Obama supports adoption of Keystone XL Pipeline in Oklahoma

Cushing, Oklahoma

President Obama appeared in Cushing Oklahoma yesterday as part of his four-state tour to promote his energy policies while Republicans continue to blame him for surging gasoline prices.

Speaking before an assembled crowd of pipeline workers, Oklahoma residents, and oil pipeline officials from TransCanada, President Obama promised to speed up the approval for the southern leg of the Keystone XL Pipeline and bring more oil to refineries on the Gulf Coast.

The 435-mile southern Keystone XL pipeline leg will stretch from major oil storage centers in Cushing, Oklahoma to refineries in southern Texas. It will cost $2.3 billion to build and transport at least 700,000 barrels of oil per day. 

The construction of the southern leg of the pipeline is expected to release a bottleneck of North American oil that is held in storage facilities in Cushing, Oklahoma waiting to be transported to refineries on the Gulf Coast in Texas.

“A new pipeline running south from Cushing is needed because there’s a bottleneck right here because we can’t get enough of the oil to our refineries fast enough,” Obama said.

As gas prices have climbed over twenty-five cents during  the past month,  Americans’ discretionary spending levels in the overall economy are beginning to face increasing pressure. President Obama’s energy policies are expected to become an important issue during the presidential campaign in November.

The Keystone XL Pipeline will be constructed by TransCanada, a Canadian oil company that is still awaiting for federal approval of the northern leg of the pipeline that was originally intended to run from Alberta’s oil sands in Hardisty, Alberta to Cushing, Oklahoma before reaching its final destination in Texas on the Gulf Coast.

The northern leg of the Keystone XL Pipeline is currently on hold due to an environmental assessment that was requested by the State Department. The project needs full executive approval since it crosses international boundaries. It could take as long as early 2013 before it is finally approved.

The environmental concerns about the northern leg focuses on the Sands Hill region, a large area that includes the Ogallala Aquifer, one of the largest reserves of fresh water in the world that provides drinking water to 2 million people and supports billions of dollars in the agriculture industry across the eight state Midwest region (see map below).

Environmentalists opposed the Keystone XL Pipeline and want President Obama to focus on clean energy alternatives. A tar sands pipeline that spilled a million gallons of toxic heavy oil into Michigan’s Kalamazoo River in 2010 illustrates the dangers this type of corrosive oil could bring along the Keystone XL route.

On the other spectrum, Republicans are upset with President Obama for delaying the northern leg of the Keystone XL Pipeline and request a fast track of the approval process with the northern leg of the pipeline to bring tar oil sands from Alberta to Cushing, Oklahoma and then Texas to create more jobs and alleviate oil supply concerns.

A Gallup poll released Thursday suggests that 57% of the U.S. public says the Obama administration should go forward with the pipeline’s construction, with 29% disagreeing and 14% unsure.

Eight in ten Republicans surveyed in the poll supported the construction of the pipeline along with independent voters 51% (approve) compared to 35% (reject). Democrats slightly favor approving the pipeline with 44% (approve) compared to 38% (disapprove).

Despite President Obama’s promise to fast track the approval of the southern leg of the Keystone Pipeline, it will take some time before oil actually reaches the market and increases oil supplies.

“Even with President Obama speeding up the process, we only expect Keystone XL to be operational in 2014 at the earliest,” Barclays said in a research note on Thursday.

Bloomberg  reports that TransCanada’s president of energy and oil pipelines, Alex Pourbaix, said  during an interview on March 6 that construction of the Cushing phase of Keystone KL  to the Gulf Coast could begin as soon as June although the Canadian oil company is still waiting for permits from the U.S. Corps of Engineers.

Keystone XL Pipeline

“Today, I am directing my administration to cut through red tape, break through  bureaucratic hurdles and make this project a priority,” Obama said to his approving outdoor audience.

 President Obama explained that he wants to protect Americans’ health while also encouraging oil development.
“As long as I’m President, we’re going to keep encouraging oil development and infrastructure in a way that protects the health  and safety of the American people,” he said.
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