Keystone XL pipeline: Alberta will not lobby U.S.

Amid talk U.S. President Obama is about to reject the Keystone XL pipeline, Alberta Energy Minister Marg McCuaig-Boyd says the provincial government will not intervene.

"It's in their hands," McCuaig-Boyd said in an interview.

North Dakota Republican Senator John Hoeven said this week that Obama will reject the proposed pipeline, and that the announcement will be made in August, after Congress adjourns for its summer break.

That comment was given additional heft Wednesday when White House deputy press secretary Eric Schultz said that a decision on Keystone would come during this administration.

The proposed pipeline would move bitumen from Alberta's oilsands to refineries in Texas. It has faced intense environmental opposition, both over concerns about leaks from the pipeline and about how much oilsands pipelines add to global greenhouse gas emissions.

Hoeven said Obama would reject Keystone on environmental grounds.

Focus on other pipelines

During the Alberta election campaign, now-Premier Rachel Notley said she would not make trips to the United States to lobby for Keystone XL. That policy continues to hold now that the NDP is in government

"We're going with the ones that are probably going to have the most success soonest," McCuaig-Boyd said. "Energy East has some promise and so does Kinder Morgan's Trans Mountain. Those are the two right now to put our energies into."

McCuaig-Boyd said that Keystone XL is too caught up in U.S. politics to intervene.

"I think with the election coming and a few others things, it's in their hands more than ours."

'If he says anything, he'll say no'

"I think if he [Obama] says anything, he'll say no," said Christopher Sands, a fellow with the Hudson Institute think-tank in Washington, D.C.

Sands agrees with McCuaig-Boyd that Keystone XL is politically tricky.

Democratic presidential candidate Hillary Clinton dodged a question in a town hall on Tuesday, refusing to answer whether she would sign a bill allowing the pipeline.

"The White House might be thinking that if the president simply rejects it now, then Hillary Clinton can say, 'Well, I always said it was up to the president, he made this decision, the company can always file again," said Sands.

"That allows her to kick this off her plate."

Does Alberta still need Keystone?

Despite lower energy prices, market access remains top of mind for Alberta's energy sector. Production in the oilsands is still increasing and shipping oil by rail is more expensive that shipping it via pipeline.

As oil prices have slid, so have shipments of oil by rail. In the first quarter of 2015, exports of oil by rail were at their lowest level in two years.

TransCanada spokesman James Miller said in an interview that the pipeline is still needed.

"Our trigger for building a pipeline, such as Keystone, is we need to sign long-term binding contracts with those companies" who want to ship oil to Gulf Coast refineries.

"One thing we've been consistently able to do in the midst of all the controversy over the last seven years is to maintain 100 per cent shipper support," he said.

However, while energy companies continue to support Keystone XL, they are also finding other ways to get oil to those Texas refineries. Both TransCanada and its competitor Enbridge have been working on end-runs around Keystone, projects such as Enbridge's Seaway Pipeline and TransCanada's Marketlink.

Those efforts appear to be working. The amount of crude exported from Canada to the Gulf Coast nearly doubled between April 2014 to April 2015, according to data from the U.S. Energy Information Administration.

Harper not hopeful

Prime Minister Stephen Harper said in an interview with Bloomberg that the delays in approving Keystone XL are not a hopeful sign.

That lack of hope is probably appropriate, Sands said.

"I think probably, with the base fired up, Obama thinks it's better to disappoint the Canadians and the business community and please the environmentalists, who are much more vocal."