A decision on the approval of the $5.4 billion northern portion of the Keystone XL pipeline (linking oil sands production in Canada with refining on the U.S. Gulf Coast) is expected in the first quarter of 2014. And a new survey has revealed strong support for the project among Americans.
Lobbyists and interest groups seize on every media comment and investment decision, to the extent where the truth about the project's environmental and economic impact is difficult to deduce. But Keystone, which has always been as much a political football as a solution to a logistical problem, needs President Barack Obama's approval to cross the U.S. border, and that could have implications for the country's relationship with its northern neighbor.
Oil and gas pipelines have a long history of being some of the most politically charged infrastructure projects. It is never simply a question of picking the quickest and cheapest route from A to B, then calling in the engineers and getting down to business — economic viability is only ever one consideration.
We only need to look at polarizing projects further afield, such as the endless discussions over the Southern Corridor route from Caspian oil fields to EU markets. Over the past decade, relations have been strained by European moves to break Russia's stranglehold over regional gas markets, by building an alternative route for natural gas via Turkey and Southern Europe.
There are countless other examples, and few more politically charged than the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline, on which some have even pinned hopes of greater stability in a relentlessly troubled region.
In the case of this 1,400-kilometer leg of Keystone XL, it is the Canadian trade lobby lined up on one side, strongly backed by Prime Minister Stephen Harper, and environmentalist groups facing them off on the other side.
In 2011, in the lead-up to an early deadline for a decision, hundreds of protesters were arrested for a sit-in at the White House against the pipeline. Their banners read things like, "What would Sasha and Malia say?", and the president was explicitly warned that he could not rely on the support of environmentalists if the pipeline was approved.
Obama was left with little choice but to reject the project first time around in January 2012, ahead of tough elections. The drawn-out process has also caused an unusual rift between Obama and his Canadian counterpart, who have disagreed about exactly how many jobs the projects would create, and whether the environmental impact has been over- or understated.
The recently released poll suggests that Keystone is backed by 56 percent of Americans. But given the highly polarized media coverage of the issue, it is difficult for ordinary Americans and Canadians to find reliable sources of information on the potential costs and benefits.
The favorable U.S. State Department-commissioned assessment of Keystone's impact has been criticized by environmental groups for a conflict of interest among the companies who worked on the draft (one of whom is a member of the powerful API lobby group). And even when a source purports to be explicitly fact-based, such as the Oil Sands Fact Check website, a closer look reveals a thinly-veiled political agenda.
A breakdown of the poll's findings — 82 percent of Republicans in favor, 64 percent of indepenents, and 51 percent of Democrats — underline the political nature of project..
The most persuasive incentive cited by the project's backers is job creation. However, oil and gas is not renowned as a job-intensive industry, and a report released by the Cornell Global Labor Institute found that claims made by TransCanada and the API, claiming tens and thousands of direct and indirect jobs, to be seriously inflated. They concluded that the project could destroy more jobs than it creates and suggest a more likely scenario of 2,500-4,650 temporary construction jobs, and no change in the seasonally adjusted unemployment rate.
So what are the alternatives if Obama were to withhold approval? The State Department report outlines several "no-action scenarios," such as transporting the bitumen by rail to Oklahoma before entering the existing Keystone system, or a rail and tanker scenario where the oil is shipped from a port in western Canada to the Gulf Coast. Some still view rail as a viable and flexible alternative to pipelines in this context. But, as I have written here before, there remain serious concerns on costs, risks and capacity.
In reality, a “no” from Obama would likely lead to an intensification in Canadian engagement with China, an alternative and plentiful source of demand for Canadian oil. As the report mentioned above makes clear, and to the chagrin of the environmentalist lobby (who see their opposition to the project as a means to put a brake on the entire oil sands project), "production of WCSB and Bakken crude oil will proceed with or without the proposed project." Harper's visits to Asia are clearly designed to send that message to Washington.
The Keystone debate, which splits the U.S. down the middle (environmentalists vs. industry, liberals vs. conservatives) was always about much more than a piece of steel tubing. For Canada, the oil sands are strategic resources, and south of the border Obama knows that the resolution of the issue, whichever way he decides, will have a great impact on his administration's legacy.