gas Reporter - January 2012
