The Canadian oil sands, one of the most carbon-intensive fuel sources in the world, is spurring a flurry of global lobbying activity, from encouraging President Obama to approve an extension to a transnational pipeline pressuring Europe to ease its tax on the sands-produced oil.
TransCanada Lobbying in Keystone XL States
In 2008, the State Department sanctioned an environmental review to extend the Keystone pipeline, which runs from Alberta, Canada, through the Dakotas and south to Oklahoma, with a spur reaching Illinois. The extension, termed Keystone XL, would cut across Montana and reach Houston and Port Arthur, Texas, from where the oil could be loaded on tankers. The extension is estimated to cost $7 billion and would cut across swaths of farmland in the Midwestern states.
Two years later, a political battle has prevented the extension from receiving the necessary permits for construction and amidst increasing pressure from states through which the pipeline will run, the final decision on the route has been postponed till the 2012 elections.
TransCanada, the Alberta-based energy company building the pipeline, has been actively lobbying in the U.S. since 2008 and has spent more than $2.1 million on lobbying the federal government in the past four years, according to a report from the Center for Responsive Politics. In 2011, TransCanada has spent $790,000 lobbying the federal government, up from the previous years, a possible indication that the the company will continue to spend heavily on lobbying, both at the federal level and in the states especially with the Obama administration postponing the final decision on the pipeline.
TransCanada is also registered to lobby in all of the states that the extended pipeline would pass through. In Oklahoma, TransCanada hired James Dunlap and Patrick Hall of the government relations group Majority Plus to be its lobbyists. Dunlap, who served as a state senator and state house member, was also the on the board of American Legislative Exchange Council (ALEC), a group of Republican state-level officials that describes itself as advancing "free markets, limited government, federalism, and individual liberty, through a nonpartisan public-private partnership of America's state legislators, members of the private sector, the federal government, and general public."
In Nebraska, where the battle against the pipeline has spurred legislation to address environmental concerns, TransCanada paid lobbyist Gordon Kissel $49,000 in 2011. Kissel was the Executive Director of the Nebraska Association of Resources Districts from 1980-1994. Nebraska is divided up into 23 districts that are charged with preserving, protecting and developing the natural resources of the state. As the executive director of an association that seeks to get the districts to work together, Kissel was responsible for the organization's governmental and legislative affairs.
TransCanada has also been active in Texas, where it is the biggest client of Shayne Woodard, a Texas lobbyist with 10 years of experience in Texas' capital, Austin. Woodard is a former employee of the Texas House and Senate Natural Recourses Committee.
The company has also spent $6,000 on lobbying efforts in Montana this year, and an unknown amount in South Dakota, Kansas and Oklahoma, which don't disclose lobbying expenditures.
The final decision on the pipeline extension is due in December, 2011, but could be delayed further after Congress has called for an Inspector General investigation to look into possible conflict of interest allegations against the State Department.
Meanwhile, the Obama administration is taking heat from environmentalists for hiring a former Keystone lobbyist, Broderick Johnson, as a campaign adviser, according to news reports. This comes as the environmental group Friends of the Earth acquired email communications among TransCanada and State Department officials that shows how tenacious, well-connected lobbyists can gain access to policy makers.
The pipeline project is also facing scrutiny from Rep. Henry Waxman, D-Calif., who is on the Energy and Commerce committee. Waxman sent a letter to Sec. Clinton, saying the pipeline would be a “step in the wrong direction.”
Oil sands lobbying involves some other large players. In the second quarter of 2011, oil giants Conoco Phillips, Chevron and Shell spent millions lobbying on tar sands, among other issues, federal lobbying disclosures show. In all, 23 other organizations have lobbied to expedite the approval and construction of the XL pipeline, according to a CRP report.
The global oil sands lobby
Lobbying efforts aren't restricted to just the United States. For the past several years, the Canadian government, which has direct control over much of Canada’s oil sands resources, is engaging in an international lobbying and diplomacy campaign to encourage the export and consumption of petroleum derived from the sands, thanks to a steady steam of pressure from the oil companies.
Within Canada, lobbyists have approached Canadian officials who regulate oil sands, with lobbying disclosures showing repeated contacts by international oils companies, such as Shell Canada Limited, with Canadian officials.
Another company, Canadian Oil Sands Limited, has interest in the oil sands, with 1.8 billion barrels of proved and probable reserves, and is the largest investor in Syncrude, which has 4.8 billion barrels of proved and probable reserves. It, too, has reported lobbying activities in the past with key political players. For example, in October of 2010, members of the comany met with 11 members of parliament, two ministers and a Senator. Canadian Oil Sands Ltd.’s objective was to influence “Canada’s plan, leading up to the international summit in Copenhagen, to reduce greenhouse gas emissions and air pollution as it relates to oil sands mining operations.”
Cenovus Energy Inc., an oil sands company with refinery ties to the U.S., contacted oil sands officials at Natural Resources Board of Canada, a government agency that oversees energy regulation. Cenovus operates two oil sands projects in Alberta and it has a stake in refineries in Illinois and Texas. Laying on either end of the pipeline, the two states could become strategic locations if the Keystone XL pipeline is built.
More recently, Chinese companies have also increased investments in the Canadian oil sands market. In July, China’s largest offshore petroleum producer, CNOOC Ltd., succeeded in acquiring the oil sands resources of OPTI Canada. Lobbying efforts in Canada eased this transaction along, records show. CNOOC Ltd. hired Hill and Knowlton to lobby in Canada. According to Canadian lobbying records, Hill and Knowlton Canada lobbied for its client on the “Investment Canada Act as it relates to the proposed acquisition of OPTI Canada Inc.”
Lobbying the European Union
Meanwhile, Canadian Prime Minister Stephen Harper lifted the ban on exporting oil from the sands, known as bitumen, a reversal on his 2008 campaign promise. Still, problems for bitumen remain.
Under the EU’s fuel quality directive, bitumen would be taxed more heavily than conventional crude oil, due to the carbon-intensive process of extracting oil from the sands. Canada wanted oil from the sands to have the same tax as other crude sources. The Canadian Natural Resources Minister, Joe Oliver, has been the public spokesperson of the Canadian efforts to lessen these penalties.
Oliver made his concerns public to the European Union’s Commissioner for Energy, Günther Oettinger. Oliver contends that Canada is being punished for its energy transparency. “We object to being treated less favourably than other crude oil sources simply because Canadian industry provides more detailed data on oil sands emissions,” he argued.
Several oil companies, such as Royal Dutch Shell and BP, have joined the effort. They report each spending at least $800,000 on lobbying the EU last year. Statoil ASA totaled a minimum of $1 million in EU lobbying costs. Total S.A. registered that they spent at least $1.39 billion (yes, billion) in 2010. But, despite these lobbying efforts, the carbon estimate for oil sands will remain higher.
At least the EU has a lobbying transparency registry, in which organizations “are, in principle, expected to register.” And while, EU disclosure requirements are more vague than in the U.S., they do provide a range of spending, trade associations of the organization, goals and issue areas.
The environmental group Friends of the Earth Europe has put together a lobbying diary of pro-Canadian oil sands lobbying in the EU. It found 105 instances of Canadians lobbying EU officials in the last two years. Friends of the Earth Europe is also registered to lobby the EU and spends between $800,000 and million on lobbying.