Pipeline looms large as Canada's British Columbia votes

By Jennifer Kwan

VICTORIA, British Columbia (Reuters) - The left-leaning New Democratic Party is leading the election race in Canada's Pacific province of British Columbia, raising new doubts about a pipeline that would take Canadian crude oil from neighboring Alberta to the coast for export to Asia.

The NDP, about 17 percent ahead of the ruling Liberals in recent opinion polls, promises a new review of the $6 billion Northern Gateway pipeline if it wins the May 14 election, a process that would likely bring new legal challenges and delays.

"Northern Gateway is not in our economic or environmental interest," NDP leader Adrian Dix told Reuters in an interview. "We obviously think this decision should be made in British Columbia."

The pipeline, proposed by Calgary-based Enbridge Inc, is a key plank of efforts by the federal and Alberta governments to promote oil exports to Asia as a way to boost economic activity and create jobs. It would bring Canadian crude to the deepwater Pacific port of Kitimat for export to Asia.

Northern Gateway could also serve as a key link for export markets if the U.S. government denies TransCanada Corp's proposed Keystone XL pipeline, designed to take Alberta oil sands crude to U.S. markets. President Barack Obama is under heavy pressure from environmentalists to block the project.

Environmental and aboriginal groups also oppose Northern Gateway, and a poll released in February by Insights West showed 61 percent of adults in the province oppose the project.

The Liberals, led by Christy Clark, are also unenthusiastic and say they would only let the pipeline be built if Alberta and Enbridge meet a series of fiscal and environmental conditions.

But the Liberals have already signed a so-called "equivalency agreement" with Ottawa, agreeing that any decision by the federal government following the existing review of the pipeline constitutes B.C.'s stance as well.

Dix said he planned to revoke that agreement and proceed with his own review.

Chris Tollefson, executive director of the Environmental Law Centre at the University of Victoria, said it was anyone's guess long that process might take.

Even with federal approval, the pipeline would likely require hundreds of provincial approvals, licenses and permits to proceed, he said.

REVIEWS UPON REVIEWS

A federally appointed review panel is already holding public hearings into Northern Gateway, seen as key to lifting returns for oil producers by allowing their supply to be sold in more lucrative international markets.

The panel is due to rule by the end of this year, although recent changes to environmental legislation make it easier for the Conservative government of Prime Minister Stephen Harper to overrule the panel's findings if it wants to do so.

Environmentalist groups and aboriginals are worried about the risk of spills, recently embodied in a television commercial that features footage of the Exxon Valdez oil spill in the late 1980s, played to Simon & Garfunkel's "The Sound of Silence."

"Don't be silent. Vote for an oil-free coast," it says.

The Liberals, in power since 2001, are promising a tough campaign, regardless of their position in the polls, with a focus on balanced budgets and debt-reduction.

"British Columbia is at a crossroads, with two very different choices," Clark said in a statement that highlighted her party's efforts to control spending.

Both parties have proposed increases in corporate and personal income taxes, while the NDP says it will fund its spending promises by reintroducing a tax on banks and credit unions, as well as expanding the province's carbon tax base.

That's a red flag to the Vancouver Board of Trade.

"What I'd like is some inclusion in an NDP platform, if indeed they form government, some indication or some gesture that gives the green light for investment; a welcome mat for growing business and starting businesses and capital investment into the province of B.C.," said Iain Black, chief executive of the Vancouver Board of Trade and a former Liberal minister.

(Editing by Janet Guttsman and Bob Burgdorfer)

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Canada finance minister to raise Keystone pipeline with Lew

OTTAWA (Reuters) - Canadian Finance Minister Jim Flaherty will raise TransCanada Corp's proposed Keystone XL pipeline when he meets new Treasury Secretary Jack Lew this week, a senior Canadian finance ministry official said on Tuesday.

Canada's Conservative government strongly backs the project, which would take crude from Alberta's oil sands to refineries in Texas. President Barack Obama, who will ultimately decide the pipeline's fate, is under pressure from environmentalists to block the project.

Flaherty and Lew will be in Washington later this week for a meeting of the Group of 20 leading and emerging nations. Their face-to-face talk will be the first since Lew was sworn in on February 28.

(Reporting by David Ljunggren; Editing by Jeffrey Hodgson)

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Keystone XL critics now hang hopes on delaying the pipeline

WASHINGTON (Reuters) - After the Keystone XL oil pipeline cleared an important hurdle last week, critics of the project are searching for ways to force more of the delays that have dogged it for more than four years already.

The State Department said Friday that TransCanada Corp's pipeline from the Alberta oil sands to Texas would not add to global greenhouse gas emissions because oil sands crude will make it to market whether or not the project is built.

That interpretation neutralized a major argument that many environmentalists have put forward against the 800,000 barrel per day pipeline: that once built it would usher in greater development of the oil sands, where production is carbon-intensive.

The public has 45 days to comment on the State Department's review. Once that step is taken the department has 90 days to determine whether the project is in the national interest, with a decision expected in August or later.

"We think 45 days is very insufficient given the 2,000-plus pages of analysis," said Danielle Droitsch, head of the Canada Project at the Natural Resources Defense Council, one of the groups fighting Keystone. Greens will write letters to officials seeking to extend the comment period to 120 days, she said.

Environmentalists have reason to hope. In the years a decision has been pending on Keystone, the State Department has repeatedly delayed the process because of environmental concerns.

In mid-2010 State twice extended the comment period on an earlier environmental review after groups complained they did not have enough time to analyze it. Then it delayed the project for 90 days after the Environmental Protection Agency urged consideration of emissions from refineries in Texas and damage from potential oil spills.

