Obama Draft EIS on Keystone XL Leans Toward Project Approval

The Obama administration’s positive draft environmental impact statement on the final, four-state leg of the Keystone XL pipeline appears to set approval by the State Department on an exorable path.

The draft EIS cleared away the major roadblock: concerns that greenhouse gas emissions from extraction of tar sands in Alberta would be unacceptable. It also found no problem with a new route TransCanada developed to avoid passing through a vulnerable aquifer in the Sand Hills of Nebraska.

“Completing the Draft Supplemental Environmental Impact Statement for Keystone XL is an important step towards receiving a Presidential Permit for this critical energy infrastructure project,” said Russ Girling, TransCanada’s president and chief executive officer.

“We’re looking for feedback now from the public to help us shape this going forward,” Kerri-Ann Jones, assistant secretary for Oceans and International Environmental and Scientific Affairs, told reporters after the draft EIS was released. The agency is conducting the review because the pipeline would cross an international border.

John Stoody, director, Government & Public Relations, Association of Oil Pipe Lines (AOPL), says the draft EIS “gives the Obama administration every reason it needs to approve the project.”

But environmentalists hope the State Department will discard upon closer inspection assumptions it made about railroads stepping in to carry oil sands crude to the U.S. if the pipeline is not approved, according to Anthony Swift, an attorney for the Natural Resources Defense Council, a major environmental group opposing Keystone.

The proposed Keystone XL project consists of an 875-mile long pipeline and related facilities to transport up to 830,000 barrels per day (bpd) of crude oil from Alberta, Canada and the Bakken Shale Formation in Montana. The pipeline would cross the U.S. border near Morgan, MT, and continue through Montana, South Dakota, and Nebraska where it would connect to existing pipeline facilities near Steele City, NE, for onward delivery to Cushing, OK, and the Texas Gulf Coast region. The administration previously approved the pipeline’s southern leg called the Gulf Coast Pipeline Project from Oklahoma to Texas. That $2.3-billion project is more than half complete.

The State Department will be examining public comments before issuing a final EIS. It will then make a determination whether the Keystone XL project is in the public interest. The national interest determination by the Department involves consideration of many factors, including energy security; environmental, cultural, and economic impacts; foreign policy; and compliance with relevant federal regulations and issues. That decision is not expected before September.

The August 2011 Final Environmental Impact Statement (FEIS) further notes that TransCanada has also agreed to adopt 57 special safety measures for the pipeline developed by the U.S. federal pipeline safety regulator (PHMSA), which the FEIS said would give the pipeline “a degree of safety over any other typically constructed domestic oil pipeline system under current code.” Throughout 2012, TransCanada completed the process established by the state of Nebraska. TransCanada’s existing Keystone Pipeline has safely and reliably delivered more than 389 million barrels of crude oil from Canada to refinery markets in the U.S. Midwest since it began operation in July 2010.

Pipeline Adequacy Key Issue In EPA Decision
The adequacy of U.S. gas pipeline infrastructure is a major issue in the Environmental Protection Agency’s (EPA) effort to regulate greenhouse gas (GHG) emissions from electric utilities. The EPA has proposed what are called “New Source Performance Standards” which will dictate how much carbon dioxide and other GHGs electric utilities can emit. The proposal would require all new fossil fuel-based electric generation units (EGUs) to limit emissions to no more than 1,000 pounds of carbon dioxide (CO2) per megawatt hour (lb CO2/MWh) as of the date of publication of the proposed NSPS, based on the emissions expected from a natural gas combined cycle (NGCC) unit.

No final rule has been issued by the EPA, which is waiting for a new administrator to take office. Gina McCarthy, the assistant administrator of the EPA’s Office of Air and Radiation, has been nominated by President Obama to replace Lisa Jackson.

A number of utility groups are pressing the Obama administration to drop issuance of a final rule whose objective, essentially, is to prevent construction of any new coal-burning utilities until carbon capture and sequestration (CCS) technology is commercialized. That won’t be for a few decades, however. Meanwhile, the EPA wants any new plants to use natural gas.

“A standard that effectively precludes the building of new coal-based plants, combined with the difficulties in being able to build new nuclear or large hydro plants, puts the nation at risk of over-reliance on a single fuel source, natural gas,” says Thomas Kuhn, president, Edison Electric Institute.

Groups such as the Utility Air Regulatory Group, which is composed of electric utilities, go even further. “It is evident from this discussion that EPA’s no-new-coal energy policy jeopardizes the reliability of the electricity supply because of infrastructure problems associated with pipelines and storage capacity,” says F. William Brownell, counsel for the Utility Air Regulatory Group. The American Public Power Association and National Rural Electric Cooperatives Association have made similar points.

But environmentalists say there will be plenty of natural gas and a Feb. 28, 2013, letter from the Environmental Defense Fund underlines that argument. The letter argues that adequate pipeline and storage capacity will be added to the current system to support new gas-powered utilities, and cities an INGAA report published in 2011 as evidence. It goes on to cite various reports, including ones from INGAA that forecast additional natural gas demand by the electric utility industry requiring 43 Bcf/d of new natural gas supply, which, coincidentally, adds the letter, is what is predicted to be built by consulting firm Navigant. Similarly, the Energy Information Administration’s current tally of pipeline projects lists 73 interstate and intrastate pipeline construction or expansion projects that have been announced, approved or are under construction with expected online date from 2013 to 2016. These pipeline projects are located in every region of the country and represent about 35 Bcf/d of capacity and over $10 billion of investment. Tomás Carbonell, one of the EDF attorneys signing the letter, declined to explain what prompted the letter when reached by phone.

But utility groups say predictions about new pipelines and adequate supply are just that: predictions. They don’t account for such things as slower shale gas production because of federal and state regulatory hurdles, increased exports of LNG and other things. “As these studies identify, while INGAA believes the physical capabilities are available to meet such needs, numerous obstacles beyond the control of the pipeline builders could delay or derail efforts to meet these projected needs,” says Rae E. Cronmiller, environmental counsel, National Rural Electric Cooperative Association.

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