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OIL AND GAS
Keystone pipeline could be US Republicans' first step
by Staff Writers
Washington (AFP) Nov 06, 2014


Key facts about controversial Keystone XL pipeline
Washington (AFP) Nov 06, 2014 - With US Republicans securing a majority in Congress in Tuesday's midterm elections, House and Senate leaders will press the Obama administration to speed approval of the controversial Keystone XL pipeline.

Republicans argue that the project, which would transport crude from Canada's tar sands to US refineries, would create thousands of jobs and boost energy production. Critics warn of its environmental impact.

Here are key facts about what's at stake.

WHAT IS IT?

Keystone XL is an expansion of TransCanada's existing system to funnel oil from Alberta's tar sands to refineries in the United States.

The initial $7 billion proposal in 2008 was to build a pipeline from Hardisty, Alberta that would cut through Montana to meet up with TransCanada's existing line in Steele City, Nebraska -- and then add on a new southern leg to bring the oil to Texas refineries.

After years of delays, TransCanada separated the southern portion into a project that did not require presidential approval and is currently under construction. What remains is a $5.3 billion-proposal to build a 1,179-mile (1,900 kilometer) pipeline from Alberta to Nebraska.

WHY IS IT SO CONTROVERSIAL?

Alberta's tar sands are considered to have the 'dirtiest' oil on the planet. Unlike traditional crude which gushes from a well, tar sand oil must be dug up and essentially melted with steaming hot water before it can be refined.

This means more fossil fuels need to be burned as part of the extraction process, which further contributes to climate change. It also results in huge lakes of polluted water and the strip-mining of millions of acres of once-pristine boreal forests.

Environmentalists argue it contains a harmful and corrosive component -- bitumen -- which makes pipeline ruptures or leaks more likely and carries greater health and safety risks.

There was also significant opposition to the initial route, since changed, because it passed through Nebraska's environmentally sensitive Sand Hills grasslands and over a huge, critical aquifer that serves eight US states.

ECONOMIC IMPACT:

The $7 billion