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Keystone Pipeline debate pits environment against energy, jobs

This article first appeared in the St. Louis Beacon, Jan. 3, 2012 - WASHINGTON - Last summer, police arrested 1,253 protesters at a sit-in near the White House. The demonstrators there and in cities across the United States weren't part of the Occupy Wall Street movement and weren't protesting wars.

The target of their collective wrath was ... a pipeline.

Not just any pipeline: the Keystone XL-- a $13 billion project that would transport tar-sands oil about 1,700 miles from western Canada to the Gulf of Mexico. It would also connect with the existing Keystone, which crosses Missouri on its way to refineries in southern Illinois.

The project has become a prime target of environmental and climate-change groups, a rallying cry for Republicans seeking more North American energy sources, a priority for some labor unions that want "shovel-ready" jobs, and even a provision of the short-term extension of the payroll tax credit that nearly paralyzed Congress before Christmas.

"I like fossil fuels, I like energy security, and I like trading with friends versus enemies," said U.S. Rep. John Shimkus, R-Collinsville, who traveled to the oil sand mines in Alberta, Canada, in October to view how the Canadians extract the oil. "I also want jobs, and that's why I'm for this project."

Shimkus, who is in the GOP leadership of the House Energy and Commerce Committee, also backs the project because the company behind it, TransCanada, Inc., built the first Keystone pipeline (K-1), which distributes crude oil to refineries in Wood River, Ill., and ends at the pipeline-crossing of Potaka, Ill., a small town near Centralia that is in his congressional district.

But the Illinois Republican is hardly the only lawmaker touting the Keystone XL. In recent appearances around Missouri, Sen. Roy Blunt, R-Mo., has praised the project as important to job creation and boosting the economy. And Sen. Claire McCaskill, D-Mo., says Keystone can be beneficial if it is done in "an environmentally responsible way."

On top of its political implications -- with GOP leaders planning to use any White House effort to stop Keystone as a weapon in the 2012 campaigns against President Barack Obama and vulnerable Democratic lawmakers -- the Keystone battle has also emerged as a major focus of lobbying and public pressure among business, labor and environmental groups.

TransCanada has contracted with the St. Louis-based Bryan Cave law firm and other companies for lobbying expertise and also joined with U.S. oil interests in enlisting the help of business groups to convince Congress to add a 60-day deadline in the payroll bill that requires the Obama administration to make a decision on the project.

The State Department, which has jurisdiction over cross-border pipelines, says it will not be able to finish a required supplemental environmental review -- taking into account a proposed Keystone re-routing through Nebraska -- that quickly. And White House officials have said Obama would not override its advice.

Heartened by such signals, environmental groups plan to keep up the pressure against the project. "The Keystone XL pipeline for dirty tar-sands oil has no place in a nation building a cleaner, more secure energy future," wrote Frances Beinecke, president the National Resources Defense Council.

"Republican lawmakers have forced President Obama into signing a tax bill with this 60-day Keystone provision. But now we need the president to demonstrate firm leadership and reject the Keystone XL pipeline," added Beinecke.

But environmentalists are battling the oil industry and the U.S. Chamber of Commerce, which has joined forces with about 200 businesses to form the "Partnership to Fuel America" -- a group pushing for Keystone'a approval and other projects developing North American energy.

At the same time, the American Petroleum Institute plans a Keystone element to its wider "State of American Energy" advertising campaign, to be launched in early January, promoting "energy independence" through more aggressive development of North American oil resources.

"If the president is serious about job creation and energy security, now is the time to act on the Keystone XL pipeline," said the chamber's president, Thomas Donohue. "This is the perfect example of a shovel-ready project that makes sense for our economy."

Safety, Greenhouse Gases Top Environmental Concerns

Environmental groups worry that development of Canada's massive tar-sands region is releasing major amounts of carbon dioxide into the atmosphere -- adding to the accumulation of greenhouse gases — and is gouging holes in the pristine boreal forest.

