Obama directing federal agencies to quickly approve part of Keystone XL pipeline

WASHINGTON – U.S. President Barack Obama is ordering federal agencies to expedite the approval process for the southern leg of TransCanada’s Keystone XL pipeline.

The administration said the president will direct the agencies to fast-track the pipeline when he makes an appearance Thursday at a storage yard in Cushing, Okla., where there’s a glut of Midwest oil that can’t easily get to refineries on the Gulf of Mexico.

“The need for pipeline infrastructure is urgent because rising American oil production is outpacing the capacity of pipelines to deliver oil to refineries,” the White House said in a statement.

The news comes as American oil industry executives chided Obama on the eve of his visit to Cushing, saying he needs to greenlight the entire $7.6 billion pipeline, not just a portion of it.

“Approval of the entire Keystone XL pipeline should happen now – not after the election,” the executives at several prominent oil and gas companies said in an open letter to Obama published Wednesday in The Oklahoman newspaper.

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“America’s greatest benefit will come when we can transport oil from our best energy partner, Canada, and oil-rich North Dakota and Montana.”

The Cushing storage yard houses pipes to be used in the construction of the pipeline from the oil hub to Gulf Coast refineries. Currently, crude from oil-rich states like North Dakota and Montana runs into a logjam at Cushing because of a lack of pipeline capacity and a limited number of rail cars that can transport the oil south.

The approval process for a pipeline can ordinarily stretch on for as long as a year. Obama wants to see several months slashed from that timeline.

Environmentalists are crestfallen. They’ve mounted an extensive campaign against Keystone XL, assailing the plan to transport millions of barrels a week of bitumen from the Alberta oilsands – an energy source they decry as “dirty oil” – through six U.S. states to Texas refineries.

“The administration cannot purport to protect the climate while simultaneously bending over backward to allow a pipeline to the continent’s biggest carbon bomb,” Kim Huynh of Friends of the Earth said in a statement.

Huynh wondered if environmentalists have been snookered.

“Was the president’s initial rejection of the Keystone XL simply a farce to temporarily appease the environmental voters who dared to hold him to his own promises about real leadership on the climate and shifting to 21st-century clean energy solutions? It would seem so.”

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Noah Greenwald, endangered species director with the Center for Biological Diversity, said approving only part of the pipeline doesn’t lessen the environmental risks.

“The Gulf Coast leg would add to the fossil fuel infrastructure at a time when we critically need to transition away from fossil fuels in order to avoid climate catastrophe,” he said.

“The president’s support for this pipeline is troubling. Keystone XL may be a boon to Big Oil companies in the exporting business but those profits will come at a stiff price for our land, water, wildlife and climate.”

Environmentalists intend to stage a protest in Cushing on Thursday.

The U.S. State Department has yet to make a decision on the entire length of the proposed pipeline, saying it needs more time to conduct a thorough environmental review of a new route around an environmentally sensitive aquifer in Nebraska.

State Department officials are assessing the project because it crosses an international border.

In November, the State Department deferred making a decision on Keystone until after this year’s presidential election, citing concerns about the risks posed to the aquifer.

Pipeline proponents cried foul, however, accusing Obama of making a cynical political move aimed at pacifying the environmentalists in the president’s political base and improving his chances of re-election.

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Outraged Republicans then successfully inserted pipeline provisions into payroll tax cut legislation in late December.

But within a month, facing a mid-February deadline imposed by that measure, Obama nixed TransCanada’s existing permit outright, saying there wasn’t enough time to thoroughly review a new route before giving it the green light.

Obama also assured Prime Minister Stephen Harper that the decision did not reflect on the pipeline’s merits, and that his hand was forced by Republican pressure tactics. He welcomed TransCanada to propose another route.

News that Obama was set to speed up the approval process for the southern expanse of Keystone XL comes as prices at gas pumps in the U.S. continue to march towards $4 a gallon.

Republicans have been blaming Obama’s energy policies for rising pump prices and have been relentlessly attacking him for rejecting the pipeline. Republican presidential hopeful Mitt Romney has repeatedly called Keystone XL a “no-brainer.”

Obama was on a western energy jaunt this week, also visiting Nevada, New Mexico and Ohio to promote and defend his energy policies.

The letter from the oil industry executives – one of whom, Continental Resources CEO Harold Hamm, is heading Romney’s energy advisory team – also takes aim at the Obama administration for its proposals to repeal oil industry tax breaks.

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The dispatch adds that proposed environmental regulations could impose “increased costs and bureaucratic delays (that) will cripple America’s energy production and halt the renaissance under way in our nation’s steel, plastics, chemical and agricultural industries.”