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After the Gulf, an Oil Sands Debate Looms

by Mitch Potter

WASHINGTON—America’s gaze may be fixed on the Gulf of Mexico, as a tentative bid to stanch free-flowing environmental catastrophe begins to take hold.

Suncor Energy's oil sands upgrader facility with the Athabasca River seen on the right near Fort McMurray, Alta. (Larry MacDougal/The Canadian Press) But with one pipe poised for closure, the Obama administration now must grapple with another, as a bid to dramatically increase the flow of carbon-heavy Canadian crude to the U.S. approaches its witching hour.

By any measure, TransCanada Corp.’s proposed $7-billion Keystone XL pipeline was never going to arrive quietly. If approved, Keystone XL will become the single largest conveyor of Alberta bitumen to the U.S. — a 2,700-kilometre, metre-thick, 900,000 bbl/day behemoth running all the way to the refineries of Houston with the potential to about double stateside consumption of Canadian crude.

But with decision-time overlapping on what is now the worst oil disaster in history, environmentalists in Washington are working overtime to leverage public frustrations into unprecedented scrutiny of America’s increasing dependence on Canadian oil.

“The disaster in the Gulf has totally primed the debate over Canadian tar sands,” said Liz Barratt-Brown, senior attorney with the Washington-based Natural Resources Defense Council.

“The public outrage is just beginning to translate to the political side. But with the Keystone pipeline proposal providing a decision-point, the United States is approaching a debate we’ve never before had before — do we really want increase our reliance on the planet’s dirtiest oil?”

For now, the decision on Keystone rests with U.S. Secretary of State Hillary Clinton, whose department holds sway on transboundary pipelines based on considerations of “national interest.” A deadline for public comment on the State Department’s draft environmental assessment passed last week, other federal agencies are expected to weigh in by Friday.

But as letters on interest pile up on Clinton’s desk, some believe the increasingly politicized issue may eventually be taken up directly by the White House.

Among the most notable submissions was that of California Congressman Henry Waxman, chair of the influential energy and commerce committee, who last week wrote Clinton denouncing the pipeline project “a step in the wrong direction.” His letter followed similar objections for 49 other sitting Democrats. And it came amid an especially scathing critique from John Podesta, a prominent Clinton-era politico known to be close to the Obama administration, who described oil derived from tar sands as “polluting, destructive, expensive and energy intensive.”

Canada has been pushing back, however, with lobbying on multiple fronts — including a U.S. ad campaign in which the Alberta government extols ongoing efforts to lighten its oil sands footprint. Alberta Premier Ed Stelmach, writing Clinton to counter Waxman’s objection, stressed what many oil sands supporters view as the Canadian industry’s most persuasive selling point– the fact that Canada is stable, reliable and . . . not the Middle East.

Other lobby groups, including the oil-industry backed Consumer Energy Alliance, are tub-thumping for Keystone, arguing that as many as 13,000 shovel-ready jobs will be unleashed with the stroke of Clinton’s pen. The CEA calls the project a “no-brainer,” pointing to significant union backing led by the United Association of Plumbers and Pipefitters.

Clinton’s State Department is two weeks into a 90-day countdown on the decision — but both sides acknowledge the deadline is elastic, with postponements likely as other government agencies weigh in.

“There is a cautious optimism that the Keystone pipeline will go through – but perhaps not until after November’s midterm elections,” one consultant familiar with Canadian lobbying efforts in Washington told the Toronto Star.

“At the end of the day, the energy security argument is Alberta’s trump card. But with the White House already struggling to move a climate bill through Congress, it is likely they will want to punt this back so that it won’t become fodder for the midterms.”

Longtime Washington watchers note that question of Canadian oil sands is merely one slice — albeit a very large one — of America’s larger energy and climate debate. Even if Keystone is approved, other elements of that debate — including the possibility of a future national Low Carbon Fuel Standard that potentially could discriminate against higher carbon Alberta crude — could emerge as potential points of friction between the two countries.

The environmental lobby, however, is far from ready to concede defeat on the Keystone project.

“This isn’t just about one pipeline — it’s about the hundreds of billions of dollars of rapid expansion the tar sands industry will undertake in Alberta in order to fill that pipeline,” said the NRDC’s Barratt-Brown.

“All this coming to a head in a very different way now because of the spill in the Gulf. I think back to the late 1960s, when the Cuyahoga River in Ohio became so polluted it burst into flames — and ignited a wave of environmental awareness throughout the country. The Gulf spill is the same — a disaster that brings clarity we hope will move us down a path toward clean energy.”

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