Keystone Pipeline Inches Toward Green Light With Crucial Climate Finding

View of the Syncrude oil sands extraction facility near the town of Fort McMurray in Alberta Province, Canada on October 25, 2009. Greenpeace is calling for an end to oil sands mining in the region due to their greenhouse gas emissions and have recently staged sit-ins which briefly halted production at several mines. At an estimated 175 billion barrels, Alberta's oil sands are the second largest oil reserve in the world behind Saudi Arabia, but they were neglected for years, except by local companies, because of high extraction costs. Since 2000, skyrocketing crude oil prices and improved extraction methods have made exploitation more economical, and have lured several multinational oil companies to mine the sands.  
National Journal
Ben Geman
Jan. 31, 2014, 10:07 a.m.

The State De­part­ment said Fri­day that the pro­posed Key­stone pipeline is un­likely to bring a surge in green­house-gas emis­sions, a find­ing that brings it closer to ap­prov­al but won’t end the in­tense lob­by­ing fight over the pro­ject.

A long-awaited fi­nal en­vir­on­ment­al ana­lys­is con­cludes that build­ing Key­stone XL would prob­ably not have much ef­fect on the rate of ex­pan­sion of car­bon-in­tens­ive oil sands pro­jects in Canada.

“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 prices, oil-sands sup­ply costs, trans­port costs, and sup­ply-de­mand scen­ari­os,” the re­port states.

That’s crit­ic­al, be­cause Pres­id­ent Obama said last year that he would only ap­prove Tran­sCanada’s pipeline if he’s con­vinced it won’t “sig­ni­fic­antly ex­acer­bate” car­bon emis­sions.

The re­port is a mile­stone in the years-long battle over the pipeline that would bring hun­dreds of thou­sands of bar­rels of oil per day from Ca­na­dian oil sands pro­jects to Gulf Coast re­finer­ies.

But it’s hardly the end, and ap­prov­al of the pro­ject is far from as­sured.

The State De­part­ment will now move in­to a sep­ar­ate, 90-day pro­cess to take in­put from oth­er fed­er­al agen­cies to help de­cide wheth­er ap­prov­ing Key­stone is in the “na­tion­al in­terest.”

State will also take more pub­lic com­ment. But there is no dead­line for fi­nal State and White House de­cisions on the pro­ject.

The White House em­phas­ized late Fri­day that plenty of vet­ting re­mains be­fore a de­cision ar­rives.

“The Fi­nal Sup­ple­ment­al En­vir­on­ment­al Im­pact State­ment in­cludes a range of es­tim­ates of the pro­ject’s cli­mate im­pacts, and that in­form­a­tion will now need to be closely eval­u­ated by Sec­ret­ary [of State John] Kerry and oth­er rel­ev­ant agency heads in the weeks ahead,” said Matt Lehrich, a White House spokes­man.

“A de­cision on wheth­er the pro­ject is in the na­tion­al in­terest will be made only after care­ful con­sid­er­a­tion of the SEIS and oth­er per­tin­ent in­form­a­tion, com­ments from the pub­lic, and views of oth­er agency heads,” he said.

The re­port is non­ethe­less good news for Ca­na­dian of­fi­cials, who have strongly pushed for U.S. ap­prov­al, as well as ma­jor busi­ness and oil in­dustry groups and ma­jor uni­ons that back the pro­ject.

An ar­ray of pipeline back­ers wel­comed the re­port.

“The only thing left is for Pres­id­ent Obama to de­clare that this pro­ject is in our na­tion’s in­terest. The po­ten­tial to im­prove our trade re­la­tions with our top ally, Canada, while en­han­cing our en­ergy se­cur­ity is good for all Amer­ic­ans,” said Jack Ger­ard, pres­id­ent of the Amer­ic­an Pet­ro­leum In­sti­tute, an oil in­dustry lob­by­ing group fight­ing for Key­stone’s ap­prov­al.

State’s re­port is a blow to en­vir­on­ment­al groups bat­tling the pipeline. They con­tend that Key­stone will worsen cli­mate change by en­abling faster ex­pan­sion of car­bon-in­tens­ive oil sands pro­duc­tion pro­jects.

“The State De­part­ment’s en­vir­on­ment­al re­view of the Key­stone XL pipeline is a farce. Since the be­gin­ning of the as­sess­ment, the oil in­dustry has had a dir­ect pipeline in­to the agency,” said Friends of the Earth Pres­id­ent Erich Pica.

