TransCanada still has options for Keystone XL, despite Obama's rejection

The long awaited, and long expected, decision by U.S. PresidentBarackObama's administrationon the Keystone XL pipeline application does not absolutely mean the end of the project. ButTransCanadanow needs to choose its strategy carefully.

TheObamadecision kills this application, originally filed in 2008, but the State Department confirmed today that ifTransCanadachooses, it can submit a new application.

There's also been talk of a court challenge under the North American Free Trade Agreement but Keystone's prospects really depend on the 2016 U.S. presidential election. All the Republican contenders had previously declared their support for Keystone and there's little reason to expect thatObamadeclaring the project not in the American national interest will change Republican minds.

• BarackObamarejects Keystone XL pipeline
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The two leading contenders for the Democratic nomination, Hillary Clinton and Bernie Sanders, oppose Keystone XL.

TransCanadaissued its own statements today, including one saying it will review all its options, including the eventually essential one, "filing a new application to receive a presidential permit for a cross-border crude oil pipeline."

And company president and CEO RussGirlingsaid, "Today, misplaced symbolism was chosen over merit and science - rhetoric won out over reason."

'Just keep mum'

ButMichalMoore, the energy and environment director at the University of Calgary's School of Public Policy, advisesTransCanadato "just keep mum, I don't think I would criticize anybody." Try to be as small a target as possible, Moore says.

Speaking on background at a media briefing, a State Department official said that for it to reconsider the application,TransCanadawould have to reapply.

But what's a good time to do so? Wait and hope a Republican is in the White House in January 2017?

Regardless, "You don't just turn the light switch on again, they're grounded for a while," Moore says about Keystone XL. It's still a bureaucratic process in which it takes years to get the paperwork together, Moore tells CBC News, but it won't take as long as this first failed application.

In August,The Canadian Press reportedthat people close to the project were saying "the company has become all but convinced a rejection is imminent."

TransCanadawas weighing its post-rejection options and "one aspect of that internal discussion is the political calculus and whether fanning the flames during the 2016 U.S. election campaign would help the project, or harm it."

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Moore, who's originally from the U.S. and still teaches there, advises against doing so. He says Keystone will still be a campaign issue but "You cannot predict what those winds are going to do."

Don't go crazy, this deal's done, he says. Better to start building towards the next application and "that involves first and foremost" Canada's new government. Prime Minister JustinTrudeausaid he was disappointed withObama'sdecision but didn't criticize it.

• Trudeau'disappointed' over Keystone rejection
• New environment minister will face uphill battle

ANAFTAchallenge?

That August story also said thatTransCanadawas consulting lawyers about aNAFTAchallenge, and the implications. The grounds for a challenge would be discrimination and unfair or arbitrary treatment. Experts weighed in, for and against, and the story notes that the U.S. government has a 13-0 winning record inNAFTAcases.

Moore would advise the company not to pursue that strategy. "Try to have a better relationship with the U.S. going forward," he advises, and adds that challenges typically take years or decades.

"Trying to sue the president of the U.S. is probably not the most efficacious next move," he adds.

Obamamade a political decision, he says, tellingTransCanada, "you've got to treat it as that" and accept it's part of the game.

The Energy East option

The Canadian Association of Petroleum Producers reacted toObama'sannouncement by saying "Canadian oil will find new paths to markets."

A possible path isTransCanada'sproposed Energy East pipeline, and the Keystone rejection givesTransCanadaa "more focused argument" for needing Energy East,FirstEnergyCapital analyst StevenPagettold Reuters.

But Adam Smith, climate program director for Environmental Defence Canada, told the news agency, "The arguments for rejecting Keystone XL apply to Energy East even more so -- there's more oil and the risk of tankers (transporting oil) on the east coast of Canada."

Smith also said the Keystone rejection will energize "the already very substantial movement against" the Energy East pipeline in Canada.

Moore says that with the regulatory process for Energy East, which has both supporters and opponents,TransCanadaneeds to learn from its mistakes in trying to win U.S. approval for Keystone XL, and to remember that there are other products that they can ship, like natural gas and water. "Pipelines are going to be a useful device, no matter what," he says.

TransCanadaand the U.S. State Department declined interview requests from CBC News for this story.