State Dept: No major objections to Keystone XL Pipeline

Posted: Mar 6, 2013

Written by

JEAN CHEMNICK & NICK JULIANO, E&E
Keystone pipeline

The State Department today concluded that the proposed Keystone XL pipeline wouldn't significantly influence the pace of development in Alberta's oil sands, dealing a blow to environmentalists seeking to block the project over concerns related to climate change.

State's draft supplemental environmental impact statement released this afternoon does not issue a final verdict on the controversial Alberta-to-Texas pipeline; that will not come until later this spring, following a 45-day comment period.

Opponents of the pipeline have emphasized that the oil sands crude it would transport produces more greenhouse gas emissions than conventional crude, and they have argued Keystone should be rejected to prevent development in the region from exponentially increasing.

State acknowledges oil sands development produces 17 percent more greenhouse gas emissions than conventional development but concludes that Keystone would have little impact on development in Alberta. Oil sands producers would be able to get their product to market via rail and other forms of transportation, according to the document.

"[A]pproval or denial of the proposed Project is unlikely to have a substantial impact on the rate of development in the oil sands, or on the amount of heavy crude oil refined in the Gulf Coast area," the draft review says.

If Keystone were rejected but other proposed new or expanded pipelines were allowed to proceed, production in the Alberta oil fields would fall by just 0.4 to 0.6 percent by 2030, and oil sands production would fall by no more than 4 percent over the same period even if all pipeline capacity were restricted, according to the review.

State estimates the pipeline would create more than 42,000 jobs, including direct employment in construction as well as indirect and induced jobs, according to the document.

Assistant Secretary of State Kerri-Ann Jones emphasized on a call with reporters that the document is a draft and that the department is looking forward to a "full debate" during a 45-day public comment period that follows. It will hold a hearing in Nebraska before issuing a final SEIS, then a national interest determination on the project.

But State appeared to come down on the side of pipeline advocates, who argue that construction of the project will have no impact on greenhouse gas emissions because it is not necessary to the development of Alberta's oil sands.

"With this preliminary analysis, we find in this draft that the approval or denial of any one crude oil transport project -- including this proposed project -- really remains unlikely to significantly impact the rate of development of the oil sands or the demand for heavy crude oil in the U.S.," she said.

The document set the stage for President Obama to approve or reject TransCanada Corp.'s plans for the pipeline that would carry more than 800,000 barrels of high-carbon crude daily from Alberta's oil sands region to Texas refineries.

The release of the draft SEIS is Secretary of State John Kerry's first climate-change-related action since his confirmation to the post last month, but it will be the White House that has the final say on the high-stakes project whose rejection is a major cause for green groups.

Obama and his staff have moved in recent weeks to put space between the Keystone pipeline and the Oval Office. The president didn't mention it during the State of the Union address last month, and at a press briefing Wednesday, White House energy and climate adviser Heather Zichal said it was State's SEIS that would "drive the decision" on Keystone.

"The reality is that it is the State Department, and they will pursue the process under the executive order to make a national interest determination," she said.

Obama intervened early last year to reject an alternative route for Keystone after Congress set a 60-day deadline for the administration to make a decision. But Zichal indicated Wednesday that this time the choice would not come from the White House.

"The State Department will make a national interest determination," she said.

Advocates on both sides of the issue campaigned hard on Keystone.

Environmentalists have staged events -- including a large rally in Washington, D.C., over Presidents Day weekend -- to protest the project, which they say will greatly accelerate climate change (Greenwire, Feb. 18).

The organizers of that event, including Sierra Club and 350.org, also held events around the country and online that drew millions of participants, Sierra Club's Eddie Scher said.

"Our messaging hasn't changed," he said just before State's announcement. "They need to look at climate change, and they need to reject the pipeline."

The pipeline is backed by the petroleum industry, congressional Republicans, labor unions and Canada.

At a recent event hosted by the National Association of Manufacturers in Washington, Alex Pourbaix, president of oil pipelines and energy for TransCanada, said rejection of his company's permit would simply force the Alberta petroleum industry to use higher-emitting transport options, including trucks, trains and barges.

"Our opponents are trying to make this debate about [greenhouse gases]," he said. "As Keystone will operate with virtually no emissions, the target is clearly Canada's oil sands rather than our pipeline."



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