Thursday, January 19, 2012

No Keystone Pipeline. For Now

Despite the U.S. State Department’s rejection of the heavily contentious Keystone XL pipeline on January 18, 2012, industry observers believe that it may not be an end of it.   Demand for oil and jobs in the U.S. are likely to prompt TransCanada Corporation, Keystone XL’s sponsor, to look for other ways to bring Canadian crude oil to the U.S.  The fact of the matter is Canadian oil will be increasingly important to the U.S. with time, as refineries of the latter have been feeling the crunch from dropping production levels in Venezuela and Mexico.  American demand for Canadian oil is estimated to be at 2.7 million barrels a day by 2015.  As the U.S. economy is picking up pace, oil demand is expected to rise. 
TransCanada seems to be determined not to give up on the project.  It may re-apply for permit later or build the pipeline in pieces.  Even some Democratic Senators favor the project and hold the belief the pipeline is not shelved for good.  According to Senator Kent Conrad, D – N.D., “it is clear that Canada is going to develop this resource, and I believe it is better for our country to have it go here rather than Asian markets.”  If the Republican-imposed timeframe to review the pipeline's safety was the major reason for the Obama administration to turn down the pipeline, it is likely that Keystone will reemerge through alternative routes, perhaps after the 2012 elections.

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