In a move that foes of the project have expected since his June 2013 climate change speech, President Obama announced Friday that he has accepted Secretary of State John Kerry’s recommendation to reject the northern leg of the Keystone XL pipeline. Here is a link to the transcript of his remarks.
The TransCanada project would have carried 830,000 barrels a day of diluted bitumen from the tar sands of Alberta—as well as some fracked oil from the Bakken formation in Montana— to Steele City, Nebraska. There it would have connected with a pipeline running to the refineries of Port Arthur, Texas.
The president said the pipeline was neither a “silver bullet” for the economy, as supporters had said, nor the “express train” to climate disaster that foes said it would be. He listed some reasons for the rejection:
• The pipeline would not make a meaningful long-term gain for economy. Having Congress passing an infrastructure plan would produce far more jobs than the KXL would have.
• The pipeline would not reduce gasoline prices. Those prices have already dropped.
• Shipping dirtier oil into our economy would not help U.S. energy independence. U.S. is already producing more oil than it is importing for the first time in years. More efficiency
of vehicles and solar and wind are growing rapidly. Even as our economy has continued to grow, the U.S. has cut carbon emissions over the past few years.
• The U.S. needs to keep some fossil fuels in the ground as the transition is made to less carbon-intensive fuels. The U.S. must continue as a world leader in dealing with climate change.
For activists—including environmental advocates, property owners and indigenous peoples—the rejection is a major victory. Opposition to the pipeline helped build an aggressive movement focused on climate change that can be expected to continue in the wake of KXL’s rejection. The focus of the movement is keeping most fossil fuels—coal, oil and natural gas—in the ground. That, activists say, is essential to keep global warming at or below the 2°C temperature scientists say is the most we can live with without huge negative impacts.
Tar sands producers have boosted their output by 30 percent in the past five years to about 2.5 million barrels a day. As recently as last year, analysts predicted that this would rise to 3 million bbls/day by 2020 and 4 million bbls/day by 2030. But new projects for extracting the heavy crude are now constrained by oil prices in the $40-a-barrel range. While some strip-mined tar sands can still produce a profit at $25 a barrel, the bottom line on steam assisted gravity drainage, now being used for a majority of the production, is only positive above $80 a barrel.
In addition, transporting that petroleum is pinched by a bottleneck—not enough pipelines or rail conduits to move the stuff. Expanded production from the tar sands is less likely for at least the immediate future with Keystone XL out of the equation, other proposed pipelines under attack, and oil prices low and potentially trending lower.
TransCanada first applied to build the pipeline in 2008. Since then it has undergone extensive review, including two environmental impact statements.
(Originally appeared at DailyKos.)