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Obama administration said to reject Keystone XL oil pipeline

By Kate Andersen Brower and Jim Snyder
Bloomberg News / January 18, 2012
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The Obama administration will announce rejection of TransCanada Corp.’s Keystone XL pipeline as soon as today, according to two people familiar with the matter.

The rejection will probably come from the State Department which has been charged with reviewing the project, and a joint statement will come from some unions and environmental groups in support of the decision, according to the person who spoke on the condition of anonymity before an announcement.

The administration will let TransCanada submit a new application for an alternate pipeline route, said a person familiar with the administration’s plans.

Terry Cunha, a TransCanada spokesman, declined to comment in an e-mail message today, saying the company wouldn’t respond until the administration announces a decision on the pipeline.

TransCanada fell 4.4 percent to $40.49 at 11:57 a.m. in New York, the highest intraday decline since May of 2010, according to data compiled by Bloomberg.

Andrew MacDougall, spokesman for Canadian Prime Minister Stephen Harper, said he had no immediate comment on the reports.

“President Obama is about to destroy tens of thousands of American jobs” by not approving the Keystone pipeline, Brendan Buck, a spokesman for U.S. House Speaker John Boehner, an Ohio Republican, said in an e-mailed statement.

Oil sands

Labor unions and Republican lawmakers have urged President Obama to approve the pipeline, which would carry 700,000 barrels of crude oil a day from Canada’s Alberta oil sands to refineries along the US Gulf of Mexico coast, because they argue that it will create jobs and help the nation become more energy independent.

Environmentalists have opposed the project, saying it will contribute to greenhouse-gas emissions and endanger drinking water supplies in Nebraska. They have staged demonstrations outside the White House and some vowing to withhold financial support to Obama’s presidential campaign if he approves the pipeline.

Wendy Abrams, who raised from $50,000 to $100,000 for Obama in 2008, according to the Center for Responsive Politics, had said rallying her friends around the president would be hard if he approved the pipeline. She said Obama has since shown that he’s not “in the pocket of Big Oil.”

She said if Obama rejects the pipeline, “it’s going to be tough” on him “either way because the energy folks that have money to be made, will spend a ton of money on ads and it’s a one-way street because the environmental groups don’t have the billions to spend on ads defending their position.”

Obama delay

The administration in November delayed approving the project until after the 2012 election, saying it wanted to study an alternate route that would take the pipeline away from environmentally sensitive areas. Congress last month set a 60- day deadline for the administration to issue a pipeline permit.

Obama’s jobs council yesterday called for an “all-in” approach, urging an expansion of oil and gas drilling and an acceleration of projects including pipelines.

“We should allow more access to oil, natural gas and coal opportunities on federal lands,” the year-end report by the President’s Council on Jobs and Competitiveness said.

TransCanada applied for a U.S. permit in 2008. Advocates such as Senator Richard Lugar, an Indiana Republican who sponsored legislation to set the February deadline, said further delay compromises U.S. efforts to import more oil from a friendly nation.

‘Studying time done’

“The studying time is done,” Lugar said today in an e- mailed statement. “The environmental concerns have been addressed. The job creation, economic and energy security arguments are overwhelmingly in favor of building it. The president opposing pipeline construction is not in the best interest of the United States.”

Patrick Parenteau, environmental law professor at Vermont Law School in South Royalton, said Obama has other options based on the fact that a new route through Nebraska has yet to be determined.

“The middle option is, ‘I can’t say it’s in the nation interest based on what I know,” Parenteau said in an interview. “I don’t think he’s boxed in. He’s going to be in another one of these situations that makes him look indecisive.’

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