OIL AND GAS:

Yellowstone spill fuels opposition to proposed U.S.-Canada pipeline

As cleanup continues along a Montana river despoiled by a 1,000-barrel oil leak, green groups see a new opening to secure stronger pipeline safety rules and to beat back a major U.S.-Canada oil link -- the types of victories that did not materialize after last year's Gulf of Mexico gusher.

The political ramifications of the Friday rupture on Exxon Mobil Corp.'s Silvertip line are likely to be felt most keenly in the next six weeks, as the Obama administration readies a final environmental review of the $7 billion Keystone XL pipeline while Congress advances broader safety legislation. With the Montana spill making national headlines, however, environmentalists are uniting all three issues into one conversation.

"It's really important that the governor and legislators from Montana take a hard look at how similar the proposed Keystone XL pipeline is to this Exxon Mobil pipeline," Natural Resources Defense Council (NRDC) International Program Director Susan Casey-Lefkowitz said, drawing a second connection between the controversial XL project and the pipeline safety measures now moving forward on Capitol Hill.

"You can't separate a discussion about the Keystone XL pipeline from the pipeline safety discussion," she added. "They have to happen together."

Federal regulators at the Pipeline and Hazardous Materials Safety Administration (PHMSA) issued a corrective order to Exxon last night that requires the company to rebury its ruptured Silvertip line beneath the river using a more modern method known as horizontal directional drilling, or HDD (E&E Daily, July 6).

That order also revealed some details that appeared to conflict with information previously reported by Exxon, most notably its 56-minute time frame for shutting down Silvertip following the rupture -- about double the window the company had claimed -- and the degree to which the oil has spread downriver.

PHMSA stated that "oil deposits as far as 240 miles downstream" were observed on weekend overflights, while Exxon representatives told reporters yesterday that they could confirm only a 25-mile spread.

The Keystone XL line, if it wins a permit from the State Department later this year, would cross the Yellowstone River on its way from Canada's oil sands to Gulf Coast refineries. While environmentalists cite that common thread between the Silvertip and XL projects, the company sponsoring the latter pipeline already has proposed using HDD to bury its line 25 feet below the riverbed -- at least three times deeper than the Exxon line sat beneath the Yellowstone.

Terry Cunha, a spokesman for Alberta-based TransCanada Corp., Keystone XL's potential operator, described the Montana spill as "an unfortunate incident."

"[W]e recognize that it does have an impact on public perception," Cunha said, but "it is important to recognize here that the safest way to transport crude oil is through pipelines."

Upton squares off with enviros

Environmentalists' battle against Keystone XL, which they view as an unnecessary spur for continued U.S. oil consumption in addition to a safety risk, comes as House Energy and Commerce Committee Republicans push forward with a bill expediting the U.S.-Canada project as well as broader pipeline safety legislation.

Energy and Commerce Chairman Fred Upton (R-Mich.) today took a shot at the same conservationists fighting his part on the XL line. In an Investors Business Daily op-ed, Upton blasted green groups for seeking "to produce media hype and provocative headlines" rather than work with his party on "significant updates" to pipeline safety laws.

"Instead of coming to the table with constructive ideas," Upton wrote, environmentalists are using a 2010 pipeline spill in his state "to foment opposition to the Canadian Keystone [XL] Pipeline project, which promises to create 100,000 jobs and reduce our dependence on oil from hostile nations by 1 million barrels a day.."

But advocates see the Michigan pipeline spill and this week's Montana incident as opportunities to communicate more constructively with potential grass-roots critics of Keystone XL.

"Unfortunately, when you have environmental concerns about the oil industry, the best time to talk about it to people is when there has been a disaster," Friends of the Earth fuels campaigner Alex Moore said.

"But that's kind of the reality, that it takes these kinds of wake-up calls to see what the dangers are. We saw that with the Deepwater Horizon."