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U.S. Says Keystone Rejection Disappoints But Won’t Adversely Affect Canada

Obama admin says pipeline decision won’t hurt ally or U.S. economy

A depot used to store pipes for Transcanada Corp's planned Keystone XL oil pipeline is seen in Gascoyne, North Dakota, in this file photo taken November 14, 2014
A depot used to store pipes for Transcanada Corp's planned Keystone XL oil pipeline is seen in Gascoyne, North Dakota, in this file photo taken November 14, 2014 / Reuters
• November 6, 2015 4:20 pm

President Obama said Friday that the White House’s decision to reject TransCanada’s Keystone XL pipeline proposal disappointed Canadian Prime Minister Justin Trudeau.

"I had the opportunity to speak with Prime Minister Trudeau of Canada, and while he 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 remarks at the White House announcing the decision.

The project would have transported as much as 830,000 barrels of oil per day, most of it from Canada, across six U.S. states to Nebraska. However, a senior State Department official said Friday following the president’s remarks that the rejection of the proposal will not adversely impact oil production in Canada.

"We do not conclude that this project denial will impact, on its own, production in Alberta and Canada," the official told reporters on a background call.

The official said that the parts of the project already underway in Canada will likely continue and that other methods of transportation will allow Canadian oil to make its way to the U.S. market.

"Because there are alternative methods of transportation and ability to get to the U.S. market … we don’t believe that this project denial will affect production," the official stated.

In the immediate wake of the White House announcement regarding the pipeline Friday, TransCanada shares dropped as much as 4.6 percent.

The Obama administration cited climate change as a primary reason for rejecting the project, insisting that the construction of the pipeline would have had a limited economic impact on the United States.

The president said that the pipeline would not have had a significant impact on the security of the U.S. energy supply, nor would it have made a substantial long-term contribution to domestic jobs.

A 2013 State Department report estimated that the Keystone project would have potentially supported 42,100 annual jobs across the country over the one-to-two year period of the pipeline’s construction. 

The State Department has been reviewing the Keystone proposal for seven years, during which time the senior official said the government agency received an "unprecedented" number of comments from the public.

"We take the comments by the American public very carefully," the official said, emphasizing that the agency took so long to review the project, in part, so officials could assess public opinion.

According to a Washington Post-ABC News poll released in March, 65 percent of the American public said the Obama administration should approve the Keystone XL pipeline, while only 22 percent thought the project should be rejected.

Another top official at the State Department said Friday that a decision by the Obama administration to approve the pipeline would have "undercut the credibility of the U.S." in its effort to compel other countries to enact policies to combat climate change, echoing the president’s statements earlier in the day.

"The perception of U.S. leadership on climate change … has been enormously important to the U.S. posture internationally," the official said.

The official noted that the decision by Obama and Secretary of State John Kerry to reject the proposal demonstrated the country’s "resolve" in the fight against climate change.

"The science of climate change is clear and widely accepted," the senior official further stated.

A study released by NASA scientists late last week contradicted finds from the United Nation’s Intergovernmental Panel on Climate Change (IPCC), finding that Antarctica has been gaining more ice than it has been losing. IPCC has produced research concluding the opposite and has largely blamed melting ice in Antarctica and Greenland for the sea level rise.

Republicans slammed Obama and Democratic presidential candidate Hillary Clinton on Friday for refusing to support the Keystone pipeline.

"Barack Obama and Hillary Clinton caved to extreme special interest groups and rejected good American jobs," Republican National Committee chairman Reince Priebus said in a statement. "This move can only be described as a politically motivated embarrassment and the very reason why we have the largest percentage of Americans out of work since the Carter administration."