Permit for Canada-Texas Oil Sands Pipeline under Extra Scrutiny

In atmosphere of heightened concern, State Department extends comment period, but builder still expects approval

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With global attention focused on the unstoppable oil leak in the Gulf of Mexico, the U.S. must soon rule on a permit for a big pipeline project that would carry a thick, heavy type of crude oil from Canada to refineries on the Gulf coast. The State Department is now giving the public extra time to weigh in.


Environmentalists, concerned about a host of issues associated with the pipeline, are especially worried about its route over a major fresh water aquifer crucial to the Midwest. An accident there could contaminate the water supply of 2 million people and the region’s agricultural economy. The rupture of a Chevron pipeline in Utah over the weekend, which a company manager called a “one-in-a-million event,” has only added to their concerns.

The State Department agreed last week to extend the public comment period by two weeks on a draft environmental impact statement, until July 2. It also added two public hearings, one in Houston on June 18 and a second in Washington D.C. on June 29.

A spokesman for TransCanada said he still expects the project will be approved in 2010, allowing construction to begin in 2011.

The Keystone Gulfcoast Expansion project, if approved, would cross six states and carry as much as half a million barrels a day of crude for processing in Houston and Port Arthur, Texas. The expansion would connect to two previously approved Keystone pipelines. One of them has already been completed- from Alberta to Wood River and Patoka, Illinois. The fully completed pipeline would move 1.1 million barrels a day.

Environmental groups credit the delay and the additional public hearings to pressure from nongovernmental organizations, landowners, Congress, Mayor Annise D. Parker of Houston, and government agencies concerned about the project.

“The State Department has been hearing from many sectors and voices,” says Susan Casey-Lefkowitz, director of the international program at the National Resource Defense Council. “What you’re seeing is heightened awareness and concern, to make sure people have time to get their comments in.”

Terry Cunha, a spokesman for TransCanada, says the delay “is indicating that the Department of State is making every effort to be as inclusive as possible to allow a variety of stakeholders to offer some comments on this project.”

The Keystone Gulfcoast Expansion, also known as Keystone XL, includes the last two phases in a multi-part project to bring crude oil from the oil sands into the U.S. The first phase of the project, extending from Hardisty, Alberta Illinois, was approved by the Bush administration and is now completed. The second phase, from Steel City, Nebraska to Cushing, Oklahoma, was approved 2008 and should be operational in 2011, according to TransCanada (

Variety of Concerns

The pipeline concerns groups worried about a host of environmental consequences, from increased reliance on a carbon intensive fuel to destruction of the Boreal forest in Canada. Oil sands are a mixture of sand, clay and bitumen, a tar-like gooey substance that is converted to a synthetic crude oil before it’s transported by pipeline. Its extraction from beneath the forest can involve mining, extensive water and energy use, and the production of tailings ponds filled with toxic chemicals.

Environmentalists are also concerned about a high-pressure pipeline crossing through miles of environmentally sensitive areas of the U.S., including the Ogallala Aquifer in Nebraska. Ogallala, which supplies water to about two million people and is critical to Midwestern agriculture, has some sections “so close to the surface that any pipeline leak would almost immediately contaminate a large portion of the water,” the National Wildlife Federation says in a recent report “Staying Hooked on a Dirty Fuel: Why Canadian Tar Sands are a Bad Bet for the United States”.

Environmentalists have reason to worry. Over the weekend a Chevron Corp. pipeline in Utah broke, sending an estimated 33,000 gallons of crude into a creek that ultimately flows into the Great Salt Lake. According to the NWF report, Enbridge, a Canadian company responsible for 8,500 miles of pipelines in the U.S. and Canada, admits it has spilled close to 1.3 million gallons of heavy crude in 400 separate incidents between 2003-2008.

The industry argues it’s moving toward less environmentally disruptive means of extraction, and TransCanada stresses that it monitors its 37,000 miles of pipeline around the clock and can stop a leak quickly, should it occur.

“We have a system that continually monitors flow and pressure,” says Cunha of TransCanada. “If at any time it detected a drop in pressure, our network can immediately isolate the area and isolate that section of pipeline and stop the leak.”

