Inside Energy: Keystone XL

Jan 8, 2015

One of the first things Republicans say they’ll do when the new Congress starts is approve Keystone XL. That’s the controversial pipeline owned by TransCanada that would transport Canadian tar sands crude to refineries on the Gulf Coast, picking up oil from North Dakota along the way. But in the six years the pipeline has been delayed, some oil companies have moved on. So why is it still so popular with Republicans?  Inside Energy’s Emily Guerin continues our series on energy policy in the new GOP Congress.

GUERIN: The pipes that will eventually become the northern leg of Keystone XL have sat in a field in western North Dakota for almost 3 years. In the winter, they’re covered with snow. In the summer, they’re overgrown with yellow sweet clover. It’s a pretty quiet scene -- one that belies how important this pipeline has become in American politics.

JOHN HOEVEN: It is about energy. It is about jobs. It is about economic growth and it is about national security by building a secure energy future for this country and not depending on the Middle East for our energy.

GUERIN: That’s North Dakota’s Republican senator, John Hoeven, speaking at the Capitol in November after the Senate failed to pass his bill to approve the pipeline. Keystone has become THE battle Republicans want to win in the new Congress. Bill Galston is a Senior Fellow at the Brookings Institution.

BILL GALSTON: As sometimes happens in politics, a small thing comes to stand in for a much larger set of issues.

GUERIN: For Republicans, Keystone stands in for an all of the above energy strategy...

BILL GALSTON: ...that does not, as they would put it, discriminate against fossil fuels.

GUERIN: There’s another reason why Republicans latched onto Keystone.

BARRY RABE: You had one very prominent environmentalist saying if Keystone is put into place it’s quote “game over for the climate.”

GUERIN: That’s Barry Rabe, a University of Michigan political science professor.

RABE: That’s a pretty extreme statement. But that triggered a lot of protests. And a lot of groups put a lot of energy into trying to at least delay Keystone and potentially block it.

GUERIN: As Keystone became central to each side’s political agenda, one group became increasingly disinterested in the pipeline: oil companies in North Dakota ... Harold Hamm is the CEO of Continental Resources, one of the largest oil producers here. He recently told reporters the pipeline was quote “irrelevant.” Roger Kelley is the director of regulatory affairs for Continental. At a recent meeting in Bismarck, he confirmed that.

ROGER KELLEY: We’re successfully transporting crude by rail right now. There are other issues that are much more important.

GUERIN: In the absence of a pipeline, oil companies are moving by train some 800 thousand barrels of oil a day out of North Dakota -- even though that is more expensive and puts trackside communities at risk.

LYNN HELMS: I think when you measure Keystone XL on its specific impact on crude oil volumes leaving North Dakota, it’s a pretty small impact.

GUERIN: Lynn Helms is the director of the North Dakota Department of Mineral Resources. He says building Keystone is still important to oil companies here because it’s, you guessed, it a symbol.

HELMS: When you look at it in the broader scope, though, the ability to get a large interstate pipeline for crude oil permitted and constructed is critical.

GUERIN: Let’s go back to the Senate battle over Keystone for a minute. Beyond the pipeline’s symbolic importance to the GOP, there’s a personal story that helps explain support for Keystone. And it has to do with the man we heard from at the top of this story.

JOHN HOEVEN: Approve this project…

GUERIN: Senator John Hoeven was Governor of North Dakota when the oil boom here first took off in the mid-2000s. It became immediately clear the state did not have a good way to move all that oil. Lynn Helms again.

HELMS: At that time the only two possibilities were crude by rail or Keystone XL. And Governor Hoeven invested a lot of time and effort really pressuring TransCanada and Keystone XL to create an opening and an on-ramp for North Dakota crude oil.

GUERIN: For Hoeven, building Keystone was a way of making sure North Dakota didn’t get left out of the fracking boom. And for Republicans, that’s what it still represents: keeping government out of the way, so energy development in America doesn’t fall behind.

For Inside Energy, I'm Emily Guerin in North Dakota.