Government Finds New Ways to Delay Domestic Energy Production

Despite nearly four years of environmental study and two separate permit applications, TransCanada has been unable to lay a single foot of pipe for the Keystone XL project in the United States. The delay in this project has spanned the publication of a Draft Environmental Impact Statement, a Supplemental Draft Environmental Impact Statement, a Final Environmental Impact Statement, no fewer than five national comment periods and the input of hundreds of thousands of Americans.

Now, as the State Department closes the latest of these public comment periods – this one asking Americans what the scope of its newest environmental review of the project should be – we are about to start this entire process all over again. The delays and forced route changes that TransCanada has been forced to endure have added more than a billion dollars to the cost of the project, suspended tens of thousands of high paying jobs, delayed relief at the pump for millions of American drivers and prevented the project from pumping more than $20 billion into the U.S. economy.

Unfortunately, TransCanada is hardly the lone victim of regulatory strangulation by the federal government.

For example, Shell has been waging the same type of struggle with its plans to explore offshore Alaska since 2004 and, despite more than seven years of “process” and more than $4 billion invested in the project, has not yet been able to drill a single exploration well. Given the complexity of the federal permitting system and the entrenched opposition Keystone XL’s unfortunate, multi-year regulatory challenges are not exceptional. In fact, this may be the new norm.

Both Keystone XL and Shell’s Alaskan OCS plans have undergone more scrutiny, more delays and more political hyperbole than ever witnessed for these types of project. This is a very troubling development, particularly for American energy consumers who depend on industry efforts to expand and improve our nation’s energy supply.

The President’s decision to reject Keystone XL’s application for a permit back in January, despite the fact that the Department of State has affirmed that Keystone XL would be the safest pipeline ever constructed, was a political move meant to allay environmentalists until after the election.  After suffering significant blowback from labor groups and the majority of Americans who support the project, the President enthusiastically endorsed TransCanada’s plan to move forward with construction of the southern half of the pipeline from Cushing, OK to the Gulf Coast and has pledged to run an “expeditious” review of the northern half of the project.

In Alaska, the story is even more complicated.  In 2005 and 2008, the federal government sold Shell leases in the Beaufort and Chukchi Seas, respectively, under good faith that the company would be able to develop the areas.  In 2007, a federal court prevented Shell from drilling exploratory wells in the Beaufort Sea due to a lawsuit by environmental groups claiming that the federal government’s approval process was flawed.  Shell experienced déjà vu in 2009 and 2011 when baseless lawsuits – aimed not at the substance of Shell’s program – stopped the project from moving forward.  Despite years of insisting that it was moving as quickly as possible to move the project forward, it was not until this year that the administration has stepped in to uphold Shell’s plans – seven years into this affair. Of course, the immediate response by the environmental groups was to sue the government on the taxpayer’s dime.

Similar to the safety precautions and additions to that TransCanada has taken with the Keystone XL project, Shell has developed one of the largest, most comprehensive and technically advanced oil spill prevention and response capabilities ever mounted. The federal government has affirmed that “[Shell’s] exploration activities will be conducted under the closest oversight and most rigorous safety standards every implemented.”  Unfortunately, this level of scrutiny will not be enough to prevent opposition groups from pursuing the same public scare tactics and same legal challenges to block Shell’s program in future years.

The economic impacts are staggering. Keystone XL will support 20,000 jobs directly and 100,000 jobs indirectly, drive $20 billion into the U.S. economy, and supply millions of American with 700,000 barrels of affordable, reliable North American oil daily. Offshore Alaskan energy development will create more than 54,000 jobs nationwide, generate $300 billion in revenue for the U.S. Treasury and supply Americans with 700,000 barrels of domestic oil daily over the forty-year life of Arctic production.

We sincerely hope that Keystone XL does not endure further delays and end up being a seven-year permitting saga like Shell’s Alaska venture. This standard would be devastating to American consumers for generations and would act as a serious deterrent to any company looking to develop oil and natural gas resources in the United States. If we are serious about expanding private investment and increasing energy development in America’s future, we cannot allow this pattern of delay to continue.