US Senate committee passes Keystone XL bill, despite veto threat

Washington (Platts)--8Jan2015/247 pm EST/1947 GMT

The US Senate Energy and Commerce Committee on Thursday passed a bill to approve Transcanada's contentious Keystone XL pipeline, the first step in what looks to be a lengthy legislative process that is proceeding under a veto threat from President Barack Obama.

The committee, by a 13-9 vote, passed the bill, which would allow the pipeline to bypass the presidential permit approval process and greenlight it immediately.

The full Senate is scheduled to take up the legislation next week, with Republican leaders calling the bill their top priority in the new term. But while the bill has 60 co-sponsors, including all 54 Republicans and six Democrats, supporters appear a few votes short of the 67 needed to override a veto.

Political observers said bill backers, when floor debate begins, may seek to sweeten the legislation with amendments that could garner more support from more Democrats, such as energy efficiency measures. Such amendments would need 60 votes to overcome a filibuster.

Republican leaders have promised to allow an open amendment process to consider any amendments that senators may offer, which could drag out debate for weeks.

"Let's approve the best bill that we can; if you can get 60 votes, it gets in the bill," said Senator John Hoeven, a North Dakota Republican who introduced the bill with Senator Joe Manchin, a West Virginia Democrat.

But Democrats opposed to the pipeline may also be prepared to introduce so-called "poison pill" amendments that could force Republicans to take uncomfortable votes, such as on recognizing human-caused climate change and prohibiting exports of oil transported by the pipeline.

"We see environmental allies in the Senate as prepared to use the Senate's numerous tools for obstruction and delay to derail the Keystone bill," analysts with FBR Capital Markets said in a note.

The White House on Wednesday said it would veto the bill because it would "circumvent" the executive branch's review of the pipeline, which requires a presidential permit because it would cross the US-Canada border.

"It would cut short consideration of important issues relevant to the national interest," the White House said.

Obama, who in recent weeks has voiced doubts about the project's economic benefits and in 2013 vetoed a bill that would have imposed a deadline for him to issue a presidential permit to the pipeline, has said he would judge the project according to its climate change impact.

He has also said he would not decide on the permit until after the Nebraska Supreme Court rules on a case brought on by landowners in the state opposed to the pipeline. That ruling could come as soon as Friday.

The Keystone XL pipeline, which has faced six years of delays already, is slated to carry up to 830,000 b/d of Canadian and Bakken crude to the US Gulf Coast. If built, it would be a key outlet for Canadian oil sands production, which has suffered from the relative lack of pipeline infrastructure in the region.

The project has emerged as a flashpoint between environmentalists opposed to further oil development, particularly in Canada's energy intensive oil sands, and production advocates, who say it will contribute to US energy security.

--Herman Wang, herman.wang@platts.com
--Edited by Derek Sands, derek.sands@platts.com

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