Obama energy adviser says doubts about Keystone XL remain

While Calgary-based TransCanada (TSX, NYSE:TRP) remains optimistic about its Keystone XL pipeline’s prospects, given Obama administration’s focus on moving the U.S. away from its dependence on foreign oil, uncertainties around the project remain.

The energy advisor for the newly re-elected U.S. President, Dan Kammen, told The Calgary Herald that there are still several qualms related to the $7.6 billion Keystone XL pipeline, designed to carry Alberta’s crude south to Gulf Coast refineries.

According to Kammen, a Nobel laureate, the U.S. likely expects Canada to take action on the topic of climate change and the environment, including the potential impacts of the controversial TransCanada pipeline.

The expert said it is important for the U.S. government to look at the science behind the proposed duct and evaluate all the options to enable a sustainable, low-carbon economy by 2050 and beyond.

“It’s not so much the route of the pipeline, it’s the fuel that’s in the pipeline that worries me,” Kammen, who also sits as director of the Renewable and Appropriate Energy Lab at the University of California at Berkeley, told The Calgary Herald.

The firm, which is developing one of North America’s largest oil delivery systems, saw its proposed Keystone rejected by Obama early this year, due to pressure from environmental groups. But he later flipped and announced that he wanted, in fact, fast-track the approval of the southern half of the same pipeline.

Canada exports 2 million barrels of oil per day to the U.S. and almost all of it ends up at Cushing city, Texas, the pricing point for U.S. crude, which refining capacity is limited.

Alberta production is set to more than double to 3.7 million barrels by 2025 out of a total of 4.7 million. Production in the U.S., particularly from the Bakken basin in North Dakota will see the country ramp up current output of 7.8 million barrels to 10.9 million barrels over the next few years.

Image from an extended interview with Dan Kammen.