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Keystone pipeline clears hurdle

Won't speed oilsands development: report

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WASHINGTON -- The U.S. State Department says rejecting TransCanada's Keystone XL pipeline would neither put the brakes to Alberta's oilsands development nor significantly diminish greenhouse-gas emissions, critical findings that could help the White House green-light the controversial project.

The pipeline "remains unlikely to significantly impact the rate of development of the oilsands or the demand for heavy crude oil in the United States," a State Department official told reporters Friday minutes after the draft report was released to the public.

Canada will develop its lucrative oilsands "with or without the proposed project," the State Department's analysis reads.

The report acknowledges developing the oilsands would cause greenhouse-gas emissions but added other methods used to transport the oil -- rail, trucks and barges -- release even more.

Government analysts also found Keystone XL would produce, each year, the equivalent carbon-dioxide emissions of 620,000 passenger cars operating for a year. But those emissions would likely occur anyway because of fuels produced and obtained from other sources, the report found.

The analysis also says the $7-billion pipeline, which would carry bitumen from Alberta through six U.S. states to Gulf Coast refineries, would cause "no significant impacts to most resources along the proposed project route."

U.S. President Barack Obama rejected TransCanada's permit application last year due to concerns about the pipeline's proposed path across a crucial aquifer in Nebraska.

He invited the Calgary company to submit a new application with an altered route; TransCanada did so last fall.

The State Department has given that new route its blessing, too, despite claims by environmentalists that risks to the Sand Hills region remain dire.

"The new proposed route is 509 miles shorter than the previously proposed route; however, it would be approximately 21 miles longer in Nebraska to avoid sensitive areas including the... Sand Hills region," the report reads.

The findings mean TransCanada has cleared a major hurdle in its marathon bid to win approval for Keystone XL from the Obama administration.

It wasn't all good news for the company, however.

The report also cast doubt on one of the strongest pro-pipeline arguments -- that Keystone XL will help the U.S. meet its energy needs. The report suggests the growth in rail transport of oil from Western Canada and America's Great Plains could provide plenty of energy for the U.S. during the next decade, regardless of whether the pipeline is built.

The analysis also put a more conservative estimate on the number of jobs that would be created by Keystone XL. Proponents of the pipeline have predicted a veritable hiring bonanza, with some Republicans suggesting hundreds of thousands of jobs are in the offing.

But the report said that while the pipeline's construction would support 42,100 jobs during the one- to two-year construction period, with total wages of about $2 billion, only 35 permanent and temporary jobs will remain once Keystone XL is fully operational.

Nonetheless, TransCanada CEO Russ Girling agreed with the State Department on the more significant finding -- Canada will tap into the oilsands regardless of whether Keystone XLgoes ahead. "The marketplace will determine what's produced and what's refined. The oil will find its way to the Gulf Coast," Girling said in Calgary. "A pipeline is by far the safest and most efficient way to transport oil to markets."

Alberta Premier Alison Redford said she was pleased by the State Department's findings, saying the draft analysis represents progress in the long road to Keystone XL approval.

"We believe that the people involved in this have listened to what we have said with respect to our environmental record here in Alberta," she said.

She added she's confident Obama would base his ultimate decision on "science and fact."

Canada's natural resources minister, Joe Oliver, wouldn't comment on the report, saying the government is reviewing it.

The State Department will hold 45 days of public hearings into the draft report's findings, something assistant Secretary of State Kerri-Ann Jones stressed repeatedly throughout the brief conference call.

For that reason, she said, the analysis shouldn't be perceived as the department's final word on Keystone XL.

"This paper does not come out one way or the other and make a decision about what should happen with this project," she said. "We're not at that stage in the process.... We're looking at this very objectively."

That didn't assuage environmentalists who have assailed the project for years as a "carbon bomb" and a symbol of "dirty oil." They've also asserted the pipeline poses serious health threats to communities and wildlife along its path, and have organized high-profile public protests against Keystone XL during the past two years.

Bill McKibben, head of, called the report "astonishing."

The department, tasked with assessing Keystone XL because it crosses an international border, is sorely mistaken that the pipeline won't fuel more oilsands development, he said, adding that finding is "at odds" with scientists around the world.

"Everybody who reads the industry press in Canada, anyone who pays attention to the financials, knows that if they don't have it, they aren't going to be able to expand the tarsands the way they want to," McKibben said.

Both Obama and Secretary of State John Kerry have given environmentalists hope Keystone might be nixed, given their respective pledges in recent weeks to battle against climate change.


-- The Canadian Press

Republished from the Winnipeg Free Press print edition March 2, 2013 A13


Updated on Saturday, March 2, 2013 at 11:29 AM CST: replaces photo

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