Keystone XL Passes Another Huge Hurdle

This article was written by Oilprice.com -- the leading provider of energy news in the world. Also check out these recent articles

TransCanada Corp (NYSE: TRP  ) applied more than five years ago for a federal permit to build the Keystone XL pipeline across the US in order to link Canada's tar sands in Alberta with refineries along the coast of Texas and Louisiana. President Barack Obama has continued to delay any decision, claiming that he must first determine whether or not the project would negatively impact on the environment.

A new government study has shown that the overall environmental impact of the Keystone pipeline would be minimal, removing one major hurdle for TransCanada and meaning that only one more remains.

Obama had always stated that he would not grant a permit if the project would have a negative effect on climate change, yet this recent study has concluded that the oil sands would be developed regardless of the fate of the pipeline. Now the only thing that must be determined is whether or not it is in the national interests of the US, and that means weighing up factors such as the country's energy needs and diplomatic relations with Canada.

This has obviously dealt a big blow to environmentalists and opponents of the pipeline, but Daniel J. Weiss, from the Center for American Progress, claimed that "no matter what the SEIS (Supplementary Environmental Impact Statement) says, it would be premature for either side to tear down the goalposts because there is still a long part of the game left to be played."

As a result of complaints that previous studies have not been thorough enough, for this report the agency carried out a more in-depth analysis into any market forces that could impact on the Alberta oil sands in the future. Despite this they still were unable to find any reason that the Keystone XL would significantly impact on the environment, or the rate at which the tar sands were developed.

"Approval or denial of any one crude oil transport project, including the proposed Project, 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 based on expected oil."

Now that the only issue to consider is the benefit to the US, supporters are claiming that the project would create thousands of construction jobs, and increase the energy security of the US by reducing demand for oil imported from the Middle East or Africa.

Cindy Schild, from the American Petroleum Institute, told Bloomberg"when you add all that up, if they can't show this project is in our national interest, what is? The only thing left if for the president to decide that this project is in our national interest."

Eight federal agencies have 90 days to submit their views to the State Department on the pros and cons of the Keystone XL project in relation to US national interest.

Rejecting the project at this point could hurt Obama politically, as it would anger Canadian officials, and damage the reputation of Democrats up for reelection in oil-intensive states such as Alaska (Mark Begich) and Louisiana (Mary Landrieu).

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