TransCanada pipeline faces new hurdle

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With the Gulf oil spill continuing to poison U.S. attitudes toward petroleum, strident new criticism has erupted against a TransCanada pipeline that would deliver oil sands crude to Texas, with a prominent U.S. politician joining a loud chorus of critics opposed to the multi-billion-dollar project.

The Keystone XL pipeline "is a multi-billion-dollar investment to expand our reliance on the dirtiest source of transportation fuel currently available," Henry Waxman, an important Democratic voice on energy in the U.S. House of Representatives, wrote in a letter released Tuesday.

The pipeline, which has become one of the most important bilateral issues between Canada and the U.S., and has also created dissent among the ruling U.S. Democratic Party, "represents a critical choice about America's future," Mr. Waxman wrote in a letter to Secretary of State Hillary Clinton. He urges a re-examination of the pipeline based on its potential contributions to global warming.

Opponents have argued that by providing a market outlet for oil sands crude, Keystone XL will create a huge setback to U.S. efforts to combat climate change. Though TransCanada has called it an important step toward U.S. energy security, environmental groups have labelled it an enabler of oil sands "environmental Armageddon."

Using climate change as a factor in approving the pipeline could seriously jeopardize the future of both the project and Canada's access to its most important crude buyer. The U.S. now imports more crude from Alberta alone than any other country.

Examining the greenhouse gas impact of the pipeline "would unnecessarily delay the project and jeopardize the many critically important benefits it will bring to the United States," TransCanada spokesman Terry Cunha said.

But Mr. Waxman, who as chair of the House committee on energy and commerce and co-author of the American Clean Energy and Security Act is a powerful voice on U.S. energy issues, said that approving Keystone XL "would be a step in the wrong direction."

TransCanada's $12-billion Keystone project is designed to bring 1.1-million barrels - with upgrades, as much as 1.5-million barrels - of crude a day from the oil sands to refineries in the U.S. Midwest and Gulf coast. The first part of the project, which includes a pipeline to Illinois, began commercial deliveries of crude last week.

The company is now fighting for approval of Keystone XL, a massive second stage of the project that would deliver up to 900,000 barrels per day to refineries in Texas. TransCanada has argued that it will inject $20-billion (U.S.) into the American economy and create 119,000 person-years of employment.

Secretary of State Clinton is charged with deciding whether to grant a presidential permit for construction of the pipeline. While Congressional representatives do not have the ability to block its construction, opponents like Mr. Waxman can levy moral suasion against it - and environmental groups say his opposition could prove important as TransCanada attempts to obtain approval for the project.

"It is indicative of a growing wave of opposition," said Kate Colarulli, director of the Sierra Club's dirty fuels program. "Having people such as Waxman expressing their concern, we could see a domino effect."

But debate over Keystone XL has created growing diplomatic tension between Canada and the U.S., and has also produced a rift among the ruling Democrats, who have split along traditional areas of strength: environmentalists weighing against it and some unions, who want the jobs it could bring, supporting it.

With unemployment in constructions trades "hovering near 20 per cent these jobs are critically needed by the millions of workers facing eviction and other hardships due to the lack of work," James P. Hoffa, international president of the International Union of Teamsters, wrote in a letter of support.

But environmental groups and U.S. politicians, some 50 of whom have come out against the project, have fought hard against its construction.

Though similar criticism was lobbed at Alberta Clipper, an oil sands pipeline proposed by Enbridge Inc. - and approved by President Barack Obama - the tenor and volume of the opposition has grown in the wake of the Gulf spill.

"Environmentalists are using what has happened in the Gulf Coast as their platform for saying that we need to end dependence on all oil - and so the oil sands gets wrapped up in that kind of debate," said Gary Marr, the province of Alberta's representative in Washington.

In his letter, Mr. Waxman argues that Keystone along with Alberta Clipper will triple the amount of oil sands product flowing into the U.S. and, he says, crude from Fort McMurray is 37 per cent worse from a greenhouse gas perspective than other oils.

"The combined effect of the three tar sands pipelines would be to erase roughly two-thirds of the global warming pollution reductions that the administration's historic motor vehicle standards would achieve in 2020," he wrote.

Supporters of the pipeline, however, argue that oil sands crude is just 10 to 15 per cent worse than other oils - not to mention better than those produced in California, Mr. Waxman's home state - and forms a secure, reliable energy source.

Others were more blunt, arguing that the U.S. has a choice: buy crude from Canada or nations that are far less friendly.

"Where would they have a preference for that oil to come from? Iran? Algeria? Angola?" said Murray Smith, the former Alberta energy minister who also lobbied for the province in Washington for several years.

"Twenty per cent of their imports today are from countries openly hostile to U.S. interests. Good pipes make for good neighbours."