Report backs massive Canadian oil sands pipeline

[February 04, 2011]  WASHINGTON (AP) -- A proposed oil pipeline from Canada to the U.S. Gulf Coast could substantially reduce U.S. dependency on oil from the Middle East and other regions, according to a report commissioned by the Obama administration.

The study suggests the 1,900-mile pipeline, coupled with a reduction in overall U.S. oil demand, "could essentially eliminate Middle East crude imports longer term." The $7 billion project would carry crude oil extracted from tar sands in Alberta, Canada, to refineries in Texas.

The report, prepared by a Massachusetts firm at the request of the U.S. Energy Department, was completed Dec. 23 and made public this week, as President Barack Obama prepares to meet with Canadian Prime Minister Stephen Harper on Friday at the White House.

The project's developer, Calgary-based TransCanada, hailed the report by EnSys Energy & Systems Inc. The so-called Keystone XL pipeline -- which doubles the capacity of an existing pipeline from Canada -- is projected to produce more than 500,000 barrels a day of crude oil derived from formations of sand, clay and water in western Canada.

"This study supports what we have been saying for some time -- that Keystone XL will improve U.S. energy security and reduce dependence on foreign oil from the Middle East and Venezuela," TransCanada CEO Russ Girling said in a statement. "Keystone XL will also create 20,000 high-paying jobs for American families and inject $20 billion into the U.S. economy."

Environmental groups pointed to another aspect of the report that said the United States could likely meet its demand for oil even if the pipeline extension is not built.

"Why rush a decision to build a giant pipeline that will be with us for the next 50 years?" asked Liz Barratt-Brown, a senior attorney for the Natural Resources Defense Council. "Aren't there other alternatives for our fuels that we can, and must, find in this time period?"

The Natural Resources Defense Council and other groups call the pipeline an ecological disaster waiting to happen and say the so-called tar sands produce "dirty" oil that requires huge amounts of energy to extract. They said Obama should push Harper to ensure that oil from tar sands does not endanger the public health.

As the project's largest potential customer, the United States has "the right and the responsibility to be pushing the Canadians on the production of this dirty oil," said Barratt-Brown.

Activists plan to gather across from the White House on Friday to protest the pipeline project. Obama and Harper are expected to talk about clean energy, although it is not certain whether the tar sands pipeline will be on the agenda.

Secretary of State Hillary Rodham Clinton must grant a permit allowing the pipeline to cross the U.S-Canadian border before TransCanada can proceed. Clinton said in October she was "inclined" to approve the project but has since backed off those remarks.

Lawmakers from both parties have written to the State Department for and against the pipeline, which would travel through Montana, South Dakota, Nebraska, Kansas and Oklahoma before reaching Texas. Some of the strongest opposition is in Nebraska, where the state's two U.S. senators have raised sharp questions. The pipeline would travel over parts of the massive Ogallala aquifer, which supplies drinking water to about 2 million people in Nebraska and seven other states and supports irrigation.

A spokeswoman for the Canadian Embassy declined to comment Thursday.

[Associated Press; By MATTHEW DALY]

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