March 04, 2013

State Department Issues Draft Supplemental Environmental Impact Statement on Keystone XL

On Friday, the State Department published a draft of the Supplemental Environmental Impact Statement for the proposed Keystone XL, which will inform the president’s decision later this year to approve or not approve the construction of the transboundary pipeline that could deliver an estimate 830,000 barrels a day of crude oil to the United States.

In a conference call on Friday, Assistant Secretary of State Kerri-Ann Jones noted that the EPA will officially publish the draft report in about a week for a 45-day public comment period. The president’s decision will come later this year, likely in the summer.

The 2,000-page report evaluates a number of issues, including the greenhouse gas emissions associated with Canadian oil sands and possible alternatives to the pipeline for transporting oil sands to the United States, including rail transport.  

The oil sands, referred to in the draft report as Western Canadian Sedimentary Basin crudes, “are more GHG-intensive than the other heavy crudes they would replace or displace in U.S. refineries, and emit an estimated 17 percent more GHGs on a life-cycle basis than the average barrel of crude oil refined in the United States in 2005,” according to the report. “If the proposed Project were to induce growth in the rate of extraction in the oil sands, then it could cause GHG emissions greater than just its direct emissions.”

According to The New York Times, the report “predicts that Canada and its oil industry partners will probably continue to develop the oil sands even if the Keystone XL pipeline is not built. It states that building or not building the pipeline will have no significant impact on demand for heavy crude in the United States.”

The New York Times added, “And it says that alternate means of transporting the oil — rail, truck and barge — also have significant environmental and economic impacts, including higher costs, noise, traffic, air pollution and the possibility of spill.”

Even with the decision of the Keystone XL pipeline pending, The Washington Post reported on Saturday that rail transport has emerged as a key alternative to delivering Canadian crudes. “Rail shipments of Canadian crude oil sands are on track to quadruple this year,” The Washington Post reported. “Producers and refiners are scrambling to buy their own tank cars in order to lower the cost and increase the certainty of transport. Industry sources said that there is an 18- to 24-month waiting period for new tank cars in Canada.”

Rail, is of course, more expensive, The Washington Post noted. “Sending bitumen from the oil sands by rail is costly — about $15 to $20 a barrel, versus $7 to $11 by pipeline, according to the research firm Peters.”

The report, while a draft, will undoubtedly play an important role in the president’s decision on the Keystone XL pipeline. We’ll keep you updated as developments take shape.  

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