Obama rejects construction of Keystone XL oil pipeline

Environmentalists rejoice as US president says pipeline from Canada wouldn’t have made meaningful economic contribution.

US President Barack Obama delivers a statement on the Keystone XL pipeline
President Barack Obama says Canadian-proposed pipeline would undercut US leadership in combating climate change [Michael Reynolds/EPA]

US President Barack Obama rejected the proposed Keystone XL oil pipeline from Canada in a victory for environmentalists who have campaigned against the project for more than seven years.

“The pipeline would not make a meaningful long-term contribution to our economy,” Obama told a press conference on Friday.

He said Keystone XL would not reduce gasoline prices for drivers and that shipping “dirtier” crude from Canada would not increase US energy security.

The denial of TransCanada Corp’s more than 800,000 barrels per day project will make it more difficult for producers to develop the province of Alberta’s oil sands.

It could also put the US in a stronger position for global climate talks in Paris that start on November 30 in which countries will aim to reach a deal to slow global warming.

Climate change win

Secretary of State John Kerry, who determined that the pipeline was not in the country’s interest before Obama’s final decision, said approving Keystone “would significantly undermine our ability to continue leading the world in combating climate change”.

Keystone XL would have linked existing pipeline networks in Canada and the US to bring crude oil from Alberta and North Dakota to refineries in Illinois and, eventually, the Gulf of Mexico coast.

TransCanada first sought the required presidential permit for the cross-border section in 2008, but the proposal provoked a wave of environmental activism that turned Keystone XL into a rallying cry to fight climate change. Blocking Keystone became a litmus test of the green movement’s ability to hinder fossil fuel extraction in Canada’s oil sands.

“This is a big win,” said Bill McKibben, cofounder of the environmental group 350.org, which helped make Keystone a symbol of a movement to slow global oil output. Obama’s decision “is nothing short of historic and sets an important precedent that should send shock waves through the fossil fuel industry”.

TransCanada shares fall

TransCanada and other oil companies said the pipeline would have strengthened North American energy security, created thousands of construction jobs, and helped relieve a glut of oil in the country’s heartland.

But since 2008, the US has experienced a domestic drilling boom which has boosted oil production 80 percent and contributed to a slump in US oil prices from above $100 a barrel to about $44.

TransCanada Chief Executive Russ Girling said the company would review its options to potentially file a new application for a pipeline to bring oil sands crude to the US.

“Today, misplaced symbolism was chosen over merit and science, rhetoric won out over reason,” he said in a statement.

The company on Monday asked the Obama administration to pause the review of the pipeline in a move seen by many as an attempt to postpone a decision until a new US president took over in 2017.

TransCanada’s shares fell about 4.6 percent on the Toronto stock exchange on Friday to C$43.15.

All the Democratic presidential candidates, including front-runner Hillary Clinton, oppose the pipeline while most of the Republican candidates are in favour of it.

Source: News Agencies