Keystone Fails in Senate (for Now)

More than six years after TransCanada first presented its plan for a pipeline to carry oil from Canada’s tar-sands fields to Texas’s Gulf Coast, an end may finally be in sight for the controversial, oft delayed, increasingly expensive, and perhaps increasingly irrelevant Keystone XL pipeline.

But that end didn’t come Tuesday, Nov. 18, when the Senate, in a nail-biting, made-for-C-SPAN moment late in the afternoon, killed Keystone’s chances of passing — for at least two months. Congress will get another chance in January, when Republicans will have control of the Senate. Incoming Senate Majority Leader Mitch McConnell (R.-Ky.) has signaled that he will press for a Keystone vote early in the next Congress.

Suspense over the (temporary) fate of the pipeline went down to the wire, with the last potential wild-card vote that could have given supporters the 60 votes needed for passage — that of Sen. Dick Durbin (D.-Ill.) — flipping to a no at the very last moment.

Of course, even congressional passage — now or next year — wouldn’t mean that Keystone is a done deal. President Barack Obama can still veto the project. White House spokesman Josh Earnest made the clearest, if still veiled, veto threat yet when he said Tuesday that the president "doesn’t support" the legislation, which short-circuits the current, executive-branch-led process to decide the pipeline’s fate.

A veto of successful legislation next year may in fact be even more likely now. One hope that supporters held out was that Obama might hold his nose and allow the pipeline to proceed in the hopes of bolstering the chances of Sen. Mary Landrieu (D-La.), one of the co-sponsors of the Senate legislation, who still faces an uphill runoff battle on Dec. 6 to keep her Senate seat.

Plenty of other questions are swirling around Tuesday’s vote, and those that surely await: Can Congress even force approval of a cross-border project that has traditionally been in the State Department’s hands? Can it approve a pipeline even as part of the project’s route through Nebraska still faces legal challenges in that state’s Supreme Court? Why is the latest legislation sponsored by lawmakers in both chambers from Louisiana, a state that is not on Keystone’s route? How much would Americans be willing to pay to never hear the words "Keystone" uttered again outside Pennsylvania license plates and low-budget college drinking tales?

But the biggest question may simply be: Does Keystone even matter anymore? When TransCanada first broached it in the fall of 2008, it was seen by both the Canadian oil industry and environmentalists as a make-or-break issue for the development of the landlocked Canadian tar sands since it would provide a straightforward and affordable way to get the crude to market. Without ready market access, Canadian crude traded — and still trades — at a discount to U.S. oil benchmarks.

Environmentalists, for their part, made opposition to Keystone one of their top priorities, arguing that the pipeline would open the doors to tar-sands development that otherwise wouldn’t happen. Because tar-sands production emits more greenhouse gases than regular crude production, greenlighting Keystone would be tantamount to signing off on more greenhouse gas emissions for decades to come, they argue. James Hansen, a former NASA official and leading voice on climate change, famously called Keystone "game over" for the global climate.

But here’s the thing: The energy world has changed a lot since 2008. Keystone has proved crucial neither to the development of Canada’s tar sands nor to getting it to market. And this means that Keystone, though not environmentally friendly by definition, has also proved to be less of a concern in terms of future greenhouse gas emissions. In its last assessment of Keystone’s impact on greenhouse gas emissions, the State Department determined that the pipeline by itself would not lead to increased emissions.

And TransCanada itself already has another pipeline in the works to carry oil from Alberta and Saskatchewan to refineries and ships on the coast, making Keystone less crucial than it was just a few years ago.

Despite the years of delays on Keystone, Canadian oil sands production has continued steadily upward. In 2008, Canada produced about 1.2 million barrels a day from its tar sands. Last year, even without Keystone, production had jumped to 2 million barrels a day. Most forecasters expect Canadian tar sands to top 3 million barrels a day by 2020.

And though pipelines are the straightest and usually cheapest route to get oil to refineries and shipping terminals, one of the big recent revolutions has been the explosion, so to speak, in crude volumes carried by rail. In just the last two years, Canadian oil exports by rail have grown tenfold from about 16,000 barrels a day in early 2012 to more than 160,000 barrels a day in the second quarter of 2014.

Granted, shipping by rail costs a few dollars more per barrel than shipping by pipeline. But in many cases, the economics are cushioned because tar sands sludge can be shipped as it is, rather than having to be blended with pricey oil condensates to get it to flow down a pipe. The bigger point is that Canada’s crude exports have continued to rise despite the six-year hiatus over Keystone.

And at any rate, there are more pipelines on heaven and earth, Horatio: TransCanada itself just unveiled plans for a new export route to eastern Canada that would give it access to refineries, shipping terminals, and even the U.S. Gulf Coast. Other pipeline projects in the works could connect the tar sands region with the Pacific Coast and the still-thirsty Asian markets, as well as the United States

Even though Congress has passed the buck for now, Obama still has a choice to make regarding his last two years in office. Is he going to stake his legacy on the fight against climate change, as suggested by the historic climate pact with China and a spate of environmental rules still rolling off the presses in Washington? Would that push him to pick up his little-used veto pen and pull a Joe Pesci on a project that his own State Department concedes would have little direct impact on greenhouse gas emissions?

Or will he allow Keystone to finally proceed, which could actually give environmentalists something more substantial to pour their energies into — such as helping hold the line against a Republican assault on the administration’s plans to clean up the power sector that has already begun?