US review to delay oil sands pipeline from Canada

March 17, 2011
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, WASHINGTON, Mar 17 – The United States has called for further study on a planned multibillion-dollar pipeline to import oil from Canadian tar sands to the southern US Gulf coast, a move expected to delay the project.

Backers of the Keystone XL pipeline project say the action will unnecessarily push back approval at a time when the United States desperately needs to increase its energy resources.

But environmentalists say the project has too many risks and is unnecessary.

The US State Department said Tuesday it would seek public comment on an additional environmental impact statement (EIS) for the project, which will be made available in mid-April.

The American Petroleum Institute (API) called the announcement "unwelcome news" that is likely to delay construction.

"This much-studied and much-needed pipeline would provide a critical link to our largest energy supplier, Canada, and its vast resources of nearby and available crude oil," API president Jack Gerard said.

"It is past time for the administration to approve this important infrastructure investment," he added.

But Susan Casey-Lefkowitz, director of international programs at the Natural Resources Defense Council, dismissed the project as unnecessary, saying: "The environmental and safety costs are too high."

Casey-Lefkowitz said that the nuclear calamity in Japan highlights the need for domestic energy, but that the 2010 Gulf of Mexico oil spill underscores the importance of clean energy sources.

"It\’s ironic that when the oil spill happened in the Gulf, the tar sands people were saying it is safe," she said.

"But in truth, with the newest pipeline going across the Ogallala Aquifer (which covers a wide area of the US central plains), that could potentially contaminate freshwater resources for about two million people."

The NRDC, the Sierra Club and other groups issued a report last month arguing that the pipeline would take the unrefined bitumen from the oil sands and mix it with "volatile" natural gas condensates, making spills likely.

The 2,673-kilometer (1,661-mile) pipeline would transport hundreds of thousands of barrels per day of oil from Canada to the Texas coast as part of the $12 billion Keystone pipeline system, one of the world\’s largest.

TransCanada Corporation, owner of the pipeline, which is also backed by a number of other energy firms, said the State Department announcement means the project "has now entered the final stages of review."

"We are confident we have addressed the major questions raised by regulators and government agencies," said Russ Girling, TransCanada\’s president and chief executive officer.

"We expect a final regulatory decision for this project by late 2011 and we are pleased the Department of State has committed it will conclude its review of Keystone XL by the end of the year.

"The Keystone expansion is expected to be operational in 2013," he said.

With an estimated 175 billion barrels, the sands are the second largest oil reserve in the world, but they have been neglected for years, except by local companies, due to high extraction costs.

Michael Economides, a University of Houston professor of chemical engineering, said opposition to the pipeline is "dumb."

"The reality of the situation is the United States needs oil," Economides said in a blog post.

"America already imports a substantial amount from the Middle East, as well as Africa and South America, but the price spikes resulting from Egyptian turmoil would suggest that placing more reliance on these classically unstable locations is a bad move."

Other backers include the Teamsters union, which says the $7 billion project will create jobs.

"This project will directly create 20,000 good jobs for American workers, and indirectly it will create many more," Teamsters president Jim Hoffa said.

"In an ideal world, the United States wouldn\’t need to import crude oil from oil sands. We\’d much rather rely on clean, renewable resources for all our energy needs," he said.

"But it will be many years before we\’ve ended our dependence on petroleum."

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