Canada urges timely Keystone decision after report

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Associated Press

Posted on January 31, 2014 at 9:02 PM

Updated Friday, Jan 31 at 9:06 PM

TORONTO (AP) — Canada's Natural Resources Minister said Friday he's "more confident" the Keystone XL pipeline will be approved after U.S. State Department's latest environmental report raised no major environmental objections to the long-delayed project.

Joe Oliver urged the Obama administration to make a "timely decision," noting the United States has been studying the pipeline for five years. He said the latest federal study was the fifth on its environmental impact and said each report has stated that the pipeline would not adversely affect the environment.

"This is a positive step on the route to approval," Oliver said. "We hope and expect the final decision will be positive."

The State Department report said the Canadian oil sands are likely to be developed regardless of U.S. action on the pipeline and other options to get the oil from Canada to Gulf Coast refineries — including rail, trucks and barges — would be worse for climate change. Oliver said the report concludes that not building this project would result in emissions that are 28 to 42 percent higher than if the pipeline is built.

Calgary, Alberta-based TransCanada's pipeline would carry 800,000 barrels of oil a day from Alberta and the U.S. Bakken across six U.S. states to refineries in the Texas Gulf Coast.

The Canadian government has also warned if no new pipelines are built Canadian oil would instead be shipped to the U.S. Gulf Coast by rail. Concerns have been raised about the increasing use of rail to transport oil throughout North America. Several recent derailments have worried both officials and residents close to rail lines. In July of last year, 47 people were incinerated in Lac-Megantic, Quebec, when a train with 72 oil tankers derailed and exploded, destroying the small community's downtown

Obama's initial rejection of the pipeline went over badly in Canada, which relies on the U.S. for 97 percent of its energy exports. The pipeline is critical to Canada, which needs more infrastructure to export its growing oil sands production. Alberta has the world's third largest oil reserves, with 170 billion barrels of proven reserves.

Obama initially refused to issue a permit for part of the Keystone XL project amid concerns about its potential impact on a large aquifer in Nebraska. The administration is considering another application.

TransCanada chief executive Russ Girling said Friday he's "very pleased" with the report and called it "another important milestone."

Alex Pourbaix, TransCanada's President of energy and oil pipelines, noted the latest study has a much more robust analysis of the impact of rail and said it backs up their contention that a pipeline it is a safer way of transporting oil. TransCanada has said if the Obama administration doesn't approve the pipeline it will look to the more dangerous alternative of building build rail terminals in Alberta and Oklahoma.

Greg Stringham, a Vice President with The Canadian Association of Petroleum Producers, said the continued ramp up of transporting oil by rail in Canada is dependent on whether Keystone XL is approved.

"It really depends on this decision," Stringham said. "Many producers have been holding back on making long term commitments to rail because they believe Keystone XL will satisfy 700,000 to 830,000 barrels a day of that demand. That doesn't mean rail won't be needed. It would be much more niche. If it's not approved the rail companies will be much more mainline providers."

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