"Tar-sands extraction in Canada destroys boreal forests and wetlands, causes high levels of greenhouse gas pollution and leaves behind immense lakes of toxic waste," said an NRDC report.

Western Canada's oil sands contain an estimated 1.75 trillion barrels of oil, the second-largest known deposit in the world after those of Saudi Arabia. The study also asserts that the Keystone and other pipelines transporting tar-sands crude oil into this country are carrying diluted bitumen -- "DilBit," described as "a corrosive, acidic, and potentially unstable blend of thick raw bitumen and volatile natural gas liquid condensate" -- which raises the risks of spills.

Asserting that "DilBit is significantly more corrosive to pipeline systems than conventional crude," the report said: "These pipelines, which require higher operating temperatures and pressures to move the thick material through a pipe, appear to pose new and significant risks of pipeline leaks or ruptures due to corrosion, as well as problems with leak detection and safety problems from the unstable mixture."

The NRDC report suggests that the U.S. government should revamp its pipeline safety regulations to cover DilBit and delay approving Keystone XL or similar pipelines until the new rules are in place. It also recommends that the industry take "special precautions" for pipelines transporting DilBit and improve spill response.

Start of update: A spokesman for TransCanada, citing scientific studies that he said refute the NRDC report's claim that DilBit is unusually corrosive, said the company "would not build a $13 billion pipeline and then put a product in it that would destroy the pipeline -- that doesn't make any sense." End of update.

Several environmental groups -- including a new one, TarSandsAction.org -- are planning more demonstrations and public-information campaigns early this year. Aside from explaining environmental and safety concerns about Keystone, they also argue that the project will not create nearly as many jobs as the oil and pipeline industries claim.

Jeremy Symons, a senior vice president of the National Wildlife Federation, which is fighting the Keystone, told journalists that he is confident that the Obama administration will not approve the Keystone XL.

Symons wrote that congressional Republicans were "trying to satisfy Big Oil's lobbyists and some of the GOP's top corporate donors by forcing the president to make a hasty decision -- but it will backfire."

Extracting, transporting and refining Canada's oil sands would produce considerably more carbon emissions over its life cycle than other petroleum products. NASA climatologist James Hansen has warned that removing all of the oil from those deposits would release so much carbon dioxide into the atmosphere that it would hasten climate change.

Last summer's massive demonstrations against the Keystone XL project, including the two-week sit-in near the White House that led to 1,253 arrests, were coordinated by groups led by TarSandsAction.org, which is aligned with the climate-change movement of environmental activist Bill McKibben. In early November, more than 12,000 demonstrators gathered near the White House at the time of Obama's announcement that he was delaying the Keystone XL decision.

Jamie Henn, a spokesman for TarSandsAction, said in an interview that last summer's mass protests "took the battle against Keystone XL from a regional to a national fight."

He said elements of the Occupy Wall Street movement may join future demonstrations.

Asked why environmentalists did not mount much opposition to the Keystone 1 project -- which opened in 2010, crossing just north of St. Louis -- Henn told the Beacon that "we weren't as well organized back then." He said people in Missouri and Illinois should be concerned about leaks from that pipeline, which closed its operations for about a month last summer and should be skeptical about industry claims that the Keystone XL would create thousands of jobs and ease U.S. dependence on Middle Eastern oil.

"The jobs claim is a scam," Henn contended, offering as proof a Cornell University study that found that Keystone would create mostly temporary work. He also said the XL would "drive up the cost of oil in the Midwest" and would not lessen U.S. energy dependence because "most of the oil will be exported" after being refined.

Transcanada Counters Environmental Arguments

Officials at TransCanada, which has been in the pipeline business for six decades, contend that the global-warming argument is overblown and that pipelines are the safest method of moving oil -- about 40 times safer than rail and 100 times safer than trucks.

"Keystone [1] has been operating since July 2010, delivering 530,000 barrels of oil per day to the U.S. Midwest and there have been no issues with the pipeline in the ground," said James Millar, the corporate communications manager for TransCanada.

Millar concedes that there have been 14 minor oil releases at Keystone-1 pump stations, which create the pressure to move the oil. "All occurred on our property, mainly involving valve seals and fittings," he said in an email.

