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Critical Part of Keystone Report Done by Firms with Deep Oil Industry Ties

Two consulting firms provided State Department with key analysis of whether the pipeline would speed development of Canada's oil sands.

Mar 6, 2013
Protesters march to the White House and urge Pres. Obama to reject the Keystone

The State Department's recent conclusion that the Keystone XL pipeline "is unlikely to have a substantial impact" on the rate of Canada's oil sands development was based on analysis provided by two consulting firms with ties to oil and pipeline companies that could benefit from the proposed project.

EnSys Energy has worked with ExxonMobil, BP and Koch Industries, which own oil sands production facilities and refineries in the Midwest that process heavy Canadian crude oil. Imperial Oil, one of Canada's largest oil sands producers, is a subsidiary of Exxon.

ICF International works with pipeline and oil companies but doesn't list specific clients on its website. It declined to comment on the Keystone, referring questions to the State Department.

EnSys president Martin Tallett said he couldn't talk about the proposed pipeline, but he pointed out that in addition to working for the oil industry, his company also works for the U.S. Environmental Protection Agency, the U.S. Department of Energy and the World Bank.

"We don't do advocacy," Tallett said. "Our goal is to tell it like it is, to tell the way we see it… If we were the pet of government agencies or oil companies, the other side wouldn't come to us."

(From the EnSys Energy website)(From the EnSys Energy website)

The State Department did not respond to questions about the 2,000-page Environmental Impact Statement (EIS) it released on Friday.

The EIS covers many issues, including the proposed pipeline's impact on wildlife, water resources and economic development. But the section of the report that has drawn the most attention is the market analysis, which projects that if the Keystone isn't built, the industry will use other pipelines and railways to move the oil out of landlocked Alberta.

That conclusion disputes environmentalists' contention that the Alberta-to-Nebraska pipeline would spur additional production in the oil sands, which produce more greenhouse gas emissions than conventional crude oil (23 percent on average according to a report commissioned by the European Union, and 17 percent as reported in the EIS).

Weighing the importance of the Keystone XL, which would move up to 830,000 barrels of oil a day, has been a challenge even for the industry. Analysts agree that Canada needs more pipeline capacity to efficiently move the oil to global markets. But they say the growth of the oil sands industry also depends on the fluctuating world oil market, on the rate of growth in rail transportation and on whether other proposed projects involving new or expanded pipelines are allowed to proceed.

The study's conclusion that the Keystone XL wouldn't have much effect on oil sands development was "a judgment call based on projections of the future," said David Driesen, a law professor at Syracuse University who specializes in economics and environmental law. "Nobody knows the answer to that question…A lot of the judgment deals with which facts do you emphasize, and how you gather" the information.

TransCanada, the company behind the pipeline, has spent millions of dollars lobbying for the project, which must be approved by the Obama administration because it crosses an international border. The pipeline's southern leg, through Texas and Oklahoma, doesn't require presidential approval and is about halfway done.

"I think the question of conflict of interest is a legitimate one," Driesen said. If consulting firms are "used to working for industry clients, it's possible they would subtly orient their analysis in a certain way, and that could be reflected" in the document.

Driesen is a former attorney for the Natural Resources Defense Council, an environmental group that opposes the pipeline. He also represented then-Senator Barack Obama in Clean Air Act litigation.

Joel A. Mintz, a law professor at Florida's Nova Southeastern University, said that even if a consulting firm wants to be perfectly objective, it might be swayed by the prospect of future clients.

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