The proposed Keystone XL pipeline would be safer than transporting oil sands bitumen by rail, says the final U.S. State Department report on the controversial project. The report also predicts that oil sands development will continue even if the pipeline is rejected.

"The dominant drivers of oil sands development are more global than any single infrastructure project,” the long-awaited Environmental Impact Statement released Friday concluded.

Environmentalists have been pressuring President Barack Obama to deny the pipeline proposal in the hopes that it would stop production of what has been called the world’s dirtiest oil. But the latest report upheld earlier findings that said approval or denial of TransCanada’s pipeline would have no impact on oil sands crude based on projections on pricing, extraction costs and global demand for oil. The contentious project aims to transport unrefined bitumen from Alberta’s oil sands to the U.S. Gulf Coast, where it could be refined and shipped overseas.

The U.S. State Department compared the projected impact of the pipeline against three rail alternatives and found Keystone XL would result in fewer greenhouse gas emissions, oil spills, injuries and deaths.

The report found that increased use of oil-by-rail, tankers or combinations of both would have higher greenhouse gas emissions than the pipeline itself — some 28 to 42 per cent higher. The potential number of barrels of oil spilled each year could be as much as nine times greater with oil-by-rail alternatives than with Keystone XL, the report said.

Meanwhile, the three proposed rail alternatives — a combination of rail and tanker, rail and existing pipeline or a rail route to the Gulf Coast — would result in an estimated 49 additional injuries and six more fatalities per year, the report predicted. The State Department estimates Keystone XL could result in one additional injury per year and no fatalities.

The report predicts the price of oil sands crude would drop if Keystone XL doesn’t move forward, but not enough to shut down oil sands operations altogether. The region has been a target of climate change campaigners because of the energy required to get the tar-rich bitumen out of the ground.

However, any decision on Keystone XL “is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States," the report says.

It did, however, find the project would have some significant environmental impacts. The emissions from running the pipeline would be equivalent to running 300,000 cars for a year or electricity for 72,000 homes for a year — enough to power a small city.
This final report echoes many of the findings of the first report released last year but also responds to the more than 1.9 million comments received since the preliminary findings were released in March 2013.

Obama has been plagued with the controversial decision since his first day in office. The final call is his, but a decision is still expected to be months away. He has said that his most important question is whether the pipeline would significantly increase greenhouse gas emissions — and Friday’s report seemed to answer “no”.


Many politicians on both sides of the border viewed the report as the evidence needed to move the project forward, but others argued the report gives Obama as much reason to reject the project as to approve it. The Environmental Protection Agency and other U.S. government departments have 90 days to comment on the report. Canadian Prime Minister Stephen Harper has called approval of Keystone a “complete no-brainer” and that he “won’t take ‘no’ for an answer.”

Canada’s Minister of Natural Resources Joe Oliver took the report’s conclusion as a positive sign and said the benefits to both Canada and the U.S. are clear.

“I’m hoping that after the process, which is outlined, the decision will be taken expeditiously.”

But a spokeswoman for Secretary of State John Kerry said he can take as long as he wants to make a recommendation to the president.

Construction of the pipeline would add about $3.4 billion to U.S. GDP, and support about 42,100 jobs during the two-year-long construction period. However, that number would fall to 50 U.S. jobs — 35 permanent employees and 15 temporary contractors — after the initial construction phase.

Alternatives to pipeline building include transportation of oil by rail, which has come under significant criticism since an oil-laden train exploded in Lac-Megantic, Que., taking the lives of 47 people last summer. Since then, there has been a series of high-profile accidents involving oil trains. The accidents have strengthened arguments that pipelines are a preferable option to oil-by-rail.

The Keystone XL pipeline, with an estimated cost of $5.4 billion, would run from Alberta to an oil terminal in Cushing, Okla. The southern leg of the Keystone XL, running from Cushing to Gulf Coast ports in Texas, went into operation this month. As the southern leg doesn't cross international boundaries, it doesn't need State Department approval.

A recent poll found support for Keystone XL among Canadians is declining, though a bare plurality — 48 per cent — support the project, compared to 46 per cent who oppose it.

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