By one estimate, a positive decision on the Keystone XL pipeline, could pop energy share values by as much as 5 to 10 per cent.Nathan VanderKlippe/The Globe and Mail
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Way back when Keystone XL was just another pipeline – not a measure, in the eyes of opponents, of whether President Obama wants to bequeath a fouled planet in danger of runaway overheating to future generations – two seemingly solid pillars propped up Ottawa's case.
Buying Canadian crude was good for America because alternative supplies came from unsavory, sometimes hostile, regimes and, anyway, if the Americans didn't want oil sands crude it would be sold to rival would-be superpowers like China or India. Both pillars have badly shaken and are now severely cracked.
Americans may soon not need Canadian crude – perhaps not much imported oil at all – and Canada's threat to profitably sell off Alberta's vast oil sands reserves elsewhere may prove empty.
Meanwhile, Keystone XL, the project designed to deliver upwards of one million barrels a day of Canadian oil sands crude to huge U.S. refineries on the Gulf Coast in Texas and Louisiana is facing multiple and collateral attacks from a range of environmental groups.
Years of litigation might thwart the already long-delayed project even if its opponents fail to get President Barack Obama to deliver a flat out "No."
This week, the Sierra Club has filed a lawsuit accusing the State Department – the lead agency on assessing the transborder project – accusing it of withholding key documents and hiring outside consultants with, they say, clear conflicts of interest.
"For the State Department to let Big Oil consultants tell us Keystone XL is safe is like the Surgeon General letting Big Tobacco tell us cigarettes are safe," Robin Mann, a Sierra Club board member and past president said.
"The State Department should be an honest broker on Keystone XL, not a cheerleader for TransCanada," said Erich Pica, president of Friends of the Earth.
Keystone opponents believe both Secretary of State John Kerry – who had a long Senate record of championing clean energy and regarding man-made climate change as a grave global risk – and Vice-President Joe Biden oppose Keystone.
They are hoping that a multi-pronged campaign, from lobbying inside the Beltway, to tying the project up in the courts, to winning a broad hearts-and-minds battle by decrying Alberta's oil as filthy, dangerous and unneeded, will tip the balance against Keystone.
So far, clear majorities in both the Senate and the House of Representatives back Keystone XL but this will be an Oval Office decision by a president with no more elections to win and a legacy to create.
Meanwhile, the key arguments of Keystone XL proponents are looking out-of-date, despite a parade of premiers, federal ministers and high-priced lobbyists hired to promote the pipeline as being in America's best interests.
In 2005, when Keystone was first proposed, Iraq was aflame and hundreds of thousands of American troops were battling a raging insurgency. Fully 60 per cent of U.S. oil was imported, most of it from the volatile, unstable and – sometimes hostile – regimes in the Middle East, Africa and South America.
In striking contrast, by next year, the last U.S. combat troops will leave Afghanistan (they have been home from Iraq for years) and – with domestic shale oil and gas reserves booming – the resurgent U.S. economy is still expect to import only 30 per cent of its oil needs. Over the next several decades, the United States is projected to become an oil exporting nation and may not need a drop of Canadian crude.
Whether Americans watching their hard-earned dollars disappear into the gas tanks ever cared much about whether the original crude was Canadian or Nigerian, Saudi or Norwegian, from an ally or an adversary from a place with a spotless human rights record or one rather sullied, is hard to know. But as a sales pitch, Ottawa and TransCanada's focus on close, reliable and friendly loses whatever significance it might have if the U.S. has little need to import.
As for the threat – no matter how mildly voiced – that Canada will just send its oil sands crude to India or China or other oil-thirsty customers abroad if America passes up the chance to tie up a long-term supply with Keystone, that took a big hit earlier this month when British Columbia stoppered the biggest alternative outlet proposed to get Alberta crude to tankers loading on the West Coast. B.C.'s 'No" may not be final but it certainly is a blow.
In the U.S., Keystone opponents rejoiced. Why, they suggested, should the U.S. accept the risks of a pipeline crossing half-a-dozen states from the 49th parallel to the Gulf Coast, if Canadians rejected a smaller and shorter pipeline on their own soil.
Bill McKibben, founder of 350.org – the activist climate change group among the most opposed to Keystone XL – said he hoped the British Columbia message wouldn't be missed by President Obama, who is expected to approve or reject the pipeline later this year.
"For years the tar sands promoters have said: 'if we don't build Keystone XL the tar sands will get out some other way," Mr. McKibben said. 'British Columbians just slammed the door on the most obvious other way, so now it's up to President Obama …. if he rejects the pipeline, then an awful lot of that crude is going to stay in the ground where it belongs."
That is the Harper government's nightmare.
Paul Koring reports from The Globe's Washington bureau.