Pipeline op­pon­ents now plan to fo­cus on sway­ing fed­er­al of­fi­cials — and pub­lic opin­ion — dur­ing the “na­tion­al in­terest de­term­in­a­tion” pro­cess.

“This en­vir­on­ment­al im­pact study — which ig­nores the evid­ence gathered in the past year that in­dic­ates the pipeline will in­crease our level of emis­sions — is by no means the fi­nal word on the Key­stone XL pipeline,” said Neera Tanden, pres­id­ent of the Cen­ter for Amer­ic­an Pro­gress, a left-lean­ing think tank and ad­vocacy group with close ties to the White House.

The pro­ject is at the cen­ter of the highest-pro­file fight over cli­mate change in re­cent years, and it presents thorny prob­lems for Obama and Sec­ret­ary of State Kerry, who has made glob­al warm­ing a ma­jor fo­cus dur­ing his long polit­ic­al ca­reer.

Obama faces col­lid­ing pres­sures from Canada, a key in­ter­na­tion­al ally, and the en­vir­on­ment­al move­ment that’s part of his polit­ic­al base.

Sup­port for the pipeline from a num­ber of big uni­ons, an­oth­er key Demo­crat­ic con­stitu­ency, adds to the du­el­ing pres­sures.

In a sign of the polit­ic­al sens­it­iv­ity of Key­stone XL, the State De­part­ment on Fri­day sought to care­fully stage-man­age the re­port’s re­lease.

The de­part­ment held a morn­ing phone brief­ing for a small group of re­port­ers, with the in­form­a­tion un­der em­bargo un­til the study’s re­lease, and later held a tele­con­fer­ence for a wider group of journ­al­ists.

As­sist­ant Sec­ret­ary Kerri-Ann Jones cau­tioned that find­ings about Key­stone’s re­la­tion­ship to oil sands pro­duc­tion levels — which rest on “un­cer­tain and change­able” as­sump­tions — are just one factor in the fi­nal de­cision.

“The fi­nal sup­ple­ment­al [re­port] presents con­sid­er­able ana­lys­is, but it does not an­swer the broad­er ques­tion about how a de­cision on the pro­posed pro­ject would fit in­to the broad­er na­tion­al and in­ter­na­tion­al ef­forts to ad­dress cli­mate change or oth­er ques­tions of for­eign policy or en­ergy se­cur­ity,” said Jones, who heads State’s Bur­eau of Oceans and In­ter­na­tion­al En­vir­on­ment­al and Sci­entif­ic Af­fairs.

“These are the per­spect­ives that we’re go­ing to be ad­dress­ing in the next phase, in the na­tion­al in­terest de­term­in­a­tion,” she said.

The re­port provides a few rays of hope for pipeline crit­ics.

It ac­know­ledges that oil from Canada’s oil sands pro­jects brings more “li­fe­cycle” green­house gas emis­sions—that is, total pol­lu­tion from ex­trac­tion, pro­cessing and oth­er steps—than the grades of heavy oil it would dis­place at U.S. re­finer­ies.

While that doesn’t mat­ter so much if the oil sands will be de­veloped and get to mar­ket re­gard­less of wheth­er Key­stone is built, the re­port says it’s not quite that simple if there are ma­jor mar­ket and in­fra­struc­ture hurdles.

It notes that a very steep drop in oil prices, and po­ten­tial “long-term” con­straints on any new pipeline ca­pa­city—if that raises trans­port­a­tion costs—could lead to a “sub­stan­tial” ef­fect on oil sands pro­duc­tion levels.

“While still flawed, this en­vir­on­ment­al re­view re­cog­nizes that the Key­stone XL tar sands pipeline could have a sig­ni­fic­ant ef­fect on car­bon pol­lu­tion, de­pend­ing on vari­ables such as oil prices and trans­port­a­tion costs,” said Rep. Henry Wax­man, the top Demo­crat on the House En­ergy and Com­merce Com­mit­tee.

But the over­all find­ing that build­ing Key­stone prob­ably wouldn’t be a cata­lyst for faster oil sands pro­duc­tion promp­ted fresh pres­sure on Obama from Re­pub­lic­ans and some pro-pipeline Demo­crats to ap­prove the pro­ject.

“The pres­id­ent could start cre­at­ing good-pay­ing jobs with a stroke of his pen, yet for five years now the pres­id­ent has picked far-left spe­cial in­terest groups over jobs for middle-class Amer­ic­ans,” said Sen. John Thune, a South Dakota Re­pub­lic­an who is part of the Sen­ate GOP’s lead­er­ship team.

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