US State Dept says not building Keystone would lead to more GHG

31 January 2014 21:59 Source:ICIS News

HOUSTON (ICIS)--Not constructing the hotly contested northern segment of the Keystone XL crude oil pipeline could lead to an increase in greenhouse gas (GHG) emissions of 28-42% as the Canadian oil sands product makes its way to market in other ways, the US State Department said on Friday in the release of a long-awaited report on the project.

In its final supplemental environmental impact report, the department said the total GHG emissions associated with operating the pipeline would be about 147m-168m tonnes of carbon dioxide (CO2) equivalent per year, based on the assumption of producing, refining and combusting 830,000 bbl/day of oil sands crude.

But not taking action would lead to the crude oil being shipped by railroad and tankers and lead to greater production of GHG from both diesel and fuel combustion and electricity generation to support logistics, the State Department said.

The privately funded Keystone XL project has been under review by President Barack Obama's administration for more than four years and has already been given approval by the US Environmental Protection Agency (EPA).

The long-delayed decision on the project had been pending a final environmental review at the State Department, which has ultimate authority over the proposal because it crosses an international boundary.

The presidential permit process now will focus on whether the project serves the national interest, the department said, with other executive-branch agencies consulted before Obama makes a decision. A 30-day public comment period on the report begins on 5 February and ends 7 March.

The $7bn project would involve building a 36-inch pipeline some 1,100 miles across five US states, bringing crude to refineries in the US Midwest as well as Texas and providing refined products to another half-dozen states.

The southern segment of the Keystone is already in operation, and Canadian officials have said that if the US does not approve the building of the northern segment, that country will pursue building more east-west pipelines to move oil sands product to Asian markets.

The State Department said in its report that if such east-west pipelines were built to the Canadian coasts, they would be heavily utilised to export oil sands crude due to “relatively low shipping costs to reach growing Asian markets”.

If no pipelines were built, the oil sands crude still would end up being shipped by rail to refineries in Canada and the US, the department said.

Construction of the Keystone XL northern segment would create around 42,100 jobs throughout the US for up to two years, the department said, with operations of the pipeline requiring about 35 permanent employees and 15 temporary contractors.

Construction would contribute about $3.4bn to US GDP – about 0.02% of 2012’s US economic activity, by comparison, the State Department said.

The American Petroleum Institute (API)  hailed the department’s report and called on Obama to sign off on the project.

“Five years, five federal reviews, dozens of public meetings, over a million comments and one conclusion ─ the Keystone XL pipeline is safe for the environment,” said API president and CEO Jack Gerard in a news release. “This final review puts to rest any credible concerns about the pipeline’s potential negative impact on the environment. This long awaited project should now be swiftly approved. It’s time to put thousands of Americans to work.”

A member of the president’s own political party, Democratic Senator Mary Landrieu of refinery-laden Louisiana, also urged swift approval of Keystone.

“If we wait any longer to approve this project, we risk losing it for good,” she said.

Meanwhile, US environmental group the Sierra Club said the pipeline project is “not in the interest of the American people”.

“The president has two choices before him: fighting climate disruption or promoting an energy policy that includes the expansion of dirty fossil fuels like tar sands,” the club said on its website. “The Keystone XL tar sands pipeline fails the basic climate test.”

Additional reporting by Joe Kamalick

By Jeremy Pafford