Cunha adds that TransCanada also has emergency plans in place should a spill occur. “We do regular training annually where our staff are continually doing field exercises to make sure they are prepared,” he says.

Waiver Requested to Use Thinner Pipe

TransCanada has applied to the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration for a waiver allowing them to use a thinner pipe, under higher pressure, through “low consequence” areas, which are areas away from large population centers, according to the NWF. The DOT approved a similar request for the first phases of Keystone.

Before the expansion can be built, the State Department must approve a final Environmental Impact Statement and issue a Presidential Permit. The decision on whether or not to issue the permit is based on the “national interest” and is made after the State Department considers public comments as well as input from a host of government agencies, including the Environmental Protection Agency, the Department of Transportation, Department of Interior, and the Department of Energy.

The interagency review concludes in mid-September, and according to J. Brian Duggan, an energy officer in the State Department, a final decision is expected in the Fall. The project also needs various permits from each state it crosses through.

Keystone XL would be the first international pipeline from Canada to the U.S. to be assessed and approved by President Barack Obama’s administration. That’s significant, say environmentalists, because the Obama administration advocates a clean energy economy based on reduced reliance on fossil fuels.

Environmental groups argue oil demand in the U.S. is falling, and construction of this pipeline will perversely lead to more reliance on a type of fuel – bitumen from the oil sands – that is dirtier to produce and refine than conventional fuels.

Also, oil from tar sands, as they are also known, is typically used for transportation fuel at a time the U.S. is tightening fuel economy standards, says Kate Colarulli of the Sierra Club’s Dirty Fuels campaign. The draft EIS doesn’t take these factors into account, Colarulli and officials from other environmental groups say.

“What we’ve seen in the draft EIS, is they’ve essentially started with this blanket assumption that we need the oil from tar sands,” says Ryan Salmon, coordinator of global warming solutions at the National Wildlife Fund. “They haven’t done an adequate assessment of need, given the administration’s clean energy priorities.”

National Interest the Litmus Test

Still the State Department has concluded pipelines carrying oil from the tar sands of Canada were in the national interest twice before – for Keystone 1 and a second, the Alberta Clipper built by Enbridge from Hardisty, Alberta to Superior, Wisconsin. These decisions set a precedent that Salmon says may be difficult to reverse.

“From the staff, bureaucrat level, they would rather just start with that assumption, that we’ve already determined building the pipeline is in the national interest,” he says.

Still, the NWF, Sierra Club, NRDC, and other groups have been meeting with officials at many of the agencies involved in the interagency review, and say these agencies have significant concerns with the draft EIS that they are sharing with the State Department.

Aside from the question of need, environmental groups don’t believe the EIS adequately addresses the problems of refining tar sands oil in two communities, Houston and Port Arthur, which already do not meet air quality standards, according to the NRDC.

The draft EIS considers crude from the oil sands to be the equivalent of conventional oil that’s already being processed in Houston and Port Arthur, says Colarulli of the Sierra Club. But oil sands oil has higher levels of pollutants than conventional oil, and so the Sierra Club has asked the EPA to do a formal lifecycle analysis of oil sands production that includes studying the effects of adding more pollutants in the Houston and Port Arthur areas.

According to a March NRDC report, Say No to Tar Sand Pipeline: Proposed Keystone XL Pipeline Would Delivery Dirty Fuel and High Costs, tar sands have more sulfur, nitrogen and metals than conventional crude.

Environmental groups also are concerned the draft EIS doesn’t accurately account for the pipeline’s impact on global warming pollution, Colarulli says.

Environmentalists also argue the pipe will provide more capacity than necessary, given that the three Canada-to-U.S. pipelines could carry 3 million barrels of crude a day, and the Canadian Association of Petroleum Producers doesn’t expect the tar sands to produce that much oil until at least 2020. 

Cunha of TransCanada counters that the Keystone Gulfcoast Expansion has already has firm 20-year contracts to fill 83% of the pipeline’s capacity should it be approved.