http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/6084508
Washington (Platts)–22Mar2012/1237 pm EDT/1637 GMT
After defending his approach to oil and gas development for five weeks, President Barack Obama traveled to the heart of the US oil pipeline network Thursday and promised to accelerate permitting for TransCanada’s Oklahoma-to-Texas pipeline.
Obama signed a memorandum directing heads of executive departments and agencies to expedite their review of the southern section of TransCanada’s controversial Keystone XL pipeline. The Oklahoma-to-Texas line primarily needs local and state support, not approvals from the White House or from the Federal Energy Regulatory Commission, which oversees siting of natural gas, not oil, pipelines. Obama did not explain how his executive order would speed the review. Oilgram News brings fast-breaking global petroleum and gas news to your desktop every day. Our extensive global network of correspondents report on supply and demand trends, corporate news, government actions, exploration, technology, and much more.
Obama spoke in front of sections of 36-inch pipe that TransCanada contractors will eventually string together across 485 miles from Cushing to Nederland, Texas. The line will link the Cushing crude hub to refineries along the Gulf Coast.
“We are drilling all over the place right now,” Obama said a day after visiting drilling rigs in New Mexico. “That’s not the challenge. That’s not the problem. The problem in a place like Cushing is that we’re producing so much oil and gas in places like North Dakota and Colorado and that we don’t have enough pipeline capacity to transport all of it to places it needs to go.”
Cushing calls itself the “pipeline crossroads of the world” and is the delivery point for the NYMEX crude contract.
TransCanada, which has taken a decidedly low profile during the president’s visit to its own pipe yard, has dubbed Keystone XL’s southern portion the Gulf Coast Project. The company expects it to cost $2.3 billion and hopes to start oil flowing in the second half of 2013.
In his speech, the president mentioned his rejection two months earlier of TransCanada’s application to build the full 1,700-mile system from Alberta to the Texas Gulf Coast, but again blamed that decision on Congress imposing an unreasonable deadline on the process.
ENERGY POLICY IN ELECTION YEAR SPOTLIGHT
Obama has devoted at least one speech a week to energy policy since February 23, when gasoline prices began setting record highs and started to threaten his election-year approval ratings.
The Cushing speech did not expand on standard White House talking points about energy that Obama has overseen an expansion of oil and gas drilling, shrinking dependence on OPEC and falling US consumption through fuel efficiency standards.
Obama’s promise to accelerate the Gulf Coast Project was not even uncharted ground. When TransCanada announced on February 27 its plans to push forward with the southern section despite the Keystone XL rejection weeks earlier, the White House said it looked “forward to working with TransCanada to ensure that it is built in a safe, responsible and timely manner, and we commit to take every step possible to expedite the necessary federal permits.”
The oil industry did not greet Obama’s visit to its home turf especially warmly.
“Mr. President, your words suggest you want the economic benefits American natural gas and oil can deliver,” chief executives of Oklahoma oil and gas exploration companies Continental Resources, Chesapeake Energy, Devon Energy and SandRidge Energy said in an open letter published Wednesday in The Oklahoman newspaper. “We hope your actions follow suit — to date they have not.”
Likewise, pipeline supporters and oil-state lawmakers in Congress have spent the week bashing the president’s energy record.
Senator Richard Lugar, Republican-Indiana, said Obama’s “public relations exercise” in Cushing does nothing to change his “incomprehensible obstructionism” against the larger project.
“I’m glad that President Obama went to Cushing to see the mess he has in part caused,” Lugar said in a statement ahead of the speech. “If the Obama administration had acted on Keystone XL within a reasonable time frame to approve the application, then it most likely would already be delivering surplus oil supplies from Cushing to Gulf Coast refineries and would soon be delivering Canadian and US Bakken oil to American motorists.”
KEYSTONE XL OPPONENT SAYS CUSHING STOP HIGHLIGHTS OIL ‘ADDICTION’
Bill McKibben, whose group 350.org turned Keystone XL into the environmental movement’s chief rallying point last summer, said Obama’s visit to the pipeline yard would become an icon for inaction on climate change.
“No movie producer, 50 years from now, will be able to resist a scene that explains the depth of our addiction to oil: the president coming to the state that just recorded the hottest summer in American history, in the very week that the nation has seen the weirdest heat wave in its history, and promising not to slow down climate change but instead to speed up the building of pipelines,” he said.
McKibben’s group encouraged Keystone XL opponents to protest Obama’s visit to Ohio State University Thursday afternoon.
TransCanada plans to reapply to the US government for a permit to build the cross-border section of Keystone XL, which would run 1,179 miles from Hardisty, Alberta, to Steele City, Nebraska. It would link up with the existing Keystone pipeline to connect to Cushing.
While it has not submitted the application, the company estimates approval of the key US permit in the first quarter of 2013. It twice pushed back its completion target, now set at early 2015. Obama also signed a more general executive order calling for quicker federal permitting of major infrastructure projects, including pipelines, renewable energy plants, electricity transmission, roads, ports, waterways and broadband.
–Meghan Gordon, meghan_gordon@platts.com
Special thanks to Richard Charter