U.S. President Barack Obama plans to veto a pro-Keystone XL pipeline bill from Congress in the coming weeks – that much is certain. What is less clear is what decision Obama will make after the State Department finally finishes its review, and what happens next if he says no to TransCanada's proposal.

The Calgary-based company and other pro-Keystone stakeholders say they don't want to speculate about the aftermath of a rejection and the Canadian government, which is lobbying hard for the project, is still expressing confidence that Obama will say yes. A Plan B won't be necessary, they hope.

"As the eternal positive guy, I think this project will be approved at some point," Canada's Natural Resources Minister Greg Rickford said Wednesday while in Washington, D.C., on yet another trip south of the border for bilateral energy talks.

But if Obama rejects Keystone now will "some point" only come after the 2016 election and he has left the White House? Rickford said Canada has not given up on Obama and that he's confident in the State Department review, which will recommend whether or not the pipeline is in the national interest.


Canadian Natural Resources Minister Greg Rickford says he's confident in the U.S. State Department's Keystone review, which will recommend whether or not the pipeline is in the national interest. (Jacquelyn Martin/Associated Press)

Obama is free to ignore whatever advice the State Department gives him and if he decides against the pipeline, TransCanada and Keystone supporters on and off Capitol Hill and Parliament Hill, will have to regroup.

Obama plans to veto the bill from Congress, not necessarily because he's opposed to Keystone, but because he believes approval or rejection of it is up to him, not Congress. The House already passed it and debate in the Senate is now underway. Amendments will have to be voted on, but eventually the bill will go to the White House and Obama will pull out his veto pen.

Climate change a serious problem: Obama

The State Department's review, meanwhile, is just getting started again after being put on hold because of a Nebraska court case where landowners challenged the state government over approval of the route. Nebraska's Supreme Court ruled last Friday and it was a victory for the pipeline — the route can stand.

It's not clear how much longer the State Department's review will take. When it's done, Obama can take as long as he wants to make the final call. The application for a presidential permit has been dragging on for six years and for much of that time Obama's language has been neutral on it. But lately, his tone has changed.

"At issue in Keystone is not American oil. It is Canadian oil that is drawn out of tar sands in Canada … It's very good for Canadian oil companies and it's good for the Canadian oil industry, but it's not going to be a huge benefit to U.S. consumers," Obama said at his end-of-year press conference.

He downplayed how many jobs the pipeline would generate and also said he wants to make sure it wouldn't add to the problem of climate change which "is very serious and does impose serious costs on the American people."

He didn't sound like a president who feels Keystone is in the national interest, but Obama could still give the project a green light. The Canadian government is counting on Obama listening to the State Department, which Rickford said is being guided by science and facts and he thinks signs are pointing to a positive recommendation.

While the State Department continues its work, Congress will have to deal with Obama's veto. It could be overridden with 67 votes in the Senate, but at this point it doesn't look like enough Democrats will join the 54 Republicans to reach that magic number. Two-thirds of the House of Representatives would also have to vote in favour of squashing Obama's veto. Republicans do hold a majority, but they would need a lot of Democrats to get on board and that's not likely to happen.

They won't be able to force Obama's hand with that bill, they will have to find another way — or another bill.

A spokesman for North Dakota Senator John Hoeven, the main sponsor of the bill that is doomed to be vetoed, told CBC this is a strategy that will be pursued.

Republicans won't give up in Congress

"If the president follows through with his threat to veto our legislation, Senator Hoeven will work to attach it to a must-pass appropriations bill or to an energy bill that would be difficult for the president to veto," Don Canton said.

Tucking Keystone into another bill is a tactic that will be used when Obama vetoes the bill, and later, if he rejects it on his own accord, Canton confirmed. Republicans in Congress don't intend to give up.

TransCanada's president and CEO Russ Girling told reporters last week that if Obama says no, 2016 is a long time to wait for another president to occupy the White House. The pipeline is needed now, he said.

"I think it's really premature to speculate on how that would play itself out," Girling said. In the event of a negative decision, TransCanada would have to understand the reason for the denial and go from there, he said.

"We're a market-driven company and we'll continue to press for approval of a pipeline as long as that need exists, and I don't see any scenario in the foreseeable future where that need dissipates," Girling said.

The American Petroleum Institute doesn't want to speculate either, saying planning for a rejection is putting the "cart before the horse." Sabrina Fang, a spokeswoman for the pro-Keystone group, said the API is still confident Obama will approve the pipeline.

While the Canadian government is confident too, Rickford did say that if the pipeline is denied, Canada has other customers waiting in the wings. "Market diversification is an imperative for Canada. To frame it as a priority would not be doing it justice," he said.  

The battle over Keystone reminds Canada that it has to get its energy products to customers beyond the U.S., said Rickford, who noted he has spoken to China, Japan and European Union officials about what Canada can do for them.

"We would be in a better position overall if we had other customers, so we're striving for that goal and I think in those regards things are going quite well," he said.