Yesterday President Obama denied Trans Canada a permit to move forward with plans to develop a 7 billion 1,660 mile (2,673 km) pipeline from Alberta’s oil sands region to refineries on the U.S. Gulf Coast.
After the permit was denied in Washington D.C., shares of Trans Canada fell 1.1 % in Toronto.
The proposed pipeline is capable of transporting over 700,000 barrels of crude oil and create as much as 20,000 new American jobs.
Obama blamed Republicans for forcing him to make an early decision about the fate of the Keystone XL pipeline.
Last month, Republicans added a provision in the temporary payroll tax cut bill which states that President Obama’s administration has until February 21, 2012 to determine the fate of the Keystone XL Pipeline.
Since Obama denied the permit being granted before February 21,2012, the final decision about the pipeline permit won’t be made until 2013, after the U.S. presidential election, causing less political diviseness at the voting booth.
Obama indicated that he wants to have more time to complete the environmental impact assessments in the 6 U.S. states where the pipeline passes through on its way to the Gulf coast, a region that was damaged by the BP oil spill.
Trans Canda was invited to re-apply using other proposals for a different route.
Obama wrote in a statement, “the rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment.”
He continued, ” I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy that creates jobs and reduces our dependence on oil,” he said.
The State Department, which has governing authority over the pipeline project since it crosses the U.S.- Canada border, indicated that there was not enough time to draw a route for the pipeline and measure the potential environmental damage to sensitive grasslands and Midwest acquifers along its journey to the Gulf region. The State Department advised President Obama to reject the permit.
In early July 2011, Exxon-Mobil’s pipeline, which is partly buried under the Yellowstone River in Montana, burst for one hour and poisoned the river. Environmentalists criticized Exxon Mobil for the Yellowstone oil spill and pointed out the poor positioning of the pipeline in a flood plain zone.
Environmentalists from the United States and Canada have voiced their opposition to the Keystone XL Pipeline from both sides of the border. They expressed support for President Obama’s decision yesterday to take more time to study the environmental impact of the pipeline.
However, business leaders and oil companies with a vested interest in the pipeline expressed disappointment over yesterday’s decision. Republican leaders openly criticized Obama’s leadership in handling the thorny issue.
” It was a stunningly stupid thing to do” said Republican presidential candidate Newt Gingrich.
Another Republican presidential candidate, Mitt Romney, also weighed in.
“By declaring that the Keystone pipeline is not in the ‘national interest’, the president demonstrated a lack of seriousness about bringing down unemployment, restoring economic growth, and achieving energy independence” Romney said during his campaign trail.
Canada’s Prime Minister Steve Harper expressed his disappointment over President Obama’s decision and said on a telephone conference call with President Obama that “Canada will continue to diversify its energy exports.”
President Obama explained that TransCanada is free to re-apply.
Trans- Canada CEO Russ Girling said that his company will re-apply for a presidential permit to build the Keystone XL pipeline, and will continue its work with officials in Nebraska on an alternative route that avoids the Sand Hills region which sits atop the massive Ogallala Aquifer.
Canada has 90% of all unproven reserves and has the second largest proven oil reserves after Saudi Arabia.
Earlier this month, Canada began hearings on a proposal to move crude oil from Alberta’s oil sands to British Columbia’s coasts where the oil can be transported to China which has a growing economy and strong appetite for more sources of oil.