© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
March 1, 2013 9:55 pm
The proposed Keystone XL pipeline to bring heavy oil from Canada to the south of Nebraska has cleared an important hurdle, after an environmental impact statement concluded it would have only a marginal effect on greenhouse gas emissions.
The state department study argued that production in the oil sands of Alberta would increase even if the pipeline were not built because companies could make more use of rail transport to reach US refineries.
It also suggested that building Keystone XL would create more than 42,100 jobs across the US for one to two years, although once in operation it would support just 35 permanent jobs.
The conclusions make it more likely that President Barack Obama’s administration will approve the controversial project, which has become a battleground for the oil industry and environmental campaigners.
Formally, the state department has responsibility for deciding on the pipeline, because it crosses the border from Canada.
The pipeline would carry diluted bitumen from the oil sands – also known as the tar sands – which create higher levels of greenhouse gas emissions than many other forms of oil production. That has made it a prime target for climate change campaigners.
Kim Huynh of the Tar Sands Blockade campaign described the state department’s study as “a slap in the face to the people most impacted by tar sands expansion”.
She added: “For all of us hoping for a livable climate, Keystone XL heralds death and destruction.”
Alison Redford, premier of Alberta, praised the study as “extensive, exacting and comprehensive”.
TransCanada, the company behind the project, addressed earlier concerns about leaks from the pipeline by re-routing it away from the environmentally sensitive Sand Hills area of Nebraska.
The new route is 875 miles long, and could carry up to 830,000 barrels of diluted bitumen per day to Steele City, Nebraska, where it will connect with a southern section already under construction. The aim is to connect to refineries on the Gulf of Mexico coast that are configured to use heavy oil including Canadian production.
The pipeline could also take some production from the fast-growing Bakken shale of North Dakota, the heart of the new US oil boom.
The state department study suggests that the oil sands of Alberta will be developed whether or not Keystone XL is built.
It argues: “Approval or denial of any one crude oil transport project, including the proposed project [Keystone XL], remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the US.”
Blocking Keystone XL would cut output from the oil sands by only 0.4-0.6 per cent by 2030, the study said. Even if all new pipeline capacity were restricted, oil sands production would drop just 2-4 per cent.
That view contradicts those of environmental campaigners and some analysts, who argue that new pipelines, and Keystone XL in particular, are essential if oil sands production is to increase in the second half of this decade and beyond.
The study argues that other transport routes, particularly rail, would be capable of “providing the capacity needed to transport all incremental Western Canadian and Bakken crude oil production to markets if there were no additional pipeline projects approved”.
The state department will now take comments about the study, before a final decision from the administration on whether the pipeline is in the US national interest.
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in