TransCanada Corp.’s (NYSE: TRP) nearly seven-year battle for the Keystone XL pipeline might’ve hit its final snag under this administration.

President Barack Obama on Nov. 6 rejected a permit application to build a pipeline from Canada to Nebraska.

“After extensive public outreach and consultation with other cabinet agencies, the State Department has decided the Keystone XL pipeline would not serve the national interests of the United States. I agree with that decision,” Obama said in a press conference.

Since its initial application, the Keystone pipeline has become a symbol for politicians and environmental groups—both for different reasons. Obama’s decision infuriated industry groups and conservative politicians but was seen as a victory against big oil by environmentalists.

“All of this obscured the fact that this pipeline would neither be a silver bullet for the economy, as was promised by some, or the expressway to climate disaster proclaimed by others,” Obama said.

The American Petroleum Institute (API), a trade association for the oil and gas industry, railed against Obama’s decision, saying the rejection was “an assault against American workers” who would have stood to benefit from related jobs.

API President Jack Gerard said the administration has turned its back on Canada, despite seven years of review that showed the project is environmentally sound and safe.

“It’s ironic that the administration would strike a deal to allow Iranian crude onto the global market while refusing to give our closest ally, Canada, access to U.S. refineries,” Gerard said in a statement. “This decision will cost thousands of jobs and is an assault to American workers. It’s politics at its worst.”

In 2014, Canada was the single largest importer of crude to the U.S. at 2.9 million barrels per day (MMbbl/d).

OPEC, non OPEC, imports, EIA

OPEC countries imported about 4.3 MMbbl/d. Since 2008, overall U.S. imports have fallen about 24%, according to U.S. Energy Information Administration (EIA) data.

The president said that the Keystone project wouldn’t make a meaningful, long-term contribution to the U.S. economy or lower gas prices for consumers.

“If Congress is serious about wanting to create jobs, this was not the way to do it,” he said.

Obama also added that shipping “dirtier crude” into our country wouldn’t increase the country’s energy security.

“The truth is the United States will continue to rely on oil and gas as we transition—as we must transition—to a clean energy economy,” he said. “That transition will take some time, but it’s also going more quickly than many anticipated.”

Wood Mackenzie noted that the decision may lead to increased greenhouse gas emissions, one of the State Department’s reasons for denying the permit.

Inadequate pipeline takeaway capacity suggests Canada will rely more heavily on crude-by-rail—a transportation method that may yield more greenhouse gas emissions than by pipe, WoodMac said.

“This goes against one of the State Department’s reasons for rejecting the pipeline,” the firm said. “Alberta has over 700 Mbbl/d crude-by-rail loading capacity. We expect Canada to increase heavy oil exports to the U.S. Gulf Coast by rail and pipe.”

The proposed pipeline would have carried U.S. Bakken and Canadian crude to U.S. refineries, turning back millions of barrels of foreign oil imported daily. The $8 billion project was set to create more than 40,000 direct and indirect jobs during construction and inject millions of dollars of tax revenue into communities along the pipeline’s route, according to the State Department’s review.

WoodMac said it expects Canada’s oil sands production “to have market access between now and 2020 regardless of this decision.”

The Delay

U.S. House Energy and Commerce Committee Chairman Fred Upton (R-MI) said “the charade is finally over.”

The Keystone decision has taken so long it has become a matter of mockery by the GOP and the oil industry.

Kim Kardashian, Kanye West, faster, Keystone, pipeline, rejection, Heidi Heitkamp

U.S. Sen. Heidi Heitkamp (D-N.D.) had already created a list of projects that were done in a shorter amount of time. She noted, for instance, that since 2000 Kim Kardashian has been married three times, most recently to Kanye West.

“Kim Kardashian has been able to render multiple life-changing decisions in less time then it’s taken the Administration to make one decision about the national interest,” Heitkamp said.

Sen. John Hoeven, (R-N.D.) couldn’t help but note a certain irony in Obama’s decision after seven years of review.

“The president now finds it pressing to make a decision just as the company [TransCanada] is asking for a pause to resolve any concerns,” Hoeven said. “Clearly, the administration is making a political decision when it comes to Keystone, rather than following the legal and regulatory process.”

In September, a Harris Poll conducted for the API found a majority of U.S. voters across the political spectrum “agreed that the years of Keystone XL delay have hurt our energy security and economy.”

Cindy Schild, API’s downstream operations senior manager, said 67% American voters agreed that failure to act on the Keystone permit has “hurt our economy and energy security.”


  • 68% support building the project;
  • 66% are more likely to support a candidate who supports approving Keystone; and
  • Delays have put 42,000 jobs and $2 billion in wages out of reach.

TransCanada’s Keystone project has been under review for about seven years. The Canadian company has already completed the construction of a 298-mile stretch from Steele City, Neb., to Cushing, Okla., and a 485-mile segment between Cushing and Nederland, Texas.

On Nov. 2, the Canadian company had sent a letter to the U.S. State Department to suspend its application while the company goes through a state review process in Nebraska.

U.S. Secretary of State John Kerry denied that request on Nov. 5.

projects, finished, faster, than, keystone, pipeline, rejection

During the press conference, Obama said he had spoken with Canada Prime Minister Justin Trudeau, who was just sworn in Nov. 4.

“While [Trudeau] expressed his disappointment given Canada’s position on this issue, we both agreed that our close friendship on a whole range of issues, including energy and climate change, should provide the basis for even closer coordination between our countries going forward,” Obama said.

In the coming weeks senior members of the Obama administration will meet with Trudeau’s cabinet to deepen the cooperation between the two countries, he added.


Oil and gas industry responses ranged from dismay to contempt.

Michael Whatley, executive vice president of the Consumer Energy Alliance, said the decision disregards work done by federal agencies that show the pipeline would be safe, lower gasoline and diesel prices and reduce carbon emissions.

“He has thumbed his nose at more than two-thirds of Americans who support reducing energy imports from unfriendly nations; who support job creation; who support friendly relations with our Canadian neighbors; who support regulatory decisions based on science, not politics; and who support big ideas and big achievements,” Whatley said.

Others saw the decision as a hard-fought victory.

“In my judgment, a pipeline that would produce big profits for a Canadian company seeking to export some of the dirtiest oil through our heartland was wrong and should have never been approved,” U.S. Sen. Ben Cardin (D-Md.) said in a statement.

Cardin, a member of both the Senate Foreign Relations Committee and the Senate Environment and Public Works Committee, called out Republicans for trying to “undermine the regulatory process by passing ill-conceived of legislation in a misguided attempt to force the president’s hand on this issue.”

Republicans called the president’s decision disappointing but not surprising.

Hoeven told Hart Energy the reality is that the pipeline will ultimately be approved on its merits. “That will probably take a year, until we get a new administration,” he said.

The Keystone is needed because of the need for more infrastructure such as transmission lines, roads and rail in order to safely move energy. It also shows Obama’s embrace of fossil fuels has been largely window dressing.

“I think in general, though he espouses an all of the above energy plan, he really does not favor fossil fuels because of his environmental agenda,” Hoeven said.

Hoeven said a bill he helped write to approve the Keystone, and supported by some democrats, was blocked by Obama in February. He said the legislation still lacks the votes needed to overcome the veto.

“We’re stuck at about 63 votes and we need 67 to override the veto,” he said.

Velda Addison can be reached at, Darren Barbee can be reached at and Emily Moser can be reached at