Keystone Pipeline debate heats up, Washington Post ($)

By Juliet Eilperin and Steven Mufson, November 5, 2011

Canadian ambassador Gary Doer has a straightforward analysis of whether TransCanada will win the Obama administration’s approval to build and operate an enormous pipeline to transport oil from Alberta to the Texas coast.

“If it’s made on merit, we’re confident,” Doer said in an interview. “If it’s made on noise, it’s unpredictable.”

Foes of the project — which has become a test of how President Obama balances environmental considerations against economic and energy supply concerns — will try to turn up the noise Sunday with a rally around the White House. Unemployed workers who support the 1,700-mile Keystone XL pipeline are planning to counter with a blitz of media interviews over the weekend.

The Dec. 31 target date for a final decision is drawing closer, and it is unclear whether the State Department, which is in charge of the approval process, will meet it.

“We’d like to get it done by the end of the year, but if thoroughness demands a little bit more time, nobody’s slammed the door on that,” said State Department spokesman Victoria Nuland.

A delay could increase the costs and uncertainty associated with the $7 billion project.

TransCanada chief executive Russ Girling said Friday that the three-year review process has already imposed costs on his company, including $1.9 billion on pipe and other equipment stored in warehouses.

“The carrying costs on those are material, and we continue to incur those costs,” he said, adding that further delays beyond the end of the year could force U.S. refineries that have signed contracts with TransCanada to look at alternatives, either other sources of supply or other transport means.

In an interview with the Omaha television station KETV on Tuesday, President Obama said the State Department will “be giving me a report over the next several months and, you know, my general attitude is: What is best for the American people? What’s best for our economy both short term and long term? But also: What’s best for the health of the American people?”

A key question for the administration is how many jobs the Keystone XL project would create. TransCanada’s initial estimate of 20,000 — which it said includes 13,000 direct construction jobs and 7,000 jobs among supply manufacturers — has been widely quoted by lawmakers and presidential candidates.

Girling said Friday that the 13,000 figure was “one person, one year,” meaning that if the construction jobs lasted two years, the number of people employed in each of the two years would be 6,500. That brings the company’s number closer to the State Department’s; State says the project would create 5,000 to 6,000 construction jobs, a figure that was calculated by its contractor Cardno Entrix.

As for the 7,000 indirect supply chain jobs, the $1.9 billion already spent by TransCanada would reduce the number of jobs that would be created in the future. The Brixton Group, a firm working with opponents of the project, has argued that many of the indirect supply jobs would be outside the United States because about $1.7 billion worth of steel will be purchased from a Russian-owned mill in Canada.

TransCanada spokesman James Millar wrote in an e-mail Friday that 65 percent of the steel pipe for the project would come from the United States, produced in Little Rock and 20 percent would come from Canada. Of the remainder, 10 percent would come from Italy and 5 percent from India.

A TransCanada statement Sept. 30 said the project would be “stimulating over 14,400 person years of employment” in Oklahoma alone. It cited a study by Ray Perryman, a Texas-based consultant to TransCanada, saying the pipeline would create “250,000 permanent jobs for U.S. workers.” But Perryman was including a vast number of jobs far removed from the industry. Using that technique in a report on the impact of wind farms, Perryman counted jobs for dancers, choreographers and speech therapists.

“Any credible input-output model is going to include all induced effects and . . . some money will be spent on the arts,” Perryman said in an e-mail. “In the construction phase, this number would be minimal, given the temporary nature of the project. However, the permanent effects from lower oil prices would be somewhat larger.”

Meanwhile, the Cornell Global Labor Institute issued a study suggesting that any jobs stemming from the pipeline’s construction could be outweighed by environmental damage it caused, along with a possible rise in Midwest gasoline prices because a new pipeline would divert that region’s current oversupply of oil to the Gulf Coast.

One example of what worries activists: the break in an Exxon Mobil pipeline in Montana over the summer. On Friday, Exxon said efforts to control and clean up the 42,000-gallon spill would cost about $135 million.

Proponents of the pipeline emphasize that beyond the jobs it would create, it would also provide the United States with oil from a trusted neighbor.

“The energy security argument is part of the debate,” Doer said, adding that well before the uprisings started in the Middle East this spring he had joked with a State Department official, “What’s it going to take, a crisis in the Middle East to get this moving?”

In the end, neither side can predict with confidence what Obama will decide.

Climate activist Bill McKibben, who helped organize Sunday’s rally, said he and his fellow protesters are hoping to appeal to the person they helped put in the office three years ago.

“We’re operating on the assumption that the only person we haven’t heard from is Barack Obama,” he said, referring to the debate over the pipeline, “and he’s the same person he was in 2008.”