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TransCanada ramps up effort to sway U.S. on Keystone XL project

Pipes that carry steam to wellheads at Cenovus Energy’s oil sands operation in Christina Lake, Alta. TransCanada Corp. is seeking to bolster its case with U.S. President Barack Obama for the long-delayed Keystone XL oil pipeline from Alberta to Texas, firing off a laundry list of reasons why, the company says, the contentious project will have minimal influence on rising North American greenhouse gas emissions.


TransCanada Corp. is seeking to bolster its case with U.S. President Barack Obama for the long-delayed Keystone XL oil pipeline, firing off a laundry list of reasons the company says the contentious project will have minimal influence on rising North American greenhouse gas emissions.

TransCanada sent data from various studies on Canadian oil sands, carbon intensity and power used by pipelines to the U.S. State Department in response to Mr. Obama's recent remarks that elevated climate impact to the top of the list of criteria for approving or rejecting the project.

The Calgary-based company remains intent on winning approval for the $5.3-billion (U.S.) pipeline in the face of opposition from environmental groups, though chief executive officer Russ Girling warned on Thursday that the slow pace of the regulatory process would make it hard to achieve the current start-up target of late 2015.

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That would represent another in a string of delays since TransCanada first applied to build the export conduit to Texas refineries from Alberta nearly five years ago. In that time, the proposal, aimed at opening up a major market for Alberta heavy crude, has become politically troublesome for Mr. Obama, splitting his Democratic Party along economic and environmental lines.

In a June speech outlining plans to fight climate change, the President said Keystone XL would be approved "only if this project does not significantly exacerbate" greenhouse-gas emissions.

TransCanada wrote to the State Department's environmental policy division on Wednesday to try to reinforce some familiar themes in its argument. Rejecting the project would have no impact on how much heavy crude gets used by U.S. refineries, the company said, stressing that the absence of Canadian supply in the Gulf Coast market would be made up by oil from Venezuela, which has similar carbon intensity.

The position echoes conclusions in the draft environmental impact assessment for Keystone XL, released in March. That report said it was unlikely that approving the 830,000-barrel-a-day project would have a large impact on the rate of oil sands development. TransCanada said the resource is a "critical resource to Canada, the United States and to the world" and will be developed, regardless of Keystone's approval.

"As the decision will have little impact on [greenhouse gas] emissions, the only relevant question is whether the U.S. wants to source its heavy oil from Canada, a friendly and stable ally with strict environmental standards, or from other suppliers whose interests are not aligned with those of the United States and have limited or no environmental standards," TransCanada wrote.

It said Keystone XL is far from the only option for moving oil out of Alberta; there are numerous other pipelines in development to expand transport capacity for Canadian oil, and that the industry is increasingly turning to railways to move oil as well.

The case that all forecast oil output will flow with or without Keystone XL is far from closed, said Keith Stewart, climate and energy campaign co-ordinator for Greenpeace. "There is a circular argument here, where oil industry executives say that since expansion is inevitable you must approve my expansion project," Mr. Stewart said. "The International Energy Agency says we have to leave two-thirds of the proven reserves of fossil fuels in the ground if we want to have a hope of preventing catastrophic levels of global warming, and turning down this project is a good place to start."

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On Thursday, Mr. Girling said he expects the State Department will issue its final environmental impact assessment for Keystone XL in the coming weeks, after which there will be 90-day review period to determine whether it is in the national interest. He told Bloomberg News that the start-up target of late 2015 now looks "difficult".

In Washington, a pair of prominent Democrats launched a new round of attacks on Keystone XL. Henry Waxman of California and Senator Sheldon Whitehouse of Rhode Island, were among signatories to a letter urging Mr. Obama to make good on his pledge to fight global warming by rejecting it.

With files from Paul Koring in Washington

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About the Author
Mergers and Acquisitions Reporter

Jeffrey Jones is a veteran journalist specializing in energy, finance and environment for The Globe and Mail’s Report on Business, based in Calgary. Before joining The Globe and Mail in 2013, he was a senior reporter for Reuters, writing news, features and analysis on energy deals, pipelines, politics and general  topics. More


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