Keystone XL gets blessing from U.S. State Department, clears major hurdle

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FILE - In this Feb. 8, 2013, file photo, Secretary of State John Kerry, right, speaks with reporters during a news conference with Canadian Foreign Minister John Baird at the State Department in Washington. The State Department on Friday, March 1, 2013, raised no major objections to the Keystone XL oil pipeline and said other options to get the oil from Canada to U.S. Gulf Coast refineries are worse for climate change. But the latest environmental review stops short of recommending whether the project should be approved. (AP Photo/J. Scott Applewhite)

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 in a conference call Friday minutes after the release of its long-awaited environmental assessment of Keystone XL.

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

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

Government analysts also found that 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's carbon-intensive oilsands 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 original permit application last year due to concerns about the pipeline's proposed path across a crucial aquifer in the state of Nebraska.

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

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

In fact, 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. over the next decade, regardless of whether the pipeline is ever built.

The analysis also put a far 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 develop the oilsands regardless of whether Keystone XL ever sees the light of day.

"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 real progress in the long and winding 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 was confident Obama would base his ultimate decision on “science and fact.”

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

Environmentalists were putting their own spin on the report, with one group saying the conclusion that the U.S. doesn't need Keystone to meet its energy demands gives Obama the grounds to reject it.

“If Keystone isn't needed, why would President Obama approve it?" John Bennett, executive director of Sierra Club Canada, said in a news release.

The State Department will now 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. We want to make sure we serve the best interests of our country, so we are really taking a very thorough look and we’re waiting for everyone to comment and give us their feedback."

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 over the past two years.

Bill McKibben, head of 350.org, called the State Department report "astonishing."

The department, tasked with assessing Keystone XL because it crosses an international border, is simply wrong to suggest the pipeline won't fuel more oilsands development, he said, adding that opinion 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.

"We're hopeful that President Obama and Secretary of State Kerry conclude that the bureaucrats have done a poor job here."

Both Obama and Kerry have given environmentalists hope that Keystone might be nixed thanks to their respective high-profile pledges in recent weeks to do battle against climate change.

Obama himself will ultimately decide whether to approve the pipeline. That decision could still be months away, however.

The State Department will need to respond to the public comments on its draft analysis before finalizing the report. As well, State officials still have to conduct a separate examination into whether Keystone XL is in the national interest of the United States.

One pipeline proponent offered a jaundiced view about the progress.

"In 2010, we went through this process and it took nearly a year between when the State Department released the draft environmental impact statement and draft supplemental report," Terry Lee, a Republican congressman from Nebraska, said in a statement.

"So while I’m pleased to see this process is again moving forward, I have zero confidence that this matter will be resolved in a timely fashion. We’ve been to this rodeo before."

Girling shared those sentiments, calling the repeated delays "very, very frustrating."

"This is four and a half years of a review process that historically has taken approximately 18 to 20 months to complete. That said, we want to make sure that it's done in a very thorough way," he said.

"There hasn't been a rock uncovered that I can think of and so I think we have addressed every issue that anybody has raised."

He added that a late 2014 or early 2015 startup for Keystone XL is still "doable."