Feds meet with enviro groups as Keystone decision nears

WASHINGTON — As the State Department readies its final review of the proposed Keystone XL pipeline, environmentalists on Monday stepped up their fight against the project.

Representatives from the Natural Resources Defense Council, Sierra Club, 350.org, League of Conservation Voters and Voices for Progress outlined their concerns in a late Monday morning meeting with Kerri-Ann Jones, the assistant secretary of state for oceans and international environmental and scientific affairs.

The closed-door meeting came as the State Department puts the finishing touches on its final supplemental environmental impact statement, following the release of a March draft that concluded that the amount of carbon emissions tied to oil sands development in Canada is unlikely to change much, even if Keystone XL is never built.

The emissions question is critical because President Barack Obama in June declared that he would only approve the $5.4 billion pipeline “if this project does not significantly exacerbate the problem of carbon pollution.”

Debating Keystone’s effect

The State Department’s draft environmental analysis assumed that trains, trucks and other pipelines would end up transporting Alberta’s diluted bitumen to the U.S. and other markets anyway, so it calculated that Keystone XL would be responsible for adding just 0.83 million metric tons of carbon dioxide to the atmosphere annually — a figure far lower than critics have predicted.

Because the oil sands extraction process typically involves steam or open-pit mining, it is particularly energy-intensive, and environmentalists say the result is a crude-like product with a particularly high carbon price tag. Oil industry leaders say the diluted bitumen flowing from the oil sands is no more carbon-intensive than crudes from Venezuela and other countries that it would displace.

Moving forward: Oil begins flowing through Keystone XL’s southern leg

In Monday’s meeting, environmentalists asked the State Department officials to revise the March analysis and agree with their conclusion that Keystone XL is the linchpin to unlocking the development of Alberta, Canada’s oil sands.

Keystone XL will “enable tar sands expansion . . . and lead to that significant increase in carbon pollution and fail the president’s climate test,” said Danielle Droitsch, director of the Natural Resources Defense Council’s Canada Project, who was in the meeting.

“The State Department can’t afford to ignore this information to make sure they have a fair and balanced report,” Droitsch said. “It is critical that the State Department take this information and integrate it into the actual analysis, because it has very specific bearing on the key question of climate.”

Alternate routes

Recently, some oil industry leaders have publicly discounted the importance of Keystone XL, insisting that the surge in trucks and trains transporting crude from North Dakota and Alberta means the pipeline is no longer as critical as it was when TransCanada Corp. first proposed it more than six years ago.

But environmentalists in Monday’s meeting pointed to a slew of recent reports from industry representatives and analysts that suggest otherwise. For instance, in September, RBC analysts said that a Keystone XL rejection likely would at least temporarily slow some oil sands growth. The environmentalists also cited commentary from Goldman Sachs and projections from the International Energy Agency, which ties a predicted doubling in oil sands production to sufficient pipeline capacity.

“The financial community itself has acknowledged that tar-sands-by-rail is a niche industry,” Droitsch said. “It’s not a replacement for pipelines.”

Keystone XL is expected to transport up to 830,000 barrels of oil per day (100,000 from the Bakken shale formation), which is several times what is currently coming on rail cars from Canada.

But the Canadian Energy Research Institute predicted in May that about 700,000 barrels per day of new rail capacity is expected to come online by 2016.

Keystone XL supporters stress that with or without the pipeline, Canadian oil sands will make their way to the marketplace.

“Today, increasing volumes of oil produced in Canadian and U.S. oil fields are getting to market using rail, trucks and barges – and that will continue regardless of the outcome of the Keystone XL presidential permit,” said TransCanada spokesman Shawn Howard.

“The facts are that Keystone XL will provide Americans with sources of Canadian and U.S. oil that are needed in Gulf Coast refineries to create products we rely on every day, that it will help push out sources of oil from places like Venezuela and the Middle East — regions that are often hostile to America’s interests and values — and it will get oil to key delivery points using the safest method of transportation,” Howard added.

The environmental groups also urged the State Department to look closely at the U.S. energy supply-demand picture when deciding whether Keystone XL is in the national interest. Keystone XL critics say a decline in U.S. oil demand plus the amount of light, sweet crude flowing to Gulf Coast refineries from American fields means the border-crossing pipeline is not needed.

The State Department was inundated with about 1.2 million public comments filed in response to its draft study, and had to review them as it developed a final environmental impact statement.

Pipeline delays: TransCanada pushes Keystone XL pipeline start to 2016

Industry representatives and other stakeholders are buzzing that the final environmental review could be issued soon, possibly before the end of the year.

While that is the most significant milestone before the State Department’s determination whether the proposed border-crossing pipeline is in the “national interest,” there are many more steps before a final decision to issue or deny a presidential permit to the project:

  • The public will have a chance to weigh in on the State Department’s final supplemental environmental impact statement, during a 30-day public comment period.
  • The State Department will consult with the Energy Department, EPA and other agencies before it makes a final national interest determination.
  • The national interest determination is also subject to a 45-day comment period.
  • The EPA and other agencies can appeal the final decision.

Environmentalists in Monday’s meeting pressed the State Department to hold at least one more public hearing before making a national interest determination.

TransCanada’s Howard noted that the project has been scrutinized for more than five years in a process that has generated “more than 15,000 pages of detailed, technical and scientific reviews.”

“There have been more than 100 public meetings on this project, it has been reviewed by about two dozen government agencies – every aspect has been commented on and studied,” Howard said. “We have a great deal of respect for the regulatory process that we are involved in, and look forward to this process coming to a conclusion.”

Although the 875-mile northern leg of the project is on hold during the government review, TransCanada’s southern “Gulf Coast project” reportedly began shipping oil on Monday.

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Keystone XL protesters arrested in downtown Houston (video)