July 29, 2010 11:32 pm

Pipeline leak deals blow to Canada’s oil sands industry

Canada’s oil sands industry was trying to defuse a fresh public relations headache on Thursday after a ruptured pipeline spilled about 4m litres of Alberta crude into waterways in southern Michigan.

Lisa Jackson, head of the US Environmental Protection Agency, said that “this is a serious spill that has the potential to damage a vital waterway and threatens public health”.

Jennifer Granholm, Michigan’s governor, expressed concern that oil from the ruptured pipeline might spill into Lake Michigan and called on Enbridge, the pipeline’s Calgary-based owner, to step up efforts to contain the damage.

The incident comes at an awkward time for the Canadian industry. The Gulf of Mexico oil spill has intensified scrutiny of the oil sands’ environmental record.

Critics of the oil sands are lobbying to block US approval of a C$7bn (US$6.8bn, €5.2bn, £4.3bn) pipeline, known as Keystone XL, that would carry the bitumen-based oil from Alberta to refineries on the gulf coast. The Keystone project is led by TransCanada, an Enbridge rival.

Enbridge said on a special website that “we’re treating this situation as a top priority”. It has assigned 300 employees and numerous contractors to deal with the spill, led by Pat Daniel, chief executive, who has flown to Michigan.

The 30in diameter pipeline carries crude from Griffith, Indiana, to Sarnia, Ontario, as part of a 7,500km network connecting Alberta to refineries in the Great Lakes region, the US Midwest and Ontario. Enbridge said it was investigating the accident, but the leak had been stopped.

Alberta supplies about 1.4m barrels of oil a day to the US, both from the oil sands and conventional wells. The oil sands, which contain the world’s biggest oil reserves after Saudi Arabia, are set to make a growing contribution as several projects come on stream.

Environmental groups, which prefer the term “tar sands”, have long criticised the projects’ greenhouse gas emissions and their impact on water supplies, animal and bird life.

The US state department earlier this week extended the deadline for comments on the impact of the Keystone pipeline by three months, making it unlikely that a decision will be announced until next year.

Susan Casey-Lefkowitz, international programme director at the National Resources Defence Council, said in a blog posting: “The Keystone XL tar sands pipeline is unnecessary and will actually undermine steps to a clean energy economy.”

The Alberta government and the oil industry have mounted an increasingly aggressive counterattack. They ran a full-page advertisement in the Washington Post earlier this month under the headline: “A good neighbour lends you a cup of sugar. A great neighbour supplies you with 1.4m barrels of oil per day.”

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