Keystone pipeline clears major hurdle
Governments hail positive U.S. report —
Alberta and Ottawa say a new U.S. State Department report sets the Keystone XL pipeline on the route to approval, but the long-sought link between the oilsands and Gulf Coast still faces major obstacles that could keep it from completion.
The State Department’s final environmental impact assessment released Friday said TransCanada’s $5.4-billion proposed project, which has provoked ferocious opposition from environmental organizations, would not be a significant contributor to climate change.
The report’s release sets off a 90day period for the Environmental Protection Agency and other U.S. government departments to comment on the study, after which President Barack Obama must wrestle with the final decision on the project.
Alberta views Keystone XL as crucial for petroleum producers to get world prices for their landlocked heavy oil, which would ultimately increase royalty payments to the province.
Premier Alison Redford said in a statement the report is “an important step toward approval of a pipeline that will build our economic partnership with our friends in the U.S. and help foster North American energy security and independence.”
In Calgary, Energy Minister Diana McQueen noted that Redford has travelled five times to Washington D.C. to lobby for the project and said Alberta’s arguments about its environmental stewardship are reflected in the report.
“We expect the president’s final decision will be based on science and fact, as confirmed in today’s final environmental impact statement,” McQueen told reporters.
The report says Alberta’s oilsands are likely to be expanded further whether or not Keystone is approved, with oil moving by rail if there is no pipeline. The project would therefore have little effect on greenhouse gas emissions.
“The dominant drivers of oilsands development are more global than any single infrastructure project,” said the study. “Approval or denial of any one crude oil transport project, including the proposed project, is unlikely to significantly impact the rate of extraction in the oilsands or the continued demand for heavy crude oil at refineries in the United States.”
The federal Conservative government has also strongly backed Keystone, with Prime Minister Stephen Harper saying at one point that approval was “a complete no-brainer” and another time insisting he wouldn’t take no for an answer.
In an interview, federal Natural Resources Minister Joe Oliver said that after five years and multiple reviews, he is hoping Obama’s decision “would be taken expeditiously.”
“This has to be one of the most analyzed natural resource projects ever and I think it’s time for a decision,” he said.
TransCanada CEO Russ Girling also called for rapid approval and said the Calgary-based company was “well-prepared to move into this next phase.”
“The case for Keystone XL, in our view … is as strong as ever,” he told reporters.
“All of our customers continue to support it, the states along the route have approved it. Keystone XL is one of the biggest infrastructure projects on the books in the United States today.”
However, the State Department said there will be no rush to judgment.
Kerri Ann Jones, Assistant Secretary overseeing the Keystone XL application, said U.S. Secretary of State John Kerry will assess the report in relation to a wide range of issues including the state of oil markets, overall U.S. policy on climate change and foreign relations.
“This document has a tremendous amount of analysis,” she said. “But it is only a part of what we have to look at to make this decision.”
The latest environmental review, the fifth released on the project since 2010, acknowledges development of the oilsands in Alberta would create greenhouse gases. But the report makes clear that other methods to transport oil — including rail, trucks and barges — would release more greenhouse gases than the pipeline.
But opposition to the project isn’t cooling down.
Greenpeace Canada’s Mike Hudema said the State Department’s contention that Keystone won’t increase emissions because the oilsands will be developed anyway is “deeply flawed.”
The further growth of shipping oil by rail isn’t guaranteed because of growing opposition to the practice and a demand for safer — and more costly — rail cars, he added.
“If President Obama really wants to tell his kids he did everything he could to fight climate change ... he must reject this pipeline,” Hudema said.
The study confirmed the oilsands produces more greenhouse gases — about 17 per cent — than average U.S. oil production.
Other opponents are threatening to bury the project in litigation.
There’s already a lawsuit in Nebraska to prevent the governor from forcing landown- ers to allow the pipeline on their path. And there’s an ongoing State Department internal investigation into conflict-of-interest allegations against contractors who worked on the report, but had also done past work for TransCanada Corp.
American environmental activist Bill McKibben said the State Department has been in the tank for Keystone from the start, but the report still gives “Obama everything he needs to block this project.”
Obama has been squeezed on one end by environmental activists within his party, including influential donors, and on the other side by powerful economic interests, the pleas of the Canadian government, and criticism that the stalling has undermined his goal of creating jobs.
Chris Sands, a senior fellow at the Washington-based Hudson Institute, noted the report takes away the environment as justification for rejecting the pipeline. But he suspects the battle will continue with no end in sight.
“The politics of this suggest this report won’t resolve anything,” Sands said.
“I’m afraid that the likely outcome is the president will continue to stall, they just have to find another report or another justification for delay. My crystal ball tells me the president could just leave this for his successor.”