The report, which was released by the U.S. State Department Friday, says the growth of greenhouse gases (GHGs) both in Canada and in the United States due to the oilsands and the pipeline is a "very important topic" as officials continue their assessment of the project.
The report states, however, that "approval or denial of the proposed project is unlikely to have a substantial impact on the rate of development in the oilsands, or on the amount of heavy crude oil refined in the Gulf Coast area."
The 1,800-kilometer pipeline will transport 830,000 barrels of heavy oil from the oilsands and from shale oil fields in Montana and North Dakota to Gulf Coast heavy oil refineries in Texas.
If the Keystone project is denied but other pipelines go forward, the impact on oil sands production would be insignificant, the report states. But "if all pipeline capacity were restricted, oil sands production could decrease by approximately 2 to 4 per cent by 2030."
A situation where none of the proposed pipelines were build would cause a reduction in oilsands GHG emissions of up to 5.3 million tonnes of GHGs. This reduction would be insignificant if authorities denied only the Keystone project.
A principal argument made by environmental groups opposed to the pipeline is that it will allow the expansion of Alberta's oilsands. The report appears to put this argument to rest. They also argue that oilsands create at least 20-per-cent more greenhouse gases than conventional oil and that the oilsands' open-pit mining is destroying the boreal forest, which acts as an important carbon sink.
U.S. Assistant Secretary of State Kerri-Ann Jones said in a conference call that the carbon footprint created by the oilsands in the U.S. is a "very serious concern." But she partially downplayed this concern when she noted that the report finds that oilsands bitumen will be used simply to replace present U.S. supplies.
The pipeline itself will emit substantial amounts of GHGs. The pipeline construction will emit about 240,423 tonnes of GHGs, the report says. The annual pipeline's operations will produce about 3.19 million tonnes a year due to electrical generation to power the pump stations. These annual emissions are the equivalent to about 626,000 passenger vehicles operating for one year, or 398,000 homes.
The report also notes that refining of the oilsands in the U.S. will produce about 17 per cent more GHGs than the average barrel of crude oil refined in the U.S. in 2005. But it adds that increasing demand for oil means that more of the world's crude supply will come from energy-intensive techniques, such as oilsands extraction. "Regulatory pressure and technological advances could counter this trend," the report states.
The report also examines the impact of the pipeline construction and leaks on the natural environment including water, plants and wildlife.
There were 1,692 pipeline leaks - or "releases" - in the U.S. from 2002 to 2012, the report notes. It states any medium or large scale leak can potentially have a significant impact on the environment, contaminating surface and ground water sources. Keystone owner TransCanada has included 57 "special conditions" most of which relate to reducing the risk of leaks. The report does not assess these "conditions."
The voluminous draft report does not offer recommendations on whether the pipeline should be approved by President Barack Obama. It examines only the potential environmental impacts as well as the impacts on U.S. energy supplies now and in the future.
"I think it's premature at this point to really try to come down with strong conclusions . until we engage with the public and really get some feedback," Jones said. "We have found that there are some impacts and in some cases for those impacts there are mitigations and approaches can be taken."
Once the U.S. Environmental Protection Agency (EPA) officially publishes the draft report next week, a 45-day public comment period will follow. This will include public hearings in Nebraska where a section of the pipeline will be built. The hearings will likely be held in early April. A final draft will be prepared after the public comment period. Then Obama will make the final decision, based on national interest.
The report also compares emissions created by the pipeline to emissions that would be created from other transportation methods.
"The purpose of this draft is to be objective and to show all of the potential impacts and potential mitigations if this project were to go forward." she said. "This paper does not come out one way or the other and make a decision on what should happen with this project. We are not at that stage in the process."
Obama unexpectedly delayed approval before last year's presidential election over environmental concerns along the proposed route, prompting Alberta-based TransCanada, to draw up a new proposal.
