WASHINGTON – The often-delayed, hotly debated Keystone XL pipeline has taken one step closer to completion.
A long-awaited report by the U.S. State Department says the development of the Alberta oilsands is driven by many more factors than a single pipeline and rejects the argument by environmental groups that stopping the pipeline would thwart the oilsands.
The report points out that it has reached the same conclusion as previous State Department studies into the oft-stalled project: The construction of the Keystone XL pipeline would not significantly affect the rate of extraction of the oilsands, based on projected prices, demand, and extraction costs.
“The dominant drivers of oilsands development are more global than any single infrastructure project,” said the report’s executive summary.
“Oilsands production and investment could slow or accelerate depending on oil price trends, regulations, and technological developments, but the potential effects of those factors on the industry’s rate of expansion should not be conflated with the more limited effects of individual pipelines.”
The findings are sure to be touted by the Harper government, and supporters of the project on both sides of the border.
However, the Keystone debate remains far from the finish line.
The Environmental Protection Agency and other U.S. government departments now have 90 days to comment on the report.
The final decision on whether the pipeline may be built will be made by U.S. President Barack Obama.
Meanwhile, opponents are threatening to bury the project in litigation.
Some are also demanding an investigation into how Canadian officials, journalists and oil executives managed to learn about the report before the U.S. public, comparing the leak to insider trading.
The Canadian government scheduled a news conference to react to the report — hours before the U.S. government had even announced plans to release it.
There’s already a lawsuit in Nebraska to prevent the governor from forcing landowners to allow the pipeline on their path. And there’s an ongoing State Department internal investigation into conflict-of-interest allegations against contractors who worked on the report, but had also done past work for pipeline builder TransCanada Corp.
Shares of TransCanada (TSX:TRP) rose lightly on the news, just over one per cent in the minutes after the release of the report.
Project opponents made it abundantly clear that they wouldn’t be deterred.
“In addition to the fact that (the report authors) ignored the science, interagency criticism, basic economics of the industry and TransCanada’s own recent admission that the pipeline is the key to opening up the tar sands, the fact that a foreign oil company and foreign government were given critical intelligence ahead of everyone else tells you all you need to know about how useless this (report) is,” said an adviser to billionaire Keystone opponent Tom Steyer.
“If such insider information had been leaked by a public corporation, it would generate an insider trading investigation. Given that a foreign oil company and its lobbyists appear to have received proprietary information before it was shared with the American people demands an answers. We call on the State Department Inspector General to open up an investigation immediately. Where there is smoke there is fire.”
Those comments from a deep-pocketed Obama donor illustrate the president’s dilemma on the file.
He has been squeezed on one end by activists within his party, including influential donors, and on the other side by powerful economic interests, the please of America’s northern neighbour, and criticism that the stalling has undermined his goal of creating jobs.
The Canadian government has become increasingly strident in demanding an answer soon. Foreign Affairs Minister John Baird was in Washington recently pleading for a prompt reply, saying he didn’t want to see another construction season wasted.
The company has complained of having lost money while its already-purchased materials for the pipeline sit idle. Pipeline workers, meanwhile, have complained that the uncertainty has hurt them financially.
But there has been vigorous opposition from just under one-third of the Nebraska landowners on the pipeline path. They say the financial benefit, for them, doesn’t come close to matching the risk to their soil and water, let alone the impact of oil on greenhouse gases.
The contested route would complete an existing pipeline and carry oil from Alberta and the northern U.S. to Texas refineries. The project is designed to increase Canadian pipeline capacity in the U.S. by about one-quarter, to 2.4 million barrels per day.