What Obama’s Cushing Visit Means for Oklahoma and the Keystone Pipline

Joe Wertz / StateImpact Oklahoma

President Barack Obama visited an Oklahoma pipe yard on Thursday and pledged his support for the southern portion of the Keystone pipeline project.

In a muddy Oklahoma storage yard with a backdrop of towering pipe sections, President Barack Obama on Thursday pledged to fast-track and prioritize the Keystone Gulf Pipeline, freeing up a bottleneck of oil to flow from storage in Cushing to refineries in south Texas.

Basically, Obama pledged to speed up what’s already started.

“I’m directing my administration to cut through the red tape, break through the bureaucratic hurdles, and make this project a priority,” Obama told the receptive crowd at the event, which was closed to the public and consisted mostly of supporters and news media.

Joe Wertz / StateImpact Oklahoma

Scores of pro-drilling signs were spotted in Cushing, Oklahoma, a small city and oil center located a few miles from the pipe yard where President Barack Obama spoke.

On Thursday, Obama issued an executive order that creates a steering committee to improve permitting processes in general, as well as a memo directing federal agencies to coordinate and expedite their reviews to speed up decisions on domestic pipeline projects like the Oklahoma-to-Texas portion of Keystone.

“We’re making this new pipeline from Cushing to the Gulf a priority,” Obama said. “The northern portion of it we’re going to have to review properly to make sure that the health and safety of the American people are protected.”

Drilling Down

In January, the Obama administration rejected TransCanada’s permit for the Keystone XL pipeline, which would have transported crude from oil sands in Canada to the Gulf Coast of Texas.

Keystone XL requires presidential approval because it crosses an international boundary. The pipeline project was plagued with major routing issues in Nebraska’s ecologically sensitive Sand Hills region, and environmentalists praised the permit rejection.

“The president urgently needs to reexamine his policies, not deliver more speeches taking credit for the accomplishments of others.”

-Gov. Mary Fallin

TransCanada later announced plans to start construction on the 485-mile Oklahoma-to-Texas portion, which doesn’t require presidential approval. Completion of the southern pipeline leg would help relieve a bottleneck in Cushing, one of the largest crude oil storage facilities in the world, and eventually be connected to the northern portion of the Keystone system.

TransCanada is rerouting the Nebraska portion of the northern pipeline. In a press conference after Obama’s remarks, Robert Jones, the company’s vice president for the Keystone project, and said TransCanada will reapply for a presidential permit “in the next few months,” and hope to begin construction next year.

Presidential approval of the full Keystone XL pipeline might come easier if construction starts after the November election. The pipeline and Obama’s permit denial have played a big part in primary politics, especially here in Oklahoma.

Click here to read President Obama's executive order to expedite application approvals.

Republican presidential candidates Newt Gingrich and Rick Santorum both made primary stops in big energy in Oklahoma. Both cheered oil and natural gas drilling and blasted federal regulation of the energy industry.

Faced with public unrest over high gas prices, Obama scheduled a four-state energy tour that includes Nevada, New Mexico and Ohio. Thursday’s stop in Oklahoma was a symbolic gesture by Obama to show that booming oil and natural gas companies are part of what he’s touted as an “all-of-the-above energy strategy.”

“My administration has approved dozens of new oil and gas pipelines over the last three years — including one from Canada,” Obama said. “And as long as I’m President, we’re going to keep on encouraging oil development and infrastructure, and we’re going to do it in a way that protects the health and safety of the American people. We don’t have to choose between one or the other, we can do both.”

If someone suggests that his administration is suppressing domestic oil production, they’re not paying attention, Obama said.

Of course if you ask Republicans, Oklahoma lawmakers and energy executives, that’s precisely what Obama has done.

Joe Wertz / StateImpact Oklahoma

President Barack Obama shook hands and met with supporters after his speech in Ripley, Oklahoma.

Jobs, But How Many?

Obama’s support of the Keystone Gulf Pipeline means he won’t actively try to sabotage it, Gov. Mary Fallin said.

“President Obama’s rhetoric is matched with a policy record that is aggressively anti-energy and continues to stifle economic growth in Oklahoma and throughout the nation,” Fallin said. “The president urgently needs to reexamine his policies, not deliver more speeches taking credit for the accomplishments of others.”

Fallin’s sentiment was echoed by U.S. Sen. Jim Inhofe, U.S. Rep. Frank Lucas and Attorney General Scott Pruitt.

Energy independence is a big part of the Keystone discussion, but the project’s potential for job-creation has also become a political talking point.

TransCanada and its supporters claim that the full Keystone XL project would create 20,000 construction and manufacturing jobs and more than 100,000 direct, indirect and induced jobs.

Some have questioned those figures.

A study from Cornell University found that Keystone XL would create only 20 full-time jobs, and that up to 90 percent of those hired for temporary work would be non-local and hired from out of state.

Obama didn’t mention any specific job-creation numbers at Thursday’s event in Oklahoma, but TransCanada officials did.

The Oklahoma-to-Texas portion would create about 4,000 jobs through construction at pump stations, terminals and pipeline sections, Jones said. About 9,000 construction jobs would be added if and when construction on the northern portion of the pipeline begins, he said.

Oklahoma would see between 600 and 800 construction jobs during the building phase of the pipeline, said Jones, who expects construction to begin sometime this summer.

Next Steps

While the southern leg doesn’t require a presidential permit, TransCanada’s pipeline project has to be approved by the U.S. Army Corps of Engineers and the U.S. Fish and Wildlife Service, which oversee land and lakes the pipeline would pass through.

Construction on the Oklahoma-to-Texas portion would take 9-12 months, Jones said.

TransCanada has secured almost all the land and easements needed in Oklahoma and Texas, he said. One holdout is Julia Trigg Crawford, who owns a farm northeast of Dallas in Lamar County, Texas.

Crawford has repeatedly refused to allow TransCanada onto her farm, and the company is trying to secure the land through eminent domain, our teammates at StateImpact Texas have reported.

“We’re hopeful that we’ll be able to resolve them all with voluntary negotiations,” Jones said. “If we can’t come to a voluntary agreement then, sure, we’ll have to use [eminent domain.]”


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