After a 400-barrel oil leak in North Dakota on May 7 and a 10-barrel leak at a Kansas pump station in late May, TransCanada shut down Keystone for a few weeks to re-inspect all junctions.

"We spent two months this past summer inspecting thousands of above ground valves along the entire pipeline to check for any issues and made any necessary adjustments," said Millar. "There have been no above-ground incidents on Keystone since last May."

Overall, Millar said, TransCanada has "one of the best pipeline safety and operating records in the industry. We monitor our pipeline system through a centralized high-tech center 24 hours a day, 365 days a year." That includes satellite technology that sends data every five seconds from 21,000 data points to the monitoring center. "Since the pipeline is four feet below the ground we can begin repairs immediately and effectively," he said.

TransCanada officials say the main difference between the existing Keystone-1 and the planned Keystone XL are that that latter would add six inches in diameter and would carry more crude oil. While the 1,853-mile-long Keystone-1 is 30 inches in diameter and carries 435,000 barrels of oil per day, the planned Keystone XL would be 36 inches in diameter and -- when all phases are complete -- carry about 1.3 million barrels a day.

As for the global warming arguments, industry officials contend that the worldwide demand for the Canadian oil has been growing so rapidly that the Alberta tar sands will be developed whether or not the Keystone XL project goes forward.

And Millar, who cites an industry-financed study indicating that the Keystone would create about 20,000 jobs, told the Beacon that "it doesn't make any sense" for critics to allege that most of the oil transported through the Keystone XL would be exported.

"The vast majority of the refined oil will be for domestic use," said Millar. "For one thing, the Keystone XL includes a 25 percent capacity set-aside for U.S. oil," said Millar. "And it doesn't make sense to ship oil on a 1,700-mile pipeline and then turn around and put it into tankers to go abroad."

Political Pressures on Pipeline

Earlier this year, Shimkus went on what he calls a "Keystone tour" of Illinois sites that he says benefit from the Keystone-1 and will get added business from the Keystone XL pipeline.

The sites included the Conoco-Phillips refinery in Wood River, the pipeline crossroads and oil terminal at Patoka, and a Marathon Petroleum Corp. refinery in Robinson. "All those places will benefit from the Keystone XL pipeline," said Shimkus, contending that the new pipeline would deliver more oil to the Illinois endpoints.

Shimkus also says he favors the new pipeline as yet another way of encouraging North American oil resources and weaning the U.S. away from Middle Eastern oil that could be blockaded or interrupted by hostile nations such as Iran.

When Iran warned in December of a possible Iranian naval blockade of the Strait of Hormuz -- which, in theory, could cut off a third of the world's oil transported by sea -- Shimkus said the threat "underscores the need for Obama to make a decision on the Keystone XL that would add security and certainty to U.S. oil supplies from Canada."

Enthusiasm for the Keystone XL tends to fall along party lines in Missouri, with Republicans such as Blunt and Rep. Todd Akin, R-Wildwood, favoring the project, and most Democrats either less enthusiastic or even doubtful.

For example, Rep. Russ Carnahan, D-St. Louis, said he had qualms about the Keystone XL on environmental grounds, telling the Beacon that he would like to see more studies of its full impact on the U.S. environment as well as Canada's forests.

But McCaskill said the pipeline is a project that's "going to happen" eventually, adding that it's "not a matter of if," but rather "when and where."

"If there's going to be a pipeline, rather it go east and west in Canada to supply oil that we have to buy, it would be better for those jobs to go through our country as long as it's done in an environmentally responsible way," McCaskill told Beacon writer Jason Rosenbaum in late December.

McCaskill said it made sense to examine the objections of Nebraskans to the original route of the pipeline. "I don't know if it's a good idea to speed up the environmental considerations. But I certainly think in the long run a pipeline being built makes sense... And I'd much rather buy oil from Canada than the Middle East."

