US President Barack Obama has rejected Canadian energy giant TransCanada’s(TSX, NYSE:TRP) application to build the Keystone XL pipeline, capping this way a seven-year saga that became one of the biggest environmental flashpoints of his presidency.
The decision, announced in a media brief this morning, comes on the heels of the rejection of TransCanada’s request to pause the review of the proposed Keystone XL oil pipeline, a decision expected to lead to the project’s rejection by the Obama administration.
Addressing the media, Obama said the pipeline would not have made a meaningful longterm contribution to the US economy. He also said it would not have made any significant job contribution as their proponents claimed (fast-forward to minute 50):
Obama also noted the pipeline would not lower gas prices for American consumers because gas prices have already been falling.
The president spoke about the benefits of alternative energy sources: “America is now a global leader when it comes to taking serious action to fight climate change. Frankly, approving this project would have undercut that leadership…America has cut our total carbon pollution more than any other country on Earth.”
In a low-key expression of mild disappointment, Canada’s new prime Minister Justin Trudeau said he was “disappointed” by the U.S. decision to reject the Keystone XL pipeline, but that the relationship between the two countries was “much bigger” than any one project.
“I look forward to a fresh start with President Obama to strengthen our remarkable ties in a spirit of friendship and co-operation,” he added.
In 2008, TransCanada first applied for a permit application to build the 1,897km (1,179-mile) pipeline, which would carry 800,000 barrels of crude a day from Alberta to Steele City, Nebraska, where it could join an existing pipeline.
The company spent at least $2.5 billion on the project, whose total cost if built would have been at least $10 billion due to delays and increased permitting costs.
But the Calgary-based firm is not giving hopes up. In a statement following Obama’s press conference, it said it will review all of its options, which include filing a new application to receive a Presidential Permit for a cross border crude oil pipeline from Canada to the U.S.
The rejection of Keystone is nothing but bad news for Canada’s economy. Oil sands production has been increasing steadily and is set to rise further as new projects come on stream, in spite of the fall in oil prices. At the same time, existing pipelines to take oil out of Alberta are already close to full capacity.
For environmentalists, including top Democratic donors, the decision represents a victory as they spent heavily in hopes of defeating the project, which they say would have drastically increased emissions blamed for global warming.