Keystone XL Pipeline Clears Hurdle; Showdown Between Greens and Big Oil Looms

With the clock now ticking on President Obama's decision, expect him to face an avalanche of lobbying from both sides.

(Photo: Yuri Gripas/Reuters)



Jan 31, 2014· 2 MIN READ
Salvatore Cardoni holds a political science degree from the George Washington University. He's written about all things environment since 2007.

Setting the stage for a contentious home stretch on one of the most polarizing issues in the Obama presidency, the State Department on Friday released its final environmental impact statement for the Keystone XL pipeline. It concluded that “approval or denial of…the proposed Project is unlikely to significantly impact the rate of extraction in the oil sands.”

First proposed by Calgary-based TransCanada in 2008, the $7 billion, 875-mile pipeline would carry up to 830,000 barrels of crude oil per day from Alberta’s tar sand reserves to a vast oil depot in Oklahoma, and eventually to refineries near Houston.

The release of the report, called the Final Supplemental Environmental Impact Statement for the Keystone XL Project, triggers a 90-day review period in which the State Department—which has jurisdiction over such cross-border projects—must study whether building Keystone XL would be “in the U.S. national interest.” The ultimate decision lies with President Obama, who told an audience at Georgetown University in June that he wouldn't approve the pipeline if it would "significantly exacerbate” the problem of carbon emissions.

That’s become the crux of the issue ever since: Will the EIS find that building the pipeline will lead to expanded production of oil in the tar sands region of Northern Alberta, and hence increased emissions, such as it would be “game over for the climate,” as NASA climatologist James Hansen has famously warned? TransCanada Corp. wouldn’t be spending $7 billion and putting up with this multiyear process if it wasn’t sure it could fill Keystone XL for decades to come while charging for the privilege.

The final EIS, like the draft version released last March, finds that the oil would find its way out of Canada whether or not Keystone XL was built. But that’s debatable. Tar sands oil and shale oil are currently moving south via rail at such a rate that last year was the worst ever for accidents involving trains hauling oil, with dozens killed. This transportation method is likely to face opposition and increased regulation. The only other planned pipeline would head west, through territory controlled by Canada’s First People, who enjoy a great deal of sovereignty over tar sands oil because of the health and habitat damages experienced in the region where it’s mined. Even Canada's minister of natural resources, Joe Oliver, told the Financial Times last year that to get the oil out of Canada, “if we can’t build the infrastructure then the resources are stranded.”

Mainstream news outlets such as The Washington Post, The Wall Street Journal, and The New York Times report that the State Department has again concluded that Keystone XL’s climate effects would be negligible, with The New York Times concluding that it appears “to indicate that the project has passed Mr. Obama’s climate criteria.”

Still, environmentalists found enough in the report to rally—and lobby—around. The National Resources Defense Council said in a statement that the State Department “has, for the first time, acknowledged that the proposed project could accelerate climate change.” Retiring California Rep. Henry Waxman, one of the green movement’s fiercest advocates on Capitol Hill, added that "while still flawed, this environmental review recognizes that the Keystone XL tar sands pipeline could have a significant effect on carbon pollution."

Pipeline proponents, including the Canadian government and most Republicans in Congress, say it would reduce dependence on foreign oil and increase jobs. But the actual number of jobs would be minimal. "Once the proposed project enters service, operations would require approximately 50 total employees in the United States: 35 permanent employees and 15 temporary contractors,” according to the new EIS. Outside analysis found that the counterintuitive boost in gas prices that would result in the Midwest if the pipeline got built (thus ending a glut at the Oklahoma depot) would destroy jobs.

Green groups have accused the State Department of relying on consultants with prior business ties to TransCanada. This, in turn, prompted the department’s inspector general to start an investigation, which is pending.

“In what could be perceived as eagerness to please the oil industry and Canadian government, the State Department is issuing this report amidst an ongoing investigation into conflicts of interest, and lying, by its contractor,” Erich Pica, the president of Friends of the Earth, wrote in an email. “By letting the oil industry influence this process, Secretary Kerry is undermining his long-established reputation as a leader in the fight against climate change.”

While the clock ticks on Obama's decision, expect him to face an avalanche of lobbying from both sides.