By Bruce Wallace
Nov 3 (Reuters) - Faced with dimming prospects for approval,
the Canadian company behind the proposed Keystone XL pipeline
chose to plead with the U.S. government for a delay on its fate,
signaling that prolonged uncertainty is preferable to rejection
of the $8 billion project.
Monday's appeal by Calgary-based TransCanada Corp TRP.TO
has been widely interpreted as an attempt to avert an impending
"no" from President Barack Obama to the nearly 1,200-mile
(2,000-km) cross-border pipeline. Keystone XL would carry heavy
crude oil from Alberta to Nebraska and on to Gulf Coast
refineries, and has become the symbolic heart of a struggle
between environmentalists opposed to oil sands development and
defenders of fossil fuels.
The U.S. State Department said it had received a letter from
TransCanada asking for the delay but a spokesperson said the
review would continue for now.
TransCanada spokesman Mark Cooper said the company would not
speculate on what the decision may be or when it may come.
But the Obama administration has become more vocal and
active on climate change issues as it closes in on its final
year in office, and the president has repeatedly expressed
doubts about the merits of the pipeline.
TransCanada's request for a delay came amid a darkening
political outlook for the project on both sides of the border.
In Nebraska, the company remains embroiled in time-consuming
disputes with landowners over the proposed pipeline route. And
in Canada, it lost a powerful advocate in October when
Conservative Prime Minister Stephen Harper, who had openly
allied with Republican leaders in his aggressive lobbying for
Keystone, was defeated by Liberal leader Justin Trudeau.
Although Trudeau has offered cautious backing for Keystone,
he has also warned that both the pipeline and wider oil sands
development must demonstrate improved environmental sensitivity.
Nor does Trudeau face any political damage from U.S.
rejection of a pipeline so closely identified with Harper. The
incoming prime minister has already made clear he will not
follow his predecessor in allowing the politics of Keystone to
disproportionately define relations between the two countries.
In Washington, U.S. lobbyists close to the case said
TransCanada was finally facing political reality, recognizing
that a delay would better protect shareholder value than
allowing Obama to reject the project.
The request for a delay came on the eve of TransCanada
issuing an earnings report, and shortly after the White House
said it still expected Obama to make a decision on whether to
grant the permit before he leaves office in January 2017.
OIL SANDS EXTRACTION
Should Obama agree to suspend the review, Keystone's fate
would almost certainly fall to the next president. Republicans
have been universally supportive of building Keystone, though
Donald Trump did qualify that in October, saying he would seek a
"better deal" from TransCanada.
Democratic Party front-runner Hillary Clinton is opposed to
the pipeline.
On one level, the request to suspend the review offers Obama
an escape from having to make a final call on a decision he has
avoided for years. TransCanada began the licensing process in
2008 but the decision was continually pushed back by various
court cases, technical delays and the president's apparent
reluctance to choose.
Yet TransCanada's gambit may not have completely removed the
pressure on the president. Environmental groups responded to
TransCanada's announcement with a blizzard of demands on Obama
to ignore TransCanada's move and kill the pipeline anyway.
"TransCanada acknowledged the writing on the wall by
requesting to suspend the review of its permit application,"
said a statement issued by Tom Steyer, the billionaire green
activist who heads NextGen Climate. "Today, tomorrow or next
year, the answer will be the same: Keystone XL is a bad deal for
America, our climate, and our economy."
It's uncertain what effect killing Keystone XL would have on
oil sands extraction. Last week, the Washington, D.C.-based
environmental advocacy group Oil Change International released a
report claiming that oil sands development would peak in 2017
without additional pipeline capacity.
And when Shell (L:RDSa) announced it would not proceed with the
80,000 barrels a day Carmon Creek project in the oil sands, the
company cited among other things: "current uncertainties,
including the lack of infrastructure to move Canadian crude oil
to global commodity markets."
But much of the attention in Canada has switched to the
proposed Energy East pipeline that would move Alberta crude
across Canada to Atlantic refineries. And while there is
opposition to that pipeline as well, its politics remain
contained within Canada's borders.