Jim Snyder, Mark Drajem and Jim Efstathiou Jr. (c) 2014, Bloomberg News
WASHINGTON — The proposed Keystone XL pipeline cleared a key hurdle Friday with a government study that found the project’s impact on the climate would be minimal, which supporters said meets President Barack Obama’s test for building the project.
In its final technical review, the State Department found the Canada-U.S. oil pipeline would not greatly increase carbon emissions because the oil sands in Alberta will be developed anyway, a department official said on a call with reporters.
The environmental impact finding, while not the final decision, is important because Obama has said he wouldn’t approve Keystone if it would exacerbate carbon pollution. Now the pipeline’s fate comes down to broader questions about whether the project is in the U.S. national interest, weighing factors such as energy needs and diplomatic relations.
“No matter what the SEIS says, it would be premature for either side to tear down the goalposts because there is still a long part of the game left to be played,” said Daniel J. Weiss, senior fellow at the Center for American Progress, a Washington- based research group opposed to the pipeline.
TransCanada applied more than five years ago for a permit to build the pipeline through the U.S. heartland, connecting the oil sands with refineries along the coast of Texas and Louisiana. It’s planned 830,000-barrel-a-day capacity would represent a fraction of U.S. oil imports, though the $5.4 billion project has spawned a multimillion-dollar lobbying fight and is forcing Obama to choose between angering an ally in Canada or his supporters in the environmental movement.
“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 oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil,” according to the report.
White House press secretary Jay Carney said the Supplemental Environmental Impact Study is “another stop in the process” and declined to say today when Obama will make his final determination.
Supporters have said the pipeline would create thousands of construction jobs and boost the nation’s energy security.
“When you add all that up, if they can’t show this project is in our national interest, what is?” Cindy Schild, senior manager for refining and oil sands policy at the American Petroleum Institute, said in an interview. “The only thing left if for the president to decide that this project is in our national interest.”
While Friday’s report deviated from a March draft in some ways, the revisions aren’t as sweeping as opponents had sought.
The report includes a new analysis of pipeline safety issues. It incorporates data from a July 2010 rupture of a 30- inch Enbridge Inc. pipeline in Michigan that spilled more than 843,000 gallons into a creek feeding the Kalamazoo River, the official said. It includes a discussion of new measures to avoid and respond to spills.
The agency also deepened its analysis of market forces that may impact future development of Canada’s oil sands crude. Still, the State Department endorsed its earlier finding that the rejection of any single project to deliver Canadian oil won’t significantly impact the rate of development of oil sands crude or the refining of heavy crude on the Gulf Coast, according to the department officials.
The report does identify a scenario of lower oil prices and oil pipeline constraints that may slow development of the oil sands. Opponents have sought to knock down arguments that Keystone doesn’t matter because trains and other pipelines will emerge to deliver the oil, pointing to recent oil-train crashes to show railroads aren’t a good alternative.
The EPA sent a letter last year to the State Department saying the final report should include a “more careful review” of the ability of trains to move the heavy crude out of Alberta.
The State Department is handling the review because the project crosses an international border. The environmental assessment is important because Obama said in a June speech on climate change that he wouldn’t approve Keystone if it would “significantly exacerbate the problem of carbon pollution.”
“The question going into the State Department’s final environmental impact statement is this: Who will State listen to?” said Jim Murphy, senior counsel at the National Wildlife Federation, a Reston, Va.-based environmental group. “Will State reverse course after listening to the Environmental Protection Agency experts who criticized the first draft as ‘inadequate’ and the second draft as ‘insufficient’ on climate impacts, oil spill risks, and threats to water resources?”
The report includes an analysis of greenhouse-gas emissions from a barrel of tar sands compared with barrel of heavy crude from Venezuela or Mexico, the official said. Still, the new calculation is essentially unchanged from the March report, which found that Keystone won’t significantly contribute to climate change, the official said.
The national interest determination will weigh factors other than environmental risks, including its importance to the U.S.-Canada relationship, the economic benefits it offers to local communities and how it would improve U.S. energy security. Eight federal agencies have 90 days to give their views to the State Department.
The State Department official said Friday’s report makes no recomendations on approving or denying the project.
The March report generated about 1.5 million public comments and another opportunity to weigh in during the national interest determination will open on Feb. 5. The executive order that establishes the process for weighing international pipeline projects doesn’t set a deadline for the department to make a final recommendation.
Also expected any day is a report from the State Department’s Inspector General, on a complaint from Friends of the Earth that the department’s contractor reviewing the project is biased because of its ties to TransCanada and the oil industry. Critics say they hope that report would undercut any of the State Department’s conclusions, and force a re-start of the entire review process.
The department has addressed potential conflicts of interest and found that third-party contractors do not stand to gain financially from the project, the official said.
Douglas Welty, a spokesman for the inspector general, said no date had been set for the release though it is expected early this year.
“Since the beginning of the assessment, the oil industry has had a direct pipeline into the agency,” Erich Pica, president of Friends of the Earth, said in a statement Friday.
Production and refining of Alberta’s oil sands release more greenhouse-gas emissions than conventional forms of oil. Canadian supporters have argued that the oil will displace heavy crude from Venezuela and Mexico that has a similar carbon footprint and that the project will create thousands of construction jobs.
A decision by Obama to approve the pipeline will anger the thousands of activists who’ve held dozens of protests, written hundreds of letters, and are now pledging nationwide acts of civil disobedience in opposition to Keystone.
“Let’s be honest folks, if State Dep’t can’t get this right we will sue because ranchers’ water is more important then flawed status quo process,” Jane Kleeb, the head of Bold Nebraska, a local group fighting the pipeline, tweeted Jan. 29.
Credo Action, Rainforest Action, and the Other 98 Percent have enlisted about 76,000 volunteers to sign a “pledge to resistance” to risk arrest if it looked like the State Department would recommend approving Keystone.
Rejecting Keystone carries its own consequences for Obama. It would anger Canadian officials and could hurt Democrats up for re-election, including Sens. Mark Begich of Alaska and Mary Landrieu of Louisiana.
“The president has had five years of inaction on the Keystone XL pipeline,” said Brian Straessle, a spokesman for the American Petroleum Institute, a Washington-based representative for the oil industry. “If 2014 is really his ‘year of action,’ he should start by approving Keystone.”
— With assistance from Theophilos Argitis in Ottawa, Margaret Talev in Washington and Jim Efstathiou Jr. in New York.