The Obama administration will reject TransCanada Corp. (TRP)’s Keystone XL oil pipeline and let the company file a revised route that avoids an environmentally sensitive area in Nebraska, according to two people familiar with the decision. The shares fell as much as 4.8 percent.
The decision may be announced as soon as today by the State Department, which has been reviewing the project crossing six U.S. states. Environmental groups immediately issued statements backing Obama’s decision.
“President Obama is about to destroy tens of thousands of American jobs” by not approving the $7 billion Keystone pipeline, Brendan Buck, a spokesman for U.S. House Speaker John Boehner, an Ohio Republican, said in an e-mailed statement.
Labor unions and Republican lawmakers have urged President Barack Obama to approve the pipeline, which would carry 700,000 barrels of crude a day from Canada’s oil sands to refineries on the U.S. Gulf of Mexico coast, because they say it will create jobs and help the nation become more energy independent. TransCanada said the project may add 20,000 jobs.
TransCanada fell 64 cents to $41.10 at 1:39 p.m. in New York, and earlier today touched $39.74.
Terry Cunha, a TransCanada spokesman, said in an e-mail that the company wouldn’t respond until the administration announces a decision.
Canada will continue to support TransCanada Corp. (TRP)’s plans to build the Keystone XL pipeline, Canadian Foreign Minister John Bairdsaid, adding that it is in the best interests of both Canada and the United States.
Environmental Opposition
Environmentalists have opposed the project, saying it will contribute to greenhouse-gas emissions and endanger drinking water supplies in Nebraska. They have staged demonstrations outside the White House and vowed to withhold financial support to Obama’s presidential campaign if he approves the pipeline.
“The entire purpose of the pipeline is to move Canadian oil to the crude refineries in the Gulf so that it can be shipped overseas,” Jeremy Symons, a National Wildlife Federation vice president, said today in a phone interview. “If the pipeline is built, Canada gets the jobs, China gets the oil and American families get the oil spills.”
Protests in Nebraska and at the White House have focused on the risks of a spill tainting the Ogallala aquifer in Nebraska’s Sand Hills region. TransCanada has discussed alternate routes with state officials that would pose less risk to drinking-water supplies.
‘Big Oil’
“We’re glad Keystone hasn’t been approved, but we’d like to see the pipeline rejected outright,” said Noah Greenwald, endangered species program director for the Center for Biological Diversity, in a phone interview. He said producing petroleum from oil sands releases moregreenhouse gases and requires more water than conventional oil production.
Wendy Abrams, who raised from $50,000 to $100,000 for Obama in 2008, according to the Center for Responsive Politics, had said rallying her friends around the president would be hard if he approved the pipeline. She said Obama has since shown that he’s not “in the pocket of Big Oil.”
She said if Obama rejects the pipeline, it’s going to be tough on him “either way because the energy folks that have money to be made, will spend a ton of money on ads and it’s a one-way street because the environmental groups don’t have the billions to spend on ads defending their position.”
The administration in November delayed approving the project until after the 2012 election, saying it wanted to study an alternate route that would take the pipeline away from environmentally sensitive areas in Nebraska. Congress last month set Feb. 21 for the U.S. to issue a pipeline permit.
‘All In’
The State Department said the review could be completed “as early as the first quarter of 2013.”
Obama’s jobs council yesterday called for an “all-in” approach, urging an expansion of oil and gas drilling and an acceleration of projects including pipelines.
“We should allow more access to oil, natural gas and coal opportunities on federal lands,” the year-end report by the President’s Council on Jobs and Competitiveness said.
The American Petroleum Institute, the Washington-based group of oil and gas companies, plans to lobby Congress for legislation that would take away Obama’s power to make a final decision on the Keystone pipeline.
Creating Jobs
“The president’s decision today makes us question if he’s truly interested in jobs creation,” API President Jack Gerard said today in an interview before an appearance in Washington.
TransCanada applied for a U.S. permit in 2008. Advocates such as Senator Richard Lugar, an Indiana Republican who sponsored legislation to set the February deadline, said further delay compromises U.S. efforts to import more oil from a friendly nation.
“The studying time is done,” Lugar said today in an e- mailed statement. “The environmental concerns have been addressed. The job creation, economic and energy security arguments are overwhelmingly in favor of building it. The president opposing pipeline construction is not in the best interest of the United States.”
Patrick Parenteau, environmental law professor at Vermont Law School in South Royalton, said Obama has other options based on the fact that a new route through Nebraska has yet to be determined.
“The middle option is, ‘I can’t say it’s in the national interest based on what I know,” Parenteau said in an interview. “I don’t think he’s boxed in. He’s going to be in another one of these situations that makes him look indecisive.’
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