TransCanada still has options for Keystone XL, despite Obama's rejection

TransCanada says it reviewing all its options after Pres. Obama rejected their Keystone XL pipeline application. They could reapply, go to court, or await the outcome of the 2016 U.S. election, but they need to tread carefully, expert Michal Moore says.

2016 U.S. election could be pivotal, and a minefield, for the company

After saying that the Keystone XL Pipeline would not serve the national interest of the United States, President Barack Obama announced he was rejecting TransCanada's application. But the company still has options. Obama walks into the Roosevelt Room at the White House Nov. 6, to make the announcement. (Pablo Martinez Monsivais/Associated Press)

The long awaited, and long expected, decision by U.S. President Barack Obama's administration on the Keystone XL pipeline application does not absolutely mean the end of the project. But TransCanada now needs to choose its strategy carefully.

The Obama decision kills this application, originally filed in 2008, but the State Department confirmed today that if TransCanada chooses, it can submit a new application. 

There's also been talk of a court challenge under the North American Free Trade Agreement but Keystone's prospects really depend on the 2016 U.S. presidential election. All the Republican contenders had previously declared their support for Keystone and there's little reason to expect that Obama declaring the project not in the American national interest will change Republican minds.

The two leading contenders for the Democratic nomination, Hillary Clinton and Bernie Sanders, oppose Keystone XL.

TransCanada issued its own statements today, including one saying it will review all its options, including the eventually essential one, "filing a new application to receive a presidential permit for a cross-border crude oil pipeline."

And company president and CEO Russ Girling said, "Today, misplaced symbolism was chosen over merit and science - rhetoric won out over reason."

'Just keep mum'

In the aftermath of the Keystone XL rejection, the University of Calgary's Michal Moore advises TransCanada to try to be as small a target as possible. (School of Public Policy/University of Calgary)

But Michal Moore, the energy and environment director at the University of Calgary's School of Public Policy, advises TransCanada to "just keep mum, I don't think I would criticize anybody." Try to be as small a target as possible, Moore says.

Speaking on background at a media briefing, a State Department official said that for it to reconsider the application, TransCanada would have to reapply.

But what's a good time to do so? Wait and hope a Republican is in the White House in January 2017?

Regardless, "You don't just turn the light switch on again, they're grounded for a while," Moore says about Keystone XL. It's still a bureaucratic process in which it takes years to get the paperwork together, Moore tells CBC News, but it won't take as long as this first failed application.

In August, The Canadian Press reported that people close to the project were saying "the company has become all but convinced a rejection is imminent."

TransCanada was weighing its post-rejection options and "one aspect of that internal discussion is the political calculus — and whether fanning the flames during the 2016 U.S. election campaign would help the project, or harm it."

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Moore, who's originally from the U.S. and still teaches there, advises against doing so. He says Keystone will still be a campaign issue but "You cannot predict what those winds are going to do."

Don't go crazy, this deal's done, he says. Better to start building towards the next application and "that involves first and foremost" Canada's new government. Prime Minister Justin Trudeau said he was disappointed with Obama's decision but didn't criticize it.

Keystone XL opponents celebrate the rejection of the proposed pipeline, Nov. 6, in front of the White House. (Alex Brandon/Associated Press)

NAFTA challenge?

That August story also said that TransCanada was consulting lawyers about a NAFTA challenge, and the implications. The grounds for a challenge would be discrimination and unfair or arbitrary treatment. Experts weighed in, for and against, and the story notes that the U.S. government has a 13-0 winning record in NAFTA cases.

Moore would advise the company not to pursue that strategy. "Try to have a better relationship with the U.S. going forward," he advises, and adds that challenges typically take years or decades.

"Trying to sue the president of the U.S. is probably not the most efficacious next move," he adds.

Obama made a political decision, he says, telling TransCanada, "you've got to treat it as that" and accept it's part of the game.

(Canadian Press)

The Energy East option

The Canadian Association of Petroleum Producers reacted to Obama's announcement by saying "Canadian oil will find new paths to markets."

A possible path is TransCanada's proposed Energy East pipeline, and the Keystone rejection gives TransCanada a "more focused argument" for needing Energy East, FirstEnergy Capital analyst Steven Paget told Reuters. 

But Adam Smith, climate program director for Environmental Defence Canada, told the news agency, "The arguments for rejecting Keystone XL apply to Energy East even more so -- there's more oil and the risk of tankers (transporting oil) on the east coast of Canada."

Smith also said the Keystone rejection will energize "the already very substantial movement against" the Energy East pipeline in Canada. 

Moore says that with the regulatory process for Energy East, which has both supporters and opponents, TransCanada needs to learn from its mistakes in trying to win U.S. approval for Keystone XL, and to remember that there are other products that they can ship, like natural gas and water. "Pipelines are going to be a useful device, no matter what," he says.

TransCanada and the U.S. State Department declined interview requests from CBC News for this story.

A depot used to store pipes for Transcanada Corp's planned Keystone XL oil pipeline is seen in Gascoyne, North Dakota Nov. 14, 2014. (Andrew Cullen/Reuters)