Joe Oliver, Canada's Minister of Natural Resources Joe Oliver said in a written statement the federal government was "reviewing" the report, but stressed that Canada has "aligned its greenhouse gas emissions with the United States." He said Keystone would create "tens of thousands of jobs on both sides of the border."
"This project will replace oil from Venezuela and the Middle East with a stable continental supply, including from the oil sands and improve the energy security of North America."
Natural resources critics from the opposition New Democrats and Liberals both suggested that Prime Minister Stephen Harper had provoked uncertainty in the oilsands industry by failing to adopt adequate environmental policies.
"I think the Harper government has sorelymisunderstood how profound the issues around climate change have become in the United States, particularly with the (superstorm) tragedy in New York, justprior to the U.S. national election," said NDP MP Peter Julian, who represents a Vancouver area riding.
Ted Hsu, the Liberal MP who represents Kingston, said the State Department report would not necessarily make it easy for Obama to approve the project in the face of opposition from the American people.
Green Party leader Elizabeth May said she disagreed with portions of the State Department's analysis, including its assessment of local environmental impacts and its economic projections for the oilsands industry.
She also said a rejection of the project could actually benefit Canada's economy by forcing the industry to create more value-added Canadian jobs while slowing the growth of greenhouse gas emissions.
"As long as we're dedicated to bulk export of unprocessed product, we're (stuck in) a constant boom and bust cycle where for jobs, you need to constantly expand," May said. But she also said the Obama administration could find the report useful if it wanted to approve the pipeline.
Files from Mike De Souza
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KEYSTONE XL TIMELINE
Sept. 19, 2008: TransCanada applies to U.S. State Department for presidential permit for Keystone XL pipeline project.
March 11, 2010: National Energy Board gives TransCanada regulatory approval for Canadian portion of Keystone XL pipeline, setting 22 conditions.
April 16: State Department issues its Draft Environmental Impact Statement, drawing criticism from environmental groups and eventually a contradictory review in July by the Environmental Protection Agency.
July: U.S. Environmental Protection Agency releases its own analysis, declaring the State Department's review to be inadequate.
Meantime, U.S. House of Representatives Energy and Commerce committee chair writes letter to State Department describing pipeline as "multibillion-dollar investment to expand our reliance on the dirtiest source of transportation fuel currently available."
July 25-26: Pipeline owned by Enbridge that transports bitumen from oilsands region ruptures and spills millions of litres of oil into Kalamazoo River in Michigan, prompting a multi-year cleanup that costs hundreds of millions of dollars.
Oct. 15: U.S. Secretary of State Hillary Clinton says she's "inclined" to approve pipeline in the midst of environmental review.
April 15, 2011: State Department issues Supplemental Environmental Impact Statement.
June 3: U.S. Department of Transportation orders corrective action following leaks from TransCanada's existing one-year-old Keystone pipeline.
August: A series of U.S. protests against Keystone XL and civil disobedience lead to more than 1,000 arrests of people urging President Barack Obama to reject project.
Nov. 10: Obama announces 18-month delay on Keystone XL decision until 2013.
Jan. 18, 2012: Obama denies permit for Keystone XL pipeline in response to legislation adopted in December that forced him to make a decision by Feb. 21, 2012. Subsequent legislative attempts by Republicans to speed up the decision also fail.
May 4: TransCanada submits new application and northern route to State Department for Keystone XL, beginning a new review process.
Aug. 9: TransCanada begins construction of previously approved southern segment of Keystone XL.
Nov. 6: Obama is re-elected.
Friday: State Department issues new environmental assessment of Keystone XL project, downplaying economic impact on oilsands as well as overall environmental and climate change impacts of project. New consultation period to follow in the coming months.
Postmedia News ILLUS: MANUEL BALCE CENETA, THE ASSOCIATED PRESS / Marchers rally in Washington last month, urging U.S. President Barack Obama to reject the Keystone pipeline. The U.S. State Department has issued a new analysis.