Green groups call for more review of pipeline
By JAMES MacPHERSON
More from BusinessWeek
March 3, 2011
BISMARCK, N.D.
The U.S. government must evaluate the additional impacts of allowing domestic crude on a proposed pipeline designed to carry Canadian tar sands oil to refineries along the Gulf Coast, a coalition of environmental groups has said.
The groups said in a letter to the U.S. State Department that the agency is "legally required" to prepare a supplemental environmental impact statement for spurs in Montana, North Dakota and Oklahoma to TransCanada Corp.'s proposed 1,980-mile-long Keystone XL pipeline.
Those so-called onramps, according to the environmental groups, "significantly change the nature, scope and purpose of the larger Keystone XL project."
"The American public deserves to have good information about the environmental impact ... and a chance to comment on it," said Susan Casey-Lefkowitz, of the National Resources Defense Council, which along with the Sierra Club, National Wildlife Federation, Friends of the Earth, and the Western Organization of Resource Councils submitted the letter to the State Department last week.
TransCanada spokesman Shawn Howard called the environmental groups' letter, "the latest of a series of tactics they are employing to delay the project."
A presidential permit from the State Department is required because the pipeline would cross the U.S.-Canadian border.
State Department spokesman Michael Tran said the agency expects to complete its review of the Keystone XL project by the end of March. He said the State Department will determine then if an additional environment review is needed.
Calgary-based TransCanada first submitted its Keystone XL project for State Department review in late 2008. The project is designed to carry crude oil from tar sands near Hardisty, Alberta, to the Gulf Coast via Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas.
TransCanada announced in January that it had secured enough contracts to ship 65,000 barrels of oil daily from Montana and North Dakota. The company said the $140 million, five-mile-long Bakken Marketlink would meet with the Keystone XL pipeline in Baker, Mont. The company said the project would rely on feeder pipelines proposed by other companies to move North Dakota and Montana crude to the facility in Baker.
Also in January, TransCanada announced that it got contractual commitments for its Cushing Marketlink project, designed to transport 150,000 barrels daily from Cushing, Okla., along the Keystone XL to the Gulf Coast.
TransCanada spokesman Shawn Howard said the company has submitted plans for those projects to the State Department.
Howard said the work in Oklahoma would consist of installing addition storage tanks and other equipment at a facility that already is permitted for such use. In North Dakota and Montana, companies building feeder pipelines would be required to obtain necessary permits, he said.
"They'll have to follow the regulatory process for their section of the line," Howard said.
Casey-Lefkowitz, of the National Resources Defense Council, said the additional projects are considered connected actions under federal law and must be considered in a single environmental impact statement.
TransCanada's Keystone XL is the second phase of a massive underground pipeline network -- about five times the length of the trans-Alaska oil pipeline -- designed to move 1.5 million barrels of Canadian oil daily to U.S. refineries.
TransCanada won approval three years ago this month for the first Keystone pipeline, which carries crude oil across Saskatchewan and Manitoba and through North Dakota, South Dakota, Nebraska, Kansas, Missouri and Illinois. That portion began moving crude in June.
Howard said the initial Keystone project took 22 months to win State Department approval, while the Keystone XL has now been under review for 27 months.
The estimated cost of the entire Keystone network has increased $1 billion to $13 billion, in part due to delays, Howard said.
"The State Department has to do its due diligence and we respect that," he said.
Several environmental groups have pushed the State Department to reject TransCanada's application. They say the pipeline would speed the expansion of oil sands extraction to a rate that could exacerbate global warming.
Environmental groups last month issued a report alleging that the Canadian crude in the Keystone pipeline network and elsewhere is more corrosive than other oils, making pipelines more prone to ruptures and leaks.
TransCanada and the Alberta government said the report's findings were wrong and misleading.
"We expect our pipelines to operate safely and reliably," Howard said. "Why would we put something in them to destroy a $13 billion project and how does that make any sense?"
