by the canadian press
CALGARY — A U.S. decision to delay the Keystone XL oil pipeline could wind up killing it, Canada’s finance minister warned Friday, as the line’s sponsor accused opponents of peddling “mistruths and fear” about the project.
Jim Flaherty said the U.S. government’s plan to delay the project for more than a year “is actually quite a crucial decision” that could derail the energy megaproject.
“I’m not sure this project would survive that kind of delay,” Flaherty told Bloomberg, a business news service widely read on Wall Street and in American financial circles.
Flaherty’s pointed remarks came as finance ministers gathered at the Asia-Pacific Economic Cooperation summit in Honolulu.
Meanwhile, the company behind the project, TransCanada Corp. (TSX:TRP), said it will work with the State Department to give it whatever information it needs, and that it is confident Keystone XL will be built eventually.
“What we underestimated was the mistruths and fear the professional activists and millionaire actors peddled to the American public,” TransCanada spokesman James Millar said Friday.
The U.S. State Department said Thursday it would examine different routes Keystone XL could take through Nebraska to avoid the ecologically sensitive Sand Hills region and the Ogallala aquifer, which provides drinking water to eight states.
Keystone XL has already been through a more than three-year regulatory process — including studies of alternative routes — and the new work won’t be complete until early 2013 at the earliest.
Canadian oilsands producers — and the federal and Alberta governments — had been banking on the Keystone XL line to carry millions of new barrels of oil to U.S. refineries from oilsands expansions now under way in northern Alberta.
Flaherty said Canada may need to look to other oil export markets — mainly by tanker to China and Japan — as a result of the U.S. delay.
“It may mean that we may have to move quickly to ensure that we can export our oil to Asia through British Columbia,” Flaherty told Bloomberg.
He was referring to proposals like Enbridge Inc.’s (TSX:ENB) Northern Gateway pipeline across northern B.C. to the coast, which has also run into stiff environmental opposition.
TransCanada’s Millar said the pipeline delay will hurt the American economy and deny badly needed jobs.
“The cheering you hear today from those against our project is disrespectful to the over 25 million Americans who are unemployed and would have found work building our project.”
Prime Minister Stephen Harper described U.S. approval as a “no brainer” earlier this fall, when a decision was still expected to come by year-end.
Political and industry backers of the pipeline — one of the biggest Canadian-U.S. megaprojects in years — were similarly confident shovels would hit the ground in the new year.
So when the U.S. State Department announced its delay, the reaction from Keystone XL supporters was dismay.
“Disappointed” was how the Prime Minister’s Office, the minister of natural resources, the Alberta premier and Canada’s biggest oil lobby group described their reactions.
“I’m surprised that the Canadian government is acting surprised about this,” said Warren Mabee, with the Queen’s University School of Policy Studies in Kingston, Ont.
“I don’t think it was a no brainer.”
The proposed US$7-billion pipeline would ship crude from the northern Alberta oilsands to the U.S. Gulf Coast, a major refining hub and a coveted market for Canadian oilsands operators, which include giants like Suncor, Imperial Oil and Shell.
The issue has galvanized the U.S. environmental movement more than any other in recent memory, spurring high-profile protests in Washington and uniting unlikely factions — from left-wing non-governmental organizations to conservative Nebraska ranchers to Hollywood actors.
The Natural Resources Defense Council was one of many environmental lobby groups to cheer the Obama administration’s decision, and to declare Keystone XL dead.
“Both TransCanada and many Canadian politicians underestimated how strong the outcry in the United States has become, especially over the past few months,” said Susan Casey-Lefkowitz, the NRDC’s international program director.
Opposition to Keystone XL came from many fronts. Locally, there were concerns a spill could pollute the Ogallala aquifer in Nebraska, which supplies drinking water to eight states. More broadly, environmentalists were focused on what would be inside the pipe — oilsands crude they see as “dirty” and a major contributor to climate change.
TransCanada promoted its project through economic and energy security lenses. It said it would create thousands of jobs directly and indirectly and help wean the United States off oil imports from unstable regimes.
University of Alberta business professor Andrew Leach said he’d noticed TransCanada’s top brass speaking with increased urgency about those issues, warning a delay could kill the project, and thereby nix for good opportunities for job-creation and more stable energy supplies.
“Obviously that wasn’t enough to sway the day,” he said.