The last word is still to be spoken. Yet, Washington is one step closer to approving the Keystone XL pipeline – expected to carry about 830,000 barrels a day of tar sands fuel from Alberta in Canada and oil from shale rock formations in the US to refineries in Texas – despite stiff opposition. Many in the establishment, both in Washington and Ottawa, portray the project as instrumental and strategic to the much-cherished US energy independence. The proposed pipeline has often been a moot point in the ongoing tussle between jobs and environment. And the draft assessment released by the State Department last week represents a clear win for the oil lobbyists and a loss for environmentalists who in recent days had been applauding Obama's pledge to fight climate change in his second inaugural and State of the Union speeches. The Keystone XL oil pipeline project got the much hyped boost when the US State Department said the project would not likely change the rate at which Canada's oil sands are being developed, discounting warnings from environmentalists that it would lead to a spike in greenhouse gas emissions. TransCanada Corp's $5.3 billion proposed project is "unlikely to have a substantial impact" on development of Alberta's oil sands, the world's third-richest oil deposit, the State Department said in the long-awaited report of more than 2,000 pages. It said the pipeline would result in "no substantial change in global greenhouse gas emissions." Oil industry has been emphasizing since day one that the project will create thousands of jobs and boost US energy security. "The Keystone XL pipeline will make more Canadian and US oil available to us — oil that will not need to be imported from unfriendly places," said Karen Harbert, president of the US Chamber of Commerce's Institute for 21st Century Energy. Canadian politicians and industry have also been ratcheting up lobbying for the project, emphasizing that the project goes a long way in ensuring Washington's independence from depending on “non-friendly” countries for crude supplies. Unidentified members of Conservative Canadian Prime Minister Stephen Harper's government told the daily Globe and Mail newspaper recently that a rejection of Keystone XL by Obama would seriously damage Canadian-United States relations. Alison Redford, the premier of Alberta, while underlining the importance of the project, says: “Through our policies and our actions, past, present and future, Americans should feel confident that Alberta is the safest, most secure and responsible energy supplier to the US. The same cannot be said for the other foreign countries and regimes that currently feed US energy demand. “This project will replace oil from Venezuela and the Middle East with a stable continental supply, including from the oil sands and improve the energy security of North America,” Joe Oliver, the Canadian natural resources minister, told reporters in Toronto. Ottawa has also been warning that the oil price discount is taking its toll on Canada's national economy – and it could not be allowed to go on forever. The message all along has been that the window for project is not unlimited and that in case Washington doesn't move ahead, then it will have to explore other possibilities too. Industry watchers now feel the project is getting closer to reality. “The fact that they came out and said, ‘Eh, it doesn't really effect the oil sands development,' to me this is a prelude to approval,” Sarah Emerson, president of Energy Security Analysis Inc. told Bloomberg. John Kilduff of the New York-based hedge fund Again Capital LLC that focuses on energy, said the finding that the project won't significantly affect oil sands development signals approval. “It's still a long way away, but at least there's a roadmap forward,” Kilduff said. “No matter how many times KXL is reviewed, the result is the same: no significant environmental impact,” said Marty Durbin, executive vice president for the American Petroleum Institute. “The latest impact statement from the State Department puts this important, job-creating project one step closer to reality.” Bill Day, a San Antonio-based spokesman for Valero Energy Corp., the world's largest independent refinery by capacity, predicted that the pipeline would be approved. “Nothing that has come out in this report or any of the others, would be reason for even this delay, let alone a denial,” Day said in a press interview. Valero's plants would stand to gain work from refining the tar sands, if the pipeline is built. For TransCanada, which has spent years developing the project and lobbying in Washington for its approval, the draft analysis represents another cleared hurdle. The draft report is “an important step toward receiving a presidential permit for this critical energy infrastructure project,” TransCanada Chief Executive Office Russ Girling said in a statement. Environmentalists, opposing the project, on the other hand, are concerned and disheartened. “President Obama needs to match his soaring oratory with climate action, and the State Department just made that harder,” Michael Brune, executive director of the Sierra Club, a San Francisco-based environmental group, was quoted as saying. The analysis “reads like an on-ramp to justify the Keystone XL pipeline project,” said Erich Pica, president of Friends of the Earth in Washington. “We cannot solve the climate crisis when the State Department fails to understand the basic climate, environmental and economic impacts of the Keystone XL pipeline.” If Keystone and the other proposed pipelines from the tar sands aren't built, the reduction in annual emissions would be at most 5.3 million metric tons a year of carbon dioxide, less than 0.1 percent of total US emissions, the State Department analysis had emphasized in the report. Environmentalists however counter it strongly, underlining that Keystone is critical to the development of Alberta's oil sands. “They call it Keystone for a reason,” Bill McKibbon, who heads 350.org, which has been leading the opposition to the pipeline, told reporters. “If they don't have it, they aren't going to be able to develop the tar sands.” A final decision by the Obama administration is expected only by July or August. TransCanada's chief executive, Russ Girling, said that construction of the pipeline could be completed by late 2014 or early 2105 if a final decision by the Obama administration comes by midsummer. Industry is on move – at a cost!
