June 12, 2014 9:09 pm

Canada pushes for Keystone pipe approval

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Construction Along The Keystone XL Pipeline©Bloomberg

Canada is in talks with the US on renewable energy and other plans to curb greenhouse gas emissions in an effort by Ottawa to secure White House approval for the Keystone XL oil pipeline.

Greg Rickford, Canada’s minister of natural resources, on Thursday told the Financial Times the two countries were in talks about “alignment” on clean energy, pipeline safety and other issues aimed at overcoming US political and public opposition.

The pipeline would run from the oil sands of Alberta to connect with US pipelines in Nebraska. The project has become a battleground for climate change campaigners and oil producers, with both sides seeing it as a symbol of US President Barack Obama’s willingness to restrict fossil fuel production to protect the environment.

Mr Rickford said Canada would address US concerns over safety and the environment: “If they’re the final hurdle, then that’s going to be the way that we do it.”

Mr Obama had signalled that if the issues were dealt with, “he could perhaps move ahead sooner rather than later”, he added.

TransCanada, the company leading the pipeline project, first applied for a presidential permit six years ago, but approval has been repeatedly delayed.

The project is a strategic priority for the Canadian government because it would provide a cheaper and more reliable export route for increased oil production than rail transport. Environmental campaigners have targeted Keystone XL because the greenhouse gas emissions created by production from the tar sands, one of the world’s largest oil reserves, are greater than the average for crude used in the US. Campaigners have also raised concerns about the risk of spills from the pipeline.

Tom Steyer, the billionaire US environmentalist who has said he plans to raise $100m to back candidates in November’s midterm elections, is a prominent opponent of the project.

Environmental impact statements from the US state department, which has formal responsibility for assessing Keystone XL because it crosses an international border, have concluded it would cause no damage or risks that could not be managed.

However, in April the state department again delayed a final decision on the project, this time because a court case in Nebraska created uncertainty about the proposed route. Speaking on the sidelines of a Goldman Sachs conference in New York on Thursday, Mr Rickford argued that there were clear advantages for both Canada and the US in Keystone XL.

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If the 1,179-mile pipeline were built, he said, oil producers in Alberta would earn higher prices and US refiners would benefit from refining bitumen – the heavy crude produced from the oil sands – into products such as petrol and diesel for sale around the world.

Mr Rickford has been working with Ernest Moniz, US energy secretary, on a “joint action plan” that would “send a strong signal” on the two countries’ commitment to clean energy with the aim of helping Keystone XL to move forward, he said.

That plan could be launched in September.

“I think if we do those things, that might move the current [US] administration to say ‘all right, these things are coming together’,” and the political risks had been curbed, he added.

The countries were also engaged in parallel discussions about curbing greenhouse gas emissions overall, with Canada and the US possibly “taking that step together” rather than independently, he said, adding: “Obama announces an epiphany on coal policy; we did it two years ago. Maybe we now talk about an alignment on greenhouse gases.”

The delays to Keystone XL, and concerns about over-reliance on a single export market in the shape of the US, have encouraged the Canadian industry to try to develop other export routes from Alberta, including pipelines to the west coast for export to Asia and TransCanada’s Energy East route to refineries and ports in eastern Canada.

Mr Rickford said that in the medium term the country could “meet the demands of both Japan and Europe . . . Canada can be a superpower and a major supplier of energy products to other regions”.

The question, he said, was “how much the US wants to get in on the economic action”.

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