Oil sands pipeline approved – energy is the ticket to structural growth

Amazingly, the State Department appears to have actually approved the Keystone XL oil sands pipeline that is supposed to transport crude heavy oil from Canada to the US Gulf Coast. If all goes smoothly, it could be operational by 2013. I can’t imagine that’ll happen, but it would be great if it did.

Here’s a story about it from the New York Times: U.S. Offers Key Support to Canadian Pipeline.

Lots of good sources on this project: State Dept reportTransCanada. Chart below is from the TransCanada website. If you click thru, they have some good info on the phases of the project, etc.

Source: TransCanada

I had not read too much about the details of the permitting process, but had the sense it would get dinged due to environmental concerns and opposition to development. Maybe this gives the necessary juice to get it thru.

Sounds like the State Dept will not make a final, final decision until later this year and the Obama has to formally approve it and who knows what other gov’t agencies also get to weigh in. You’d assume, for instance, that EPA would have a voice.

Then there is the potential for endless lawsuits by environmentalists and nimby groups a la Cape Wind project in Nantucket Sound. That could jam the project up for years and years. But let’s hope not.

The project has many advantages, imo. The two biggest are:

First, it creates jobs to build and operate the thing. Apparently 10,000 direct construction jobs plus 100,000 indirect jobs created. This is good at any time, but it is especially good right now in these dire times.

Second, it engages the private sector in an economically attractive venture to help dig us out of the recession. All the President and the Democrats can envision is spending gov’t money, but the real leverage is in spending private capital on big ass projects like this – and energy projects, in particular, are tailor made for mobilizing big slugs of money.

Third, it furthers the cause of energy independence. I simply do not understand why we do not develop our own energy sources. Well, I do understand why – we treat the entirety of the outdoors as if it were a national wildlife preserve. I’m exaggerating, of course, but not by too much. I’m a big, big fan of the environment, but gosh, we’ve gone way, way too far.

In my opinion, we should back this project and dozens more related to energy independence. A massive national initiative to build our internal energy production is the single most obvious and productive mechanism for earning our way out of the recession. It creates jobs, unleashes commercial creativity, deploys capital, reduces outflow of capital to hostile nations, etc. I don’t quite know why we’ve never done this, but it is a no-brainer. It’s the only thing of sufficient scale I can think of that’s just sitting there ready to be tapped.

Update 8/27/11: Today’s Wall Street Journal has an informative Editorial about the pipeline. It provides more information about the process that’s occurred so far – and what is likely in store going forward. The original application was made in Sep 2008, so it’s been a 3 year process already. There has already also been substantial time spent coordinating with other agencies, including the EPA which blocked the original report which was presented in April 2010. Now there will be a 90-day review process and input / concurrence will need to be obtained from at least 8 gov’t agencies during that time. Then there remains the possibility of suits by environmental groups, etc. So it’s a long, long way from a done deal, but at least it wasn’t rejected.

This has led me to a thought: Every time the Dems call the Reps the ‘party of no’, someone should mention the endless series of energy and other industrial projects blocked or slowed by the greens, regulation, etc.

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