Keystone XL rejection criticized in Calgary as pure politicking

Oilpatch observers weren't surprised to see U.S. President Barack Obama reject the Keystone XL pipeline project Friday, a move many described as purely political.

Oilpatch observers unsurprised and unimpressed by President Obama's rejection of major project

Bob Skinner, an executive fellow at the University of Calgary's School of Public Policy, dismissed President Barack Obama's rejection of the Keystone XL pipeline as "symbolism." (Colin Hall/CBC)

Oilpatch observers were not surprised to see U.S. President Barack Obama reject the Keystone XL pipeline project Friday, a move many described as purely political.

"It's just symbolism to pick on the oil sands and to make President Obama look good as he goes off to [the 2015 United Nations Climate Change Conference in] Paris," said Bob Skinner, an executive fellow at the University of Calgary's School of Public Policy.

Skinner said the amount of greenhouse gas emissions that would be directly attributable to the proposed pipeline project and any related oil extraction is "absolutely trivial" in the grand scheme of global emissions.

He also took issue with Obama's close relations with China on climate change.

"China increases its carbon emissions by an amount almost equal to total Alberta emissions every year," Skinner said.

"So it really is hard to take his embrace of scientific reasoning seriously."

Alberta's emissions totaled approximately 267 megatonnes in 2013, according to Environment Canada, which accounted for 36.8 per cent of Canada's total emissions.

'Feel-good project for environmentalists'

Bob Schulz, a professor at the University of Calgary's Haskayne School of Business, said rejecting Keystone was primarily a "feel-good project for the environmentalists" and a plank for Obama as he tries to establish his legacy.

Bob Schulz, a professor at the University of Calgary's Haskayne School of Business, said the Keystone XL rejection was largely about President Barack Obama establishing his legacy. (Stacee Barton/CBC)

"His motivations are trying to set a baseline for his personal legacy and to have the environmentalists feel happy," Schulz said.

"Meanwhile, the oil companies are still going to ship the oil by rail."

Dirk Lever, managing director of AltaCorp Capital, agreed, saying the rejection of Keystone XL could turn out to be beneficial for Canadian rail companies.

"If crude can't go by pipeline, then down the road, if volumes pick up and there's further activity, they'll be using rail," Lever said.

"One guy's misfortune is another guy's opportunity."

What's next?

Schulz expects TransCanada will now bide its time, while investing capital it would have put into Keystone XL into other projects like gas-fired power plants, until the 2016 presidential election.

If a Republican candidate wins the White House, Schulz said TransCanada will likely re-apply for the major pipeline that would carry bitumen from Alberta to Texas.

"If the Democrats win, well, then it's probably not going to go at all," he said.

Lever said the Keystone XL project isn't totally dead but is effectively "on hold," something that could change if a more pipeline-friendly administration gains power in the United States.

"It's not just like the Americans are picking on Canada," he said. "There are U.S.-based pipeline companies that are having a lot of trouble just building new pipelines anywhere in the U.S."

For its part, TransCanada said it's not giving up.

"TransCanada and its shippers remain absolutely committed to building this important energy infrastructure project," CEO Russ Girling said in a statement.

"We will review our options to potentially file a new application for border-crossing authority to ship our customer's crude oil, and will now analyze the stated rationale for the denial."


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