Analysis: Jobs and energy security seen swaying U.S. on Keystone

WASHINGTON Sat Oct 8, 2011 4:07am IST

Actress Daryl Hannah protests in front of the White House in Washington against the proposed Keystone XL pipeline August 30, 2011. The pipeline extension would carry tar sands oil from Canada to the Gulf of Mexico. REUTERS/Kevin Lamarque

Actress Daryl Hannah protests in front of the White House in Washington against the proposed Keystone XL pipeline August 30, 2011. The pipeline extension would carry tar sands oil from Canada to the Gulf of Mexico.

Credit: Reuters/Kevin Lamarque

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WASHINGTON (Reuters) - A show of strength by angry ranchers, landowners and green groups against a proposed Canada-to-Texas pipeline is unlikely to sway the U.S. government's imminent decision on whether to back the project.

The State Department on Friday wrapped up a series of hearings into TransCanada's Keystone XL pipeline that would take crude from Alberta's oil sands to Texas refineries, with the issue having become a flashpoint in a debate over energy security and jobs versus environmental degradation.

The meetings -- held in recent weeks in states along the pipeline's route from Montana to Texas -- offered a chance for people to air their positions over the project.

In the final meeting, held in Washington, the line's opponents outnumbered its supporters. Some 45 protesters slept overnight in the Ronald Reagan Building, where the meeting took place, to secure coveted speaking spots while hundreds more filtered into the meeting space and protests outside.

In Texas, the opposite was true: the meetings were dominated by oil workers and supporters who looked forward to the jobs that the project would bring.

Companies that refine oil, including ConocoPhillips and Shell Oil Co, could make a lot of money processing petroleum from the pipeline, which would also drain a glut of U.S.-derived oil building up in Oklahoma.

NOT A VOTE

A State Department official on Friday called the hearings a "great example of American democracy".

It remains unclear, though, how comments from the meetings will enter into the decision process. Assistant Secretary of State Kerri-Ann Jones said the department was not tallying comments from the hearings.

"This is not a voting situation," she said at a briefing after the hearing. "We are listening and trying to understand perspectives on the national interest, so in the process of sorting through all of this information we will evaluate and make the best decision we possibly can."

Ultimately, however, the meetings were likely more about the government making sure it went through the required motions than anything that will sway its decision.

After the State Department issued an assessment in August that concluded the line would do little damage to the environment, analysts said it appears more likely the government will approve the line for the jobs it would provide and the imports of foreign oil it would reduce.

"It's all about the State Department getting their ducks in a row so if they are ever caught up in a lawsuit on this they can point to the hearings and say they followed procedure," said a New York oil analyst who did not want to be identified.

LIFELINE

Supporters of the pipeline said on Friday the project would create thousands of construction and maintenance jobs.

"It's not a pipeline to us, it's a lifeline," said Terry O'Sullivan, general president of the Laborers International Union of North America.

Members of his union, decked out in bright orange shirts, took up a large section of the jam-packed meeting room.

TransCanada maintains the $7 billion project would create about 20,000 construction jobs, while the State Department has pegged the number closer to 7,000.

Supporters also believe the project, which would deliver 500,000 barrels per day of Canadian oil sands crude to Texas, would reduce U.S. dependence on oil from unfriendly countries.

The State Department must consider whether to issue a presidential permit for the project, because the line would cross an international boundary. It is expected to make the decision by the year-end and that may be the government's final ruling on the project unless another U.S. agency intervenes.

David Goldwyn, special envoy for international energy affairs at the State Department until early 2011, has said the pipeline is in the country's national interest. But he said the State Department had a duty to gather public input.

"I think the State Department is being as deliberate as it can to make sure when it comes to a decision it's beyond reproach," Goldwyn, now an energy consultant, said at a congressional hearing earlier this year.

Opponents abounded at Friday's meeting but their concerns may make little difference.

"This permit must be denied," said Susan Luebbe, a cattle rancher in Nebraska where the pipeline would cross the Ogallala Aquifer, one of the largest U.S. supplies of water for farming.

"It's not in the national best interest for anyone except the money-hungry, greedy corporation of TransCanada," she said tearfully.

Activists in Canada and the United States worry about greenhouse gas emissions from the energy-intensive mining of Alberta's vast oil sands. They also believe much of the oil would be exported, especially as U.S. energy demand falls.

But Charles Ebinger, a senior fellow at the Brookings Institution, said the short-term jobs and energy security the pipeline would provide were more likely to dominate the administration's decision than concerns about alienating its environmental base.

(Editing by Russell Blinch and Dale Hudson)

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