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Oil sands: Third pipeline from Canada awaits crucial US decision
News Articles Featured | Financial Times | June 27, 2011
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Building a pipeline to the US from Canada to bring fuel from that northern neighbour’s vast tar sands operations should be an easy feat to accomplish.
Not only is the US desperate for fuel, but Canada is stable and friendly.
Its fuel will be cheaper to import than that of far-off nations and its stability would ensure a steady source of supply. On top of that, two such pipelines from Canada already have been built.
Indeed, Jim Vines, partner in the energy environmental practice at King & Spalding, an international law practice, believes it will be tough for the US Department of State to say this third pipeline, Keystone XL, is so different.
“Denial of this permit by the US would be vulnerable to a serious challenge in the World Trade Organisation,” he says.
But the Keystone XL pipeline is not only subject to criticism by environmentalists about the import of the high carbon fuel.
A series of spills from the first Keystone pipeline led US authorities to suspend its operation temporarily this summer. The timing could not be worse for TransCanada, the pipeline operator, which is waiting for the state department to decide by year-end whether to let it progress with its Keystone XL extension pipeline.
“TransCanada needs to ensure the pipeline is safe, secure and can operate without the risk of leaks,” says congressman Edward Markey, the top Democrat on the Natural Resources Committee of the House of Representatives.
“These concerns need to be fully addressed, as the administration and state department evaluate the Keystone XL project.”
TransCanada was able to obtain approval to restart its Keystone pipeline in a few days and points out that the last incident, at a pumping station in Kansas, had involved less than 10 barrels of oil.
“Almost all the oil releases over the past 12 months on Keystone have been minor – averaging just five to 10 gallons of oil,” says Russ Girling, TransCanada’s president and chief executive.
“The vast majority of that oil was confined to our property and in all cases was cleaned up quickly.
None of the incidents involved the pipe in the ground – the integrity of Keystone is sound.”
But that the first Keystone has suffered 11 spills in its first year is a worry for environmentalists.
Susan Casey-Lefkowitz, director of the international programme at the Natural Resources Defense Council, an environmental group, notes the highly corrosive nature of bitumen, which is what the tar sands are composed of.
This is a concern, she says, because Keystone XL is to cross the Ogallala Aquifer, a freshwater source for eight states.
The Keystone XL is a 2,673km, 0.9m crude oil pipeline that would start in Alberta and extend southeast through Saskatchewan, Montana, South Dakota and Nebraska.
It would incorporate a portion of the Keystone Pipeline that runs through Nebraska and Kansas to serve Oklahoma, before continuing, to serve the Port Arthur market in Texas.
Ms Casey-Lefkowitz says the Keystone XL pipeline is redundant, because there are already the first Keystone and the Alberta Clipper pipelines bringing tar sands fuel into the US.
“It’s not necessary for energy security,” she says. “Bringing this oil across US heartland, farms and the Ogallala Aquifer is a real danger for communities.”
A growing number of environmentalists and local officials also object to the higher carbon content of tar sands fuel.
The mayors of 25 towns and cities wrote a letter on March 24, to Hillary Clinton, secretary of state, expressing grave concerns about expanded tar sands oil imports.
“Specifically, we are concerned about the impacts of the proposed Keystone XL pipeline that would transport tar sands oil from Alberta to Texas, increasing our dependence on this high carbon fuel for decades to come, at a time when we, as local governments, are working hard to decrease our dependence on oil.”
Nonetheless, some supporters of Keystone XL say the carbon footprint will be less if fuel is exported to the US in a pipeline rather than shipped in a tanker across the ocean to China.
Kenneth Medlock, energy expert at Rice University, says there is a project under way to export the fuel to the Pacific Basin.
“The protests are not going to stop tar sands development,” Mr Medlock says. “You have to think of the world as one big bathtub. It doesn’t matter which end of the tub you fill from, as long as you are adding supply. The oil is going to flow.”
That said, it is uncertain whether that oil will flow through the planned Enbridge Northern Gateway pipeline system aimed at taking some to alternative markets.
That pipeline, which would run 1,170km from Alberta to a new port in Kitimat, on the coast of British Columbia, has also met fierce opposition.
Mr Vines focuses his comments on Keystone XL: “In the US, big energy projects tend to go through a lengthy regulatory process and a lengthy litigation process.
“If the Canadians have the perseverance to work through these two processes, which I think they do, the pipeline will get built.’’
Tagged with: keystone xl, transcanada, pipeline
