A Great Plains pipeline debate

Washington Post Staff Writer
Monday, January 24, 2011

A massive feat of engineering by any measure, the Keystone pipeline expansion project would transport crude oil close to 1,700 miles from "oil sands" in the icy reaches of Hardisty, Alberta, down through the Great Plains to the refineries of Port Arthur, Tex. In doing so, the giant pipe also promises to allay some fears about U.S. energy security: The oil will come from a trusted ally, and its cross-continental path avoids visions of another deep-sea drilling disaster.

But the decision on whether to issue a permit to the project, opposed by environmental groups, rests with the State Department, which has little expertise in engineering or environmental matters. And reflecting the chaos of U.S. energy and environmental policy, the proposed pipeline is pitting Montana landowners against pipe fitters in Nebraska and creating unlikely allies of Nebraska ranchers and chieftains from Alberta's indigenous communities.

On one hand the move to extend TransCanada's existing pipeline - which runs from Hardisty to the Illinois towns of Wood River and Patoka and has a daily capacity of 435,000 barrels - offers obvious benefits. The extension will generate 13,000 construction and 7,000 manufacturing jobs in the United States over roughly two years, according to the company, and could transport as much as 500,000 additional barrels of oil a day. It also could help stabilize electricity prices for rural co-ops along the route.

"Everyone's saying we've got to get less dependent on Middle East oil, and this is a perfect opportunity to bring this oil in," said William Hite, general president of the United Association, the union for plumbers and pipe fitters.

But the crude comes from an area known as "tar sands" or "oil sands," where operators extract a viscous oil called "bitumen" from formations of sand, clay and water. The process consumes more energy and water than most conventional drilling methods, can require clear-cuts of forests and creates tailings that can pollute nearby waterways. Canada has the world's third-largest reserve of heavy crude after Saudi Arabia and Venezuela and accounts for 20 percent of U.S. crude imports.

At least 65 lawmakers - nearly all Democrats - have written the State Department raising questions about the pipeline, while 40 Republicans have written letters backing it.

"When I think of the State Department I think of many things they do well," said Sen. Mike Johanns (R-Neb.). "But I would tell you, siting pipelines is not anything I would think of when I think of State Department expertise."

Environmental issues

The National Wildlife Federation's senior vice president, Jeremy Symons, said the Obama administration cannot claim to be fighting global warming while signing off on oil imports from such an energy-intensive operation. "What does it mean when the U.S. bellies up to the trough and says, 'Give me your dirty energy?' " Symons said.

Symons also noted that TransCanada submitted a 2009 market assessment in its Canadian permit application suggesting the extension will raise heavy crude prices in the United States by removing the "oversupply" in the Midwest, where the price has been discounted. The analysis said that by extending the pipeline to the Gulf Coast, with many more refineries and buyers, the Canadian heavy crude price could be expected to increase by around $3 a barrel, giving the Canadian oil industry at least $2 billion in additional revenue each year.

But the pipeline will traverse environmentally sensitive areas such as Nebraska's Sand Hills and the Ogalalla Aquifer, which provides drinking water for 2 million people. Local ranchers and farmers have questioned why the pipeline needs to pass through an area where the aquifer runs just a few feet below the ground and the sandy soil makes it harder for vegetation to regrow.

"We know what it takes to try to maintain the land in a productive state," said Teri Taylor, who runs a cow-calf operation with her husband and son that would have miles of pipeline laid across it. "We are unable to even fathom what it would take to reclaim the land."

An Energy Department-commissioned analysis, which has not been released but has been obtained by The Washington Post, provides fodder to both sides' arguments. The report says the United States can obtain the Canadian crude it needs for the next decade without the Keystone extension, but it suggests that increasing oil-sands imports and reducing overall U.S. oil demand would "have the potential to very substantially reduce U.S. dependency on non-Canadian foreign oil, including from the Middle East."

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