OIL AND GAS:

Push for tar-sands pipeline sparks fierce Hill debate

From cap and trade to chemicals reform to offshore drilling, 2010 was marked by pitched environmental battles that Congress left unsettled as the clock wound down. But some of the season's most intense political jockeying has come over a $7 billion project that lawmakers can neither approve nor veto.

The 1,700-mile Keystone XL pipeline would carry up to 900,000 barrels per day of Canadian oil sands to Texas refineries, nearly doubling U.S. imports from a crude reserve ranked as the second-largest in the world. While the broad battle lines over the pipeline were drawn months ago, with green groups linking the oil sands to a panoply of public health and safety risks, the company behind Keystone XL has taken its public relations push to a new level by courting members of Congress.

TransCanada Corp. CEO Russ Girling appeared last month at a Montana summit organized by Sen. Max Baucus (D-Mont.), who called for the pipeline to hurdle "bureaucratic red tape." Days later, Sens. Lindsey Graham (R-S.C.), Kay Hagan (D-N.C.) and Saxby Chambliss (R-Ga.) toured the oil sands and returned touting the upsides of imported Canadian crude.

The four senators remain outnumbered by the 50 House Democrats who raised concerns about Keystone XL in June. Still, Girling acknowledged a "split" among Democrats in an interview this week.

"The way I'd characterize the split is, there are those supportive of the import of Canadian oil because the U.S. needs oil for a long time yet to come," Girling said. By contrast, he added, critics of the oil sands are "focused on shutting down what most would say would be the most reliable source of crude oil to America."

TransCanada's message is simple: If America does not take advantage of the oil sands, other nations will.

"There is no benefit in denial of the pipeline," Girling said. "There is only a downside to the U.S."

But Keystone XL is not subject to the approval of Baucus or Graham, who vowed to "block any effort to deny my country" oil sands access in an interview with Canadian media this week. The State Department continues to weigh a presidential permit for the project and is unlikely to issue a final ruling until next year, after other federal agencies are given 90 days to examine the department's final environmental impact statement (EIS) on the pipeline.

Meanwhile, national and local environmental advocates are meeting TransCanada's efforts with a redoubled campaign of their own. Several Nebraska green groups launched a telephone and Internet tip line this week aimed at collecting local concerns over the company's threat to use powers of eminent domain against landowners who live in the pipeline's planned path.

Jane Kleeb, chief of the liberal-leaning Bold Nebraska group, which helped create the new tip line, said she sees TransCanada's volley of radio and print ads in the state "backfiring" among residents.

"[Locals] say that when BP [PLC] went up with their slick ads" after this summer's Gulf of Mexico oil spill, Kleeb noted, "they were even more suspect of BP -- and it's the same thing with TransCanada."

The Gulf disaster armed pipeline foes with a set of resonant new safety arguments, and three recent ruptures along U.S. oil and gas lines only amplified questions about the effectiveness of federal and state oversight (Greenwire, Sept. 22). Nebraska's section of Keystone XL would run through the sensitive Ogallala Aquifer, a leading source of state drinking water, which has raised questions from Sen. Mike Johanns (R-Neb.).

During a Tuesday hearing on pipelines, Johanns reiterated concerns about oversight of the project and others like it.

"We've got to somehow figure out a way to do a better job of managing this," Johanns said. "I'm sure people are working as hard and as smart as they can, but the reality is, with tens of thousands of miles of pipeline, it occurs to me that we're only scratching the surface."

His warnings have not gone unnoticed by green groups that see Baucus' and Hagan's support as anomalous in their party. "If you look at it on the whole, Democrats are really opposed to it," Friends of the Earth fuels campaigner Alex Moore said. "Senator Johanns has not been a traditional champion of the environment, and he is even saying there are real environmental concerns here."

Senate Commerce Chairman Jay Rockefeller (D-W.Va.) offered a pipeline reauthorization bill this week that adds teeth to an earlier Obama administration proposal, but both plans suggest that the industry is in for a firmer regulatory hand in the coming months. That prospect did not deter Girling, the TransCanada chief.

"We're prepared for more scrutiny in our business, which isn't necessarily a bad thing," he said. Canada's recognition of the environmental and safety risks involved in tapping the oil sands, Girling added, helps further the case for Keystone XL. "We take the stewardship of that resource very seriously. We will do it in a way that minimizes the impact on land, water and air."

First Nations indigenous groups in Canada, however, take little solace in assertions about responsible oil sands production. More than three dozen of their communities in the oil sands region have called for a halt to development, raising alarms about water pollution and higher rates of cancer that they link to emissions from the crude that would flow through Keystone XL.

Safety and siting

Pipeline critics in the American West offer similar environmental worries, but eminent domain and the potential damage from a rupture are sharing top billing in their arguments.

"I'm trying to get a clear vision of what [the company's] safety plan is -- what do they do, who do they call if they find a leak or think there's a leak," said Center for Energy Matters project director Rosemary Crawford, whose Oklahoma-based group is organizing landowners in affected states against the pipeline. "I'm not certain anyone's gotten a clear-cut answer."

Should TransCanada prevail in its push for a State Department permit, it would be required to submit oil-spill and emergency response for approval by the federal Pipeline and Hazardous Materials Safety Administration (PHMSA) before starting to run crude through Keystone XL. The Calgary, Alberta-based firm also touts a monitoring system that Girling said would be able to wall off and shut down any section of the line that presents a problem.

The Plains states' valuable aquifer, the CEO asserted, would not be affected by the pipeline. "Any route you choose has certain environmental impacts associated with that," Girling said. "We've chosen one of the straightest routes possible."

State Department assessors considered alternative paths in their draft EIS on Keystone XL, suggesting that the government could give the pipeline a permit contingent upon a re-siting of its more contentious segments. Crawford and other skeptics along Keystone XL's red-state route say their allies are not interested in a compromise, but a strong undercurrent of opposition in Nebraska appears to stem from the prospect of a 36-inch oil line through the Ogallala.

"We think it's the wrong project," Nebraska Wildlife Federation Executive Director Duane Hovorka said. "We also think that if you're going to build it, this is the wrong place to put it."

PHMSA would conduct inspections of the pipeline during construction, but a comprehensive in-person assessment of its progress likely would be left to TransCanada. Company spokesman Terry Cunha praised the agency's oversight of the Keystone pipeline, which began carrying crude earlier this year and would link up with the XL line, and said PHMSA has audited the company more than 70 times since 2008.

PHMSA "has been very diligent about Keystone from the very first phases of development," Cunha said via e-mail. "They are well aware of everything we do, but perhaps better communication to interested stakeholders about those activities is needed."

According to the State draft EIS, the chances of no oil from Keystone XL entering the nearby environment would be close to zero.

"Small oil spills (e.g., intermittent leaks and drips from construction machinery and operating equipment) would be almost certain to occur during construction and operation of the" pipeline, the department's assessors wrote. "There would be a very limited potential for an operational pipeline spill of sufficient magnitude to significantly affect natural resources and human uses of the environment."