OIL AND GAS:

Wrangling over oil-sands pipeline ramps up

Political jostling over the $7 billion Keystone XL pipeline continued yesterday as opponents and supporters both lobbied Secretary of State Hillary Rodham Clinton over the project.

Seven green groups today hammered Clinton for a recent statement that she is "inclined to" sign off on the 1,700-mile pipeline, asking the former senator to recuse herself from State Department decisionmaking on the future of Keystone XL. If Clinton does not step aside, they warned, her department would be vulnerable to a lawsuit.

Clinton was also advised by the sponsor of Keystone XL, TransCanada Corp., that it would not pursue Sen. Mike Johanns' (R-Neb.) call to consider an alternative route that is "obviously environmentally inferior on its face." Johanns' bid for extra analysis of the planned pipeline, which would nearly double U.S. imports of crude from Canadian oil sands, reflects significant skepticism in his state over the impact of Keystone XL on a valuable Nebraskan aquifer.

The twin volleys at the State Department indicate that, while GOP gains in this week's midterm elections left critics of the pipeline with fewer allies in Congress, the clash over Keystone XL is not about to cool down.

"Keystone stands on its merits," TransCanada CEO Russ Girling told reporters yesterday during a briefing on the Calgary, Alberta-based company's latest earnings data. "[The United States] needs that 10 million barrels a day of imported crude oil, and we believe that the safest, most reliable place to get it is Canada."

Environmental groups, however, view Canada's oil sands as an ecologically unhealthy fuel that jeopardizes progress on global emissions limits as well as the health of communities on both sides of the northern border.

The final ruling on Keystone XL "will test the administration's commitments to move America off of oil and combat global warming and should not be made by an official who admits to being inclined to approve it before analysis is completed," the seven green groups told Clinton today. They included the Center for Biological Diversity, Friends of the Earth and Greenpeace.

Clinton sparked controversy last month after telling a San Francisco audience she was "inclined to" approve the pipeline, adding: "We're either going to be dependent on dirty oil from the Gulf or dirty oil from Canada" (E&ENews PM, Oct. 21). In a statement accompanying the green groups' letter,Friends of the Earth legal director Marcie Keever said Clinton's remarks "demonstrate disregard for her agency's legal responsibilities under the National Environmental Policy Act" (NEPA) and could open the door for a legal challenge of any future approval.

The State Department appeared to walk back Clinton's statement last week, reiterating that a final decision on Keystone XL remains months away (Greenwire, Oct. 28).

Johanns' concerns also focused on NEPA reviews of the pipeline, asking Clinton to conduct an extra environmental assessment of the pipeline. Johanns and other Nebraskan officials from both parties worry that shipping Canadian oil sands crude across the state's sensitive Sandhills region could put the nearby Ogallala Aquifer at risk in case of a spill.

But Girling, in his letter to Clinton yesterday, dismissed the Republican's request to look at alternative pipeline paths that would avoid the aquifer.

"To engage in a supplemental review of alternative routes, such as the route suggested in Senator Johanns' letter, which is obviously environmentally inferior on its face ... would elevate process over rational decision making, with no benefit to the public, while unduly delaying the important pending national interest determination," Girling wrote.

A Johanns adviser said in an interview that the senator "thinks it's an entirely reasonable and feasible request to ensure that the State Department at least take a look at" a shorter U.S. route for Keystone XL that runs more north-to-south than the diagonal line proposed by TransCanada, largely avoiding the Sandhills in the process. The senator has not yet discussed potential opportunities to secure such a review through legislative language, according to his office.

The TransCanada chief said yesterday that he expects the pipeline to come online in early 2013, following the State Department's final decision.

Click here to read TransCanada's letter on Johanns' requested environmental review.

Click here to read the green groups' recusal letter to Clinton.

Want to read more stories like this?

E&E is the leading source for comprehensive, daily coverage of environmental and energy politics and policy.

Click here to start a free trial to E&E -- the best way to track policy and markets.