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Keystone Pipeline: House Energy And Commerce Committee Advances Plan

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* House Energy and Commerce approves plan, 33-20
* Would give permit power to FERC
* Next step for bill: vote in full House
* Senate Finance won't attach bill to highway bill

By Roberta Rampton
WASHINGTON, Feb 7 (Reuters) - A plan to fast-track the
stalled Keystone XL oil pipeline was passed by a key committee
in the U.S. House of Representatives, as Republicans made yet
another attempt to spur approval of the project that has become
a major issue in the 2012 elections.
The bill would wrest decision-making on the pipeline from
the Obama administration and hand it to the Federal Energy
Regulatory Commission, which would be compelled to issue
approval permits quickly on the Canada-to-Texas project.
But the plan would need to clear several more congressional
hurdles, including getting through Democratic opposition in the
Senate, before it could land on President Barack Obama's desk
for approval.
In a decision last month that pleased environmental groups,
Obama blocked TransCanada's $7 billion project, citing
the need for further review of its route as the line would have
traversed sensitive lands and an aquifer in Nebraska.
Republicans have made the pipeline a symbol of what they
believe are unnecessary regulations that are stifling job
creation and energy production in the United States.
On Tuesday, the House Energy and Commerce Committee voted
33-20 to send its Keystone bill to the full House, where it will
likely become part of a highway and infrastructure funding bill
that House Speaker John Boehner wants to see passed this month.
Republicans also have not ruled out trying to attach a
Keystone provision to must-pass payroll tax-cut legislation.
"We're going to use all options, so we'll see," said Fred
Upton, the Republican chair of the energy committee, who is also
part of a joint Senate-House conference panel working on the
payroll tax-cut compromise.



GLUT IN MIDWEST
The latest Keystone debate comes as a glut of crude oil in
the U.S. Midwest widens the discount between what refiners pay
for oil around the key delivery point of Cushing, Oklahoma,
compared to the price paid by refiners on U.S. coasts and the
rest of the world.
Meanwhile, Canadian production is surging on expanding
output from the oilsands. With exports to the United States up
34 percent year-over-year, existing pipeline capacity is full.
The lack of pipeline space has pushed the discount between
Canadian crude and benchmark prices to multi-year lows, eating
into the profits of the Canadian oil industry, including its two
largest producers, Suncor Energy Inc and Canadian
Natural Resources Ltd.
Canadian oil producers are desperately looking
for alternative markets in Asia and elsewhere, though it will be
years before any new export lines can be built.
Canada's Prime Minister Stephen Harper is leading a large,
high-level trade mission to Beijing this week, and told Reuters
that Canada will focus on exporting oil to China even if the
U.S. decision on Keystone is reversed.

KEYSTONE ROUTE IN SENATE UNCLEAR
Republicans in the Democratic-controlled Senate also are
trying to resurrect a quick start for the pipeline, but have not
yet determined a strategy for advancing legislation.
On Tuesday, Republican Senator Orrin Hatch withdrew a
proposal to link Keystone to the Senate's highway funding bill.
"It is absolutely tragic that the prime minister of Canada
is now negotiating with the Chinese to take their oil because
we're too stupid to allow a pipeline to go through," Hatch said
at a Senate Finance Committee hearing.
Max Baucus, the Democratic chairman of the powerful panel,
convinced Hatch to withdraw his measure.
"The inclusion of Keystone would take down the bill," Baucus
said, although he noted he strongly supports the pipeline.

LAWSUITS AHEAD?
On Tuesday, House Democrats tried but failed to amend the
bill to block exports of oil and refined fuels from the
pipeline, and to bar TransCanada from having the ability to
expropriate land for the pipeline from private owners.
Also defeated was a proposal to postpone action on the
pipeline pending results of a study, expected sometime in 2013,
on whether pipelines carrying petroleum from Canada's oilsands
are at greater risk for spills than those carrying other types
of crude.
John Dingell, a Democrat from Michigan who supports the
pipeline, argued the authority to approve the line should remain
with the president rather than being fast-tracked by Congress.
Dingell said he worries environmental groups would tie up
the pipeline with lawsuits if the Republican plan goes ahead.
"It's going to infuriate the environmentalists who are going
to be on this like a duck on a June bug," Dingell said.
The Natural Resources Defense Council panned the bill,
saying it attempted to "jam" the project ahead in a rush.
"We hope the Senate will use common sense and avoid trying
to undermine proper review using politically motivated
legislative maneuvers," said Frances Beinecke, president of the
group, in a statement.
But Lee Terry, a Republican from Nebraska, said the Obama
administration has dragged out the process for too long, making
it essential for Congress to take charge.
"It is the president that made this a political football,"
Terry said.

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