The US Senate narrowly rejected a bill to authorize TransCanada to build its proposed 830,000 b/d Keystone XL pipeline today.
The Senate voted 59-41 in favor of a measure to enable TransCanada to construct the $5.4bn pipeline to carry heavy Canadian crude to the US midcontinent, where it would link up with an existing network feeding US Gulf coast refineries.
That was short of the 60 votes Democrats and Republicans had agreed would be necessary to pass the bill. Fourteen Democrats and all 45 Republicans voted for the bill.
The Republican-controlled US House of Representatives voted 252-161 in favor of an identical measure on 14 November.
The Senate vote throws the long-debate debate over the project into next year, when Republicans will control both houses of Congress.
Republican leader Mitch McConnell (R-Kentucky) said the Senate under his leadership will take up Keystone XL legislation "early up" next year. After the Republican victories in the 4 November midterm elections, McConnell said Democratic opposition represented what he called a "remarkable stance."
By defeating the bill, the Senate avoided a confrontation with President Barack Obama over the pipeline project. For days, Obama and his White House staff have been voicing opposition to the legislative effort to force approval of the line, while studiously avoiding issuing a formal veto threat.
Since the Keystone XL pipeline crosses the US-Canada border, the State Department must determine whether its construction would be in the US' national interest. But pipeline proponents have grown frustrated with a review process that has dragged on for more than six years.
The American Petroleum Institute (API), which has lobbied hard for passage of the bill, called the vote "politics as usual."
API president Jack Gerard said that the Keystone XL pipeline will have 63 votes to win passage once Republicans take control of the Senate in January. "It is clear now the votes are there, and the president will have to deal with this," he said.
Obama, speaking at the G20 meeting in Brisbane, Australia, on 16 November, said he wanted that process to play out without Congress intervening.
But Obama made clear he does not take seriously the argument the pipeline would supply crude to US refineries along the Gulf coast. "One major determinant of whether we should approve a pipeline shipping Canadian oil to world markets – not to the US – is does it contribute to the greenhouse gases that are causing climate change," he said.
TransCanada chief executive Russ Girling said the regulatory process "has been hijacked by those who believe if they can delay or prevent the Keystone XL pipeline, oil production and refining will be controlled and global GHG emissions will be reduced." He called that belief "naïve, inaccurate and unrealistic."
US independent refiner PBF Energy chief executive Tom O'Malley questioned the project's significance in today's price environment. "Frankly, I do not think it matters anymore," O'Malley said at a conference in Houston today. "At $60/bl Canadian crude, you don't need the XL pipeline." PBF processes Canadian heavy crude, but the oil is delivered to its east coast refinery by rail.
The legislation would have deemed all environmental reviews completed. And it would have allowed TransCanada to proceed with the project, even if a challenge to the pipeline in Nebraska state court forces the company to reroute the line.
Pipeline opponents in Nebraska have challenged the constitutionality of a 2012 statute that bypassed the Nebraska Public Service Commission and enabled governor Dave Heineman (R) to approve TransCanada's proposed pipeline route. Nebraska's state supreme court is expected to rule on that case early next year.
The Senate vote was a blow to Senate Energy and Natural Resources Committee chair Mary Landrieu (D-Louisiana), who is in a fight for her political life.
Landrieu, who pushed successfully for the lame-duck Senate to hold a vote on the Keystone XL bill, will face representative Bill Cassidy (R-Louisiana) in a runoff election for her seat on 6 December. And she has been touting her clout as chair of Senate Energy to try to persuade voters to return her to office.
Environmental groups hailed the vote. Environment America said "we know this is not the last time the Senate will attempt do the bidding of Big Oil" and called on Obama to veto any bill that might come to his desk next year.
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