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Pipeline from Canada may already have U.S. backing

The Obama administration says it has yet to decide whether to allow a pipeline from Alberta to Texas, but documents suggest it is ready to support the project although environmental and economic studies are ongoing.

July 13, 2011|Neela Banerjee

WASHINGTON — At a town hall meeting in Pennsylvania in early April, President Obama was asked about a bitter fight between industry and environmentalists over a proposed $7-billion, 2,000-mile pipeline to ship crude from Alberta's oil sands to Gulf Coast refineries.

Because the pipeline crosses the U.S.-Canadian border, a decision on a permit is pending at the State Department. Obama avowed neutrality: "If it looks like I'm putting my fingers on the scale before the science is done, then people may question the merits of the decision later on."

For The Record
Los Angeles Times Friday, July 15, 2011 Home Edition Main News Part A Page 4 News Desk 2 inches; 67 words Type of Material: Correction
Keystone XL pipeline: An article in the July 13 Section A about a proposed pipeline to ship crude oil from Alberta, Canada, to Gulf Coast refineries stated that David Goldwyn, a former State Department energy envoy, now works on Canadian oil sands issues at Sutherland, a Washington lobbying firm. Sutherland is also a law firm. Goldwyn does not lobby on behalf of the Canadian oil sands issue.

But a 2009 cable from the U.S. Embassy in Ottawa suggests the scale may have already been tipped.

The cable, obtained by WikiLeaks, describes the State Department's then-energy envoy, David Goldwyn, as having "alleviated" Canadian officials' concerns about getting their crude into the U.S. It also said he had instructed them in improving "oil sands messaging," including "increasing visibility and accessibility of more positive news stories."

Goldwyn now works on Canadian oil sands issues at Sutherland, a Washington lobbying firm, and recently testified before Congress in favor of building the 36-inch underground pipeline, Keystone XL.

Environmentalists and industry experts say the cable is among several examples from unguarded moments and public documents that signal the administration's willingness to push ahead with the controversial pipeline, even as its agencies conduct environmental and economic reviews.

In October, Secretary of State Hillary Rodham Clinton told a San Francisco audience that her department was "inclined" to "sign off" on the Keystone XL permit, a statement her staff quickly backed away from.

"No decision's been made on the pipeline," said Daniel Clune, principal deputy assistant secretary for the State Department's Bureau of Oceans, International Environmental and Scientific Affairs.

"There is no tipping of the scale," Clune said recently. "In terms of the secretary's comments, she said there were energy security considerations that could make one inclined to permit the pipeline, but she also noted that there are many factors to balance."

The State Department has completed two environmental impact statements on the pipeline with the help of Cardno Entrix, a private environmental consulting firm that has said its biggest clients include TransCanada Corp., the owner of the Keystone pipeline system, whose current routes extend from Hardisty, Alberta, to Oklahoma and Illinois.

Cardno Entrix gained national attention last year as the environmental consultant for BP after the Deepwater Horizon disaster. The Environmental Protection Agency has criticized the resulting assessments as fundamentally flawed.

"What we've seen from the State Department recently are sloppy reports, inadequate investigations and a total disregard for the dozen accidents that occurred" in the existing Keystone I pipeline, said Michael Brune, executive director of the Sierra Club. "If the president doesn't stand up, all signs point to an agency that is simply going through the motions before giving its approval."

Yet pressure to approve the Keystone XL addition is high. Its supporters in Congress and industry -- it also has the support of the AFL-CIO and Teamsters union -- estimate that it would create more than 300,000 American jobs, reduce dependence on crude oil from unstable or hostile governments and push down gasoline prices.

"All Americans would rather receive U.S. and Canadian oil from Keystone than conflict oil from [Libya's] Moammar Kadafi or [Venezuela's] Hugo Chavez," Alex Pourbaix, Trans- Canada's president of energy and oil pipelines, said recently in Montana.

But environmental groups across Canada and the U.S. contend that building the 700,000-barrel-a-day pipeline would lead to ruinous mining and greater air and water pollution.

The oil Keystone XL would carry from Alberta is mined from soil rich in a tar-like petroleum called bitumen and refined to separate the heavy crude.

The high-energy demand of mining and refining bitumen has increased greenhouse gas emissions, polluted water sources and harmed the region's boreal forests, environmentalists say.

Critics also point to testimony in which TransCanada officials told Canadian regulators the pipeline would drive gasoline prices in the Midwest higher, not lower.

Keystone XL would thread through the vast Ogallala aquifer, the main drinking water source for the U.S. Midwest. The Keystone I system has had a dozen leaks in the last year, stoking fears of a spill in the aquifer from the new pipeline. More environmental concerns arose this month after an ExxonMobil pipeline leaked up to 42,000 gallons into the Yellowstone River in Montana, under which Keystone XL would also run.

Keystone XL's backers dismiss the environmental claims as overblown and contend that the oil industry is working hard in Alberta on land reclamation and reducing emissions. TransCanada has said that the Keystone I spills were small and easily cleaned up.

Environmentalists remain skeptical.

"The State Department is rushing toward a decision on the Keystone XL pipeline when there is no reason to rush," said Susan Casey-Lefkowitz, director of the International Program at the Natural Resources Defense Council. "Every step of the way, rather than doing detailed studies, they're giving superficial information and trying to push the process along.

"Frankly, if they had started with doing detailed studies, they would be done by now."

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neela.banerjee@latimes.com

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