KEYSTONE XL:

Enviros seize on State's pipeline alternatives

Environmental activists are ratcheting up their rhetoric against the Keystone XL pipeline, charging that a State Department report on the controversial project released Friday is woefully inadequate and erroneously minimizes the climate change impacts of Canadian oil sands.

The long-awaited State Department draft environmental impact statement concludes that TransCanada's proposed 875-mile pipeline infrastructure project would not worsen global warming because the oil sands crude would be produced and shipped regardless of whether the pipeline is built (E&ENews PM, March 1).

The 2,000-page draft lists several alternative routes that are likely to be used if Keystone XL is scuttled, including pipeline, barge and railroad connections.

"[P]rojected crude oil prices are sufficient to support production of essentially all Western Canadian crude oil projects ... even with potentially somewhat more expensive transport options," the State Department report says.

Assistant Secretary of State Kerri-Ann Jones said Friday that the State Department draft environmental report, which makes no recommendation on whether to proceed with the project, will be open for public comment for 45 days. During that time, the department is planning a public hearing in Nebraska.

A final decision on Keystone XL is not expected until midsummer and is likely to involve a sign-off from President Obama.

Canada now produces 1.8 million barrels of oil sands crude per day. The $7 billion Keystone XL pipeline could carry an additional 830,000 barrels of crude from Alberta's massive oil sands fields and from the Bakken Shale oil formation in the United States to Cushing, Okla., and oil refineries along the Texas Gulf Coast.

The Canadian oil sands industry is hoping to produce 5.2 million barrels per day by 2030. But some industry analysts note that multiple new export routes are needed to encourage continued investment in oil sands projects.

Enviros see Keystone XL as linchpin

Environmental activists argue that without the Keystone XL project, tar sands expansion would grind to a halt. They cite a December 2012 report by TD Economics warning that "the development of the oil [sands] sector is at risk if Canada cannot open up new markets for its growing production through additional pipeline capacity."

"Western Canadian producers are already suffering price discounts due to their reliance on the U.S. Midwest market, and more diversified market access would help ensure Canadians get the best price for their resources."

Susan Casey-Lefkowitz, international program director for the Natural Resources Defense Council, said the alternative oil sands transportation routes listed in the State Department's draft report are speculative and facing serious opposition within Canada.

"Without Keystone XL, industry is seeing plans to expand tar sands go away, they're seeing companies pull back development," Casey-Lefkowitz said. "Keystone XL is their main path to get stuff out to the coasts."

Jim Lyon, vice president for conservation policy at the National Wildlife Federation, noted that proposed pipeline projects from Alberta to Canadian ports "are blocked to the west by tribes that won't sell out their natural resources to Big Oil and blocked to the east by the European Union's declaration that it won't buy dirty tar sands oil."

"Without access to major U.S. export terminals from Keystone XL and other routes, tar sands production will be substantially slowed," he said.

Pipeline opponents insist that President Obama could lower world greenhouse gas emissions by rejecting the pipeline.

"The president has the ability to keep 1 million barrels of tar sands in the ground every day," argued Jane Kleeb, executive director of Bold Nebraska. "With the stroke of a pen, he can protect our property rights, our water and make a dent in climate change."

Industry welcomes another 'no impact' assessment

Energy industry officials welcomed the State Department's environmental analysis, which is nearly identical to a 2011 department assessment of an earlier pipeline route (Greenwire, Aug. 26, 2011).

Obama rejected the 2011 proposal after Nebraska officials expressed concerns about the project's impact on Nebraska's ecologically sensitive Sand Hills region and the Ogallala Aquifer. TransCanada responded by redesigning the project. Nebraska Gov. Dave Heineman (R) approved the new route in January (EnergyWire, Jan. 23).

American Petroleum Institute Executive Vice President Marty Durbin said the State Department draft report brings construction of the pipeline a step closer to reality after years of government evaluation.

"No matter how many times KXL is reviewed, the result is the same: no significant environmental impact," Durbin said.

TransCanada spokesman Shawn Howard agreed with the State Department's assessment that the oil sands crude will be produced and shipped to the world's oil markets whether or not Keystone XL is built.

"If there was not a pipeline to transport this oil, it would find a way to get to market -- either by super tankers moving the product into the Gulf of Mexico, rail, trucks or barges," Howard said in an email. "All of those methods are used today, but pipeline is much safer and Keystone XL will operate with virtually no emissions."