Greens hope the State Department will embrace fresh delays because John Kerry, who took over from Hillary Clinton as Secretary of State in February, has long supported tackling global warming. "One would hope that Kerry ... would be more than happy to spend more time talking about this," said Damon Moglen, the climate director at Friends of the Earth.

RISK THEIR BODIES

An oil analyst said he expected the Obama administration to move toward a national interest decision this summer, but that some backers of the project fear more delays.

"What Keystone proponents fear is slow-walking the decision to death," said Robert McNally, the head of the Rapidan Group, who worked in the White House as an adviser to former President George W. Bush. "Some fear the administration could decide to prolong the permit review process indefinitely, until TransCanada gave up."

TransCanada, though, seems unfazed. Chief Executive Russ Girling said last week that the line could be built by late 2014 or early 2015 if a final decision comes by midsummer.

On Capitol Hill, Senator John Hoeven, Republican of North Dakota, is working with a majority in the 100-seat chamber to find a way to move legislation that would give Congress the power to decide the fate of Keystone. It is unclear whether they have the votes to do so, and President Barack Obama would likely veto the bill.

Still, environmentalists say the State Department review has served as a rallying cry. Daniel Kessler, a spokesman for 350.org, a group that has led demonstrations against the pipeline at the White House, said members will picket Obama and Kerry at home and abroad during the public comment period.

He said 350.org has been contacted by thousands of people willing to risk their bodies to stop the pipeline, and the group will train them in civil disobedience. Protests could take place in Washington, along the route of the proposed pipeline, and at TransCanada offices in Houston and near Boston, he said.

Once the State Department completes its review, greens could also file lawsuits to delay the national interest decision. Legal action could target the National Environmental Policy Act and clean water and endangered species laws.

Still, legal actions have not stopped construction of the southern leg of the Keystone pipeline. Building of that portion, which does not need a State Department permit because it does not cross the national border, has crossed the half-way point.

Adele Morris, an energy expert at the Brookings Institution, said Keystone opponents could hit the jackpot if they force long enough delays and U.S. oil prices, always unpredictable, fall far enough.

The current price of U.S. oil, at around $90 a barrel, is high enough to support oil sands development, which is more expensive than many other petroleum sources.

Investment activity could falter if prices fell sharply, but would pick up again when oil prices rose. "Keystone's opponents are welcome to protest, but ultimately the price and demand for oil are more likely to impact the pace of oil sands development," Morris said.

(Reporting by Timothy Gardner; editing by Ros Krasny; and Peter Galloway)

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Thousands at climate rally in Washington call on Obama to reject Keystone pipeline

WASHINGTON (Reuters) - Thousands of protesters gathered on the Washington's National Mall on Sunday calling on President Barack Obama to reject the controversial Keystone XL oil pipeline proposal and honor his inaugural pledge to act on climate change.

Organizers of the "Forward on Climate" event estimated that 35,000 people from 30 states turned out in cold, blustery conditions for what they said was the biggest climate rally in U.S. history. Police did not verify the crowd size.

Protesters also marched around the nearby White House, chanting "Keystone pipeline? Shut it down." Among the celebrities on hand were actresses Rosario Dawson and Evangeline Lilly, and hedge fund manager and environmentalist Tom Steyer.

The event came days after a bipartisan group of U.S. senators made the latest call for Obama to approve the $5.3 billion pipeline, seen by many as an engine for job growth and another step toward energy independence.

A new poll by Harris Interactive showed 69 percent of respondents said they support construction of the pipeline, with only 17 percent saying they oppose it.

One of Sunday's main organizers, climate activist Bill McKibben, said that approving the pipeline, which would transport crude oil from the oil sands of northern Alberta to refineries and ports in Texas, would be akin to lighting a "carbon bomb" that could cause irreparable harm to the climate.

"For 25 years our government has basically ignored the climate crisis: now people in large numbers are finally demanding they get to work," said McKibben, founder of the environmental group 350.org.

Other major organizing groups on Sunday included the Sierra Club and the Hip-Hop Caucus.

The proposed TransCanada Corp project has been pending for 4-1/2 years. A revised route through Nebraska, which would avoid crossing sensitive ecological zones and aquifers, was approved by that state's governor last month.

Backers of Keystone, which would transport 830,000 barrels of oil per day, say it would provide thousands of jobs in the United States and increase North American energy security.

Environmentalists oppose the pipeline because the oil sands extraction process is carbon intensive, and say the oil extracted is dirtier than traditional crude oil.

Van Jones, Obama's former green jobs adviser, said if the president approved the pipeline just weeks after pledging to act on climate change, it would overshadow other actions Obama takes to reduce pollution.

"There is nothing else you can do if you let that pipeline go through. It doesn't matter what you do on smog rules and automobile rules - you've already given the whole game way," said Jones, who is president of Rebuild the Dream, a non-government organization.

Democratic Senator Sheldon Whitehouse of Rhode Island, the lone member of Congress to speak at the rally, told Reuters Obama risked creating a "credibility gap" if he approved the pipeline.

"He would have to roll out a very complete and very strong package to offset something that on its own is described by government scientist as ‘game-over' on climate," he said.

Still, some of Obama's core constituents favor the pipeline, including the labor union AFL-CIO's building and construction unit, which sees the potential for job creation for its members, and certain Democratic lawmakers.

In January, nine Democratic senators joined 44 Republicans in urging the president to approve Keystone XL.

(Reporting By Valerie Volcovici; editing by Ros Krasny and Mohammad Zargham)

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