Keystone oil sands pipeline moves one step closer to approval

The State Department said Friday that a proposed pipeline slated to carry Canadian oil sands to Gulf Coast refineries poses little environmental risk if managed properly, a decision that moves the controversial project one step closer to final approval.

The finding sets the stage for a collision between the White House and environmentalists, who bitterly oppose the project and warn federal approval could sap their enthusiasm for President Obama heading into next year’s election.

The State Department’s environmental impact statement of TransCanada’s proposed $7 billion, 1,700-mile Keystone XL pipeline marks one of the last procedural hurdles in a years-long review of the project.

The study states there would be “no significant impacts to most resources” along the route if the company adheres to conditions and mitigation measures that pipeline regulators and environmental agencies demand.

The State Department stressed Friday that the study "does not represent a decision" on Keystone XL, but the document nonetheless calls the pipeline the "preferred alternative."

"It should not be seen as a lean in any direction either for or against this pipeline," Kerri-Ann Jones, an assistant secretary at the State Department, told reporters Friday.

The Obama administration will make the final decision on the project in the coming months.

Amid early signs that the State Department would sign off on the project, environmental groups have ratcheted up political pressure on Obama to reject the pipeline proposal, arguing that the decision will be a “bellwether” for the White House on environmental policy.

Opponents of the project note that Canadian oil sands production results in greater greenhouse gas emissions than traditional oil production, and they argue that the pipeline — which could transport up to 830,000 barrels per day — could suffer from spills that pollute waters along the route.

Environmentalists are midway through a two-week protest of the pipeline at the White House. Hundreds of people have been arrested.

But many Republicans, as well as the oil industry, are pushing for the approval of the pipeline. They argue that the pipeline, which would expand oil sands imports, would boost the economy and make the country less reliant on Middle Eastern oil.

The State Department said Friday it worked closely with the Environmental Protection Agency on the final review. EPA called a previous review “insufficient,” arguing that it did not adequately take into account the project’s environmental impacts.

“During the process, the Department consulted frequently with EPA to address the questions and requests for further information from EPA’s public comment letters,” the State Department said in a summary of the final environmental review.

Now that the State Department has released its final environmental assessment of the project, the public has 90 days to weigh in. The administration is holding nine public meetings in the coming months around the country.

Following the public comment period, the Obama administration must decide whether the pipeline is in the national interest. That review will take into account the project's impacts on energy security and the economy.

The State Department has said a final decision is expected by the end of the year.

The document, in calling the pipeline the State Department's preferred approach, notes increasing demand for oil in the Gulf Coast and that many sources outside North America face declining production or are not secure and reliable, including the Middle East, Africa, Mexico and South America.

It also claims that the Canadian resources will be developed regardless, although environmentalists say that plans for pipelines that would ship oil sands to nations including China face huge barriers.

“If the proposed Project is not implemented, Canadian producers would seek alternative transportation systems to move oil to markets other than the U.S. Several projects have been proposed to transport crude oil out of using pipelines to Canadian ports,” the document states, later noting that the pipeline is not likely to affect the amount of oil produced from the oil sands.

The study acknowledges that oil sands are more greenhouse-gas-intensive than other forms of oil it would replace in the U.S., but then suggests that oil sands’ disadvantage on emissions will fade over time.

“Current projections suggest that the amount of energy required to extract all crude oils is projected to increase over time due to the need to extract oil from ever deeper reservoirs using more energy intensive techniques. However, while the greenhouse gas intensity of reference crude oils may trend upward, the projections for the greenhouse gas intensity of Canadian oil sands crude oils suggests that they may stay relatively constant,” it states.

The Keystone XL pipeline has been under federal review for years. TransCanada filed its permit application with the State Department at the end of 2008. The department issued a draft environmental impact statement in April of 2010 and a supplemental environmental impact statement in April of 2011.

TransCanada has come under fire in recent months after its existing Keystone pipeline, which carries oil from Canada to Oklahoma, sprung a series of leaks. But TransCanada insists that it has learned from the incidents and will ensure that the Keystone XL project has state-of-the-art leak-detection technology.