In a statement, Akin said he supports the building of the Keystone pipeline. "It will reduce our dependence on foreign oil, provide jobs and build American energy infrastructure." And Blunt said he strongly supported the pipeline because "more American energy equals more American jobs."

Would Keystone Xl Create U.S. Jobs?

TransCanada and the American Petroleum Institute claim that Keystone XL would create about 20,000 construction and manufacturing jobs, as well as an estimated 119,000 other jobs -- either direct, indirect or "induced" employment.

Another indicator of positive benefits is a study by the Texas-based Perryman Group concluding that "the availability of substantial Canadian [oil] supplies delivered in an efficient manner would bring notable economic benefits" to the United States.

"In effect, the Keystone XL Project facilitates a long-term increase in marginal supply, which will have a modest price effect permeating the entire economy," the Perryman study said. "These benefits, of course, are over and above the sizable gains from the construction stimulus, particularly in the areas directly affected."

Over the lifetime of the Keystone XL project, the report predicted a total of $20.9 billion in total spending, $9.6 billion in output, and 118,935 person-years of employment.

But a report by Cornell University's Global Labor Institute issued in September -- "Pipe Dreams? Jobs Gained, Jobs Lost by the Construction of Keystone XL" -- found the Perryman study flawed and predicted only a relatively minor net job impact from the Keystone XL project.

"It appears the oil lobby got what they paid for: cooked numbers to justify their untenable policy positions," said Rep. Ed Markey, D-Mass, the ranking Democrat on the House Natural Resources Committee. "When the top five oil companies shed thousands of jobs over the last five years, and companies aren't even taking advantage of most drilling opportunities offered to them, it seems to me creating a million jobs doesn't even have a million-to-one chance of happening."

The Cornell report asserts that job estimates by TransCanada are unsubstantiated and finds that the Keystone project not only will create fewer jobs, but could actually end up eliminating more jobs than it creates. Noting that about half of the steel pipe used would be made outside of the U.S., the report estimated the part of the Keystone budget that would have a direct impact on U.S. employment is half of what industry claims.

Finding that many of the created jobs would be temporary, the Cornell group asserted that as many as 90 percent of the people hired to do the actual pipeline work would be non-local or from out of state. And it cited possible job losses from fuel costs in the Midwest, pipeline spills, pollution and the rising costs of climate change.

But energy analyst Mark Green, in his industry-focused "Energy Tomorrow" blog, said a report in September by the Wood Mackenzie energy consulting firm concluded that -- if Congress adopted "pro-energy development policies," including the pipeline -- about 1 million new U.S. jobs could be created by 2018.

Even if Delayed, a New Pipeline Seems Likely

Even if Obama decides in two months that the current Keystone XL plan is not yet in the national interest, some analysts contend that a similar project eventually will be approved.

For one, no rules prevent either TransCanada or another pipeline firm from modifying the route and re-applying with the State Department for another major pipeline route from Alberta to the Gulf Coast.

At the moment, there is enough pipeline capacity to carry Alberta's current tar-sands oil production to U.S. refineries, including those in Illinois. But later in this decade -- and certainly by 2020 -- energy analysts predict that the higher production of crude from western Canada will necessitate more pipelines.

An obvious route, from Alberta westward to the Pacific to towns such as Kitimat, British Columbia, has been delayed for years by tribal and other local opposition to the environmental impact of such pipelines. But Canadian pipeline firms such as Enbridge are trying to find ways around that opposition.

Canada's prime minister, Stephen Harper, told an interviewer in late December that if the U.S. would block the Keystone XL pipeline, Canada would focus more on China as a bigger market for its oil. "I am very serious about selling our oil off this continent, selling our energy products off to China," Harper said.

But environmental activist McKibben, a professor at Middlebury College in Vermont who helped spark the anti-Keystone protests, told the New York Times that the Alberta oil sands developments would be slowed considerably if the U.S. market for the oil would shrink.

"Stopping Keystone will buy time," McKibben said, "and hopefully that time will be used for the planet to come to its senses around climate change."

Rob Koenig is an award-winning journalist and author. He worked at the STL Beacon until 2013.