Harper Says Keystone Consultations Signal Obama Punting

Canada is urging President Barack Obama’s administration to make a decision on the Keystone XL pipeline amid signs of further delays in a final ruling on the $5.4-billion project.

Prime Minister Stephen Harper said in an interview yesterday the U.S. move to seek more public comment suggests Obama’s government may postpone a decision further, while Canadian Foreign Minister John Baird called on the U.S. to end the “state of limbo” over the project.

“How much consultation do you need to do?” Harper said in an interview in his Ottawa office. “It’s clearly another punt.”

The U.S. State Department will give the public a second opportunity to comment on the pipeline after an environmental impact review is complete, according to an agency official who spoke on condition of anonymity this week. The agency hasn’t said how long it would accept public comments, though adding that step could delay a decision on the project that has been under U.S. review for more than five years.

“The challenges for Keystone are challenges of timing,” Harper said. “The current administration continues to delay the decision.”

The deferral threatens to increase tension between the U.S. and Canada at a time when oil-sands developers are counting on new pipelines to lift the price of Canadian crude.

“The time for Keystone is now,” Baird said in a speech to the U.S. Chamber of Commerce in Washington. “I’ll go further -- the time for a decision on Keystone is now, even if it’s not the right one. We can’t continue in this state of limbo.”

Still Waiting

U.S. Secretary of State John Kerry said today he’s still waiting to receive the environmental impact statement, speaking at a press conference with Baird and Mexican Foreign Secretary Jose Antonio Meade in Washington.

“The public has a role in this,” Kerry said. “We’re all accountable to our publics. The democratic process demands that we do that.”

Kerry said that “all the appropriate effort is being put into trying to get this done effectively and rapidly and my hope is that before long that analysis will be available. And then my work begins.”

Both the White House and State Department declined to comment on Harper’s remarks.

Carbon Emissions

Producers are planning to double output by 2025 and are counting on Keystone XL to connect them to refineries on the U.S. Gulf Coast. Environmentalists are trying to block the project because they say developing the oil sands would lead to more carbon emissions than other fuels and contribute to global warming. Carbon-dioxide emissions since the Industrial Revolution have led to a warming of the Earth’s temperature in the past 50 years, according to the U.S. Global Change Research Program.

Canadian musician Neil Young said yesterday Keystone XL is a “terrible idea” that won’t benefit anyone. “This fuel is going to China, which is probably the dirtiest place on the planet,” Young told reporters yesterday before a concert in Winnipeg, Manitoba.

Obama rejected Calgary-based TransCanada Corp. (TRP)’s initial application to build Keystone XL after officials in Nebraska said the pipeline would imperil ecologically sensitive lands. TransCanada then split the project in two and applied for the rerouted northern leg in May 2012.

Climate Change

A draft State Department report last year said Keystone XL wouldn’t cause increased greenhouse gas emissions because projects in Canada’s oil sands, the world’s third-largest crude reserves, would be developed anyway and transported to market by other means. Obama said in June the project wouldn’t be in the national interest if it worsens climate change.

Further delays will end up costing consumers, said TransCanada Chief Executive Officer Russ Girling, in an interview in Calgary last month. Girling told a Toronto audience Jan. 15 that Keystone XL, among major pipeline projects currently being proposed to carry crude to new markets, is the furthest along with equipment on the ground along the route.

Popular support in Canada for Keystone XL has fallen, according to a poll released this week by Nanos Research Group. Canadian support has declined to 52 percent in December from 68 percent in April, while opposition has increased to 40 percent from 28 percent.

To contact the reporters on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net; Andrew Mayeda in Ottawa at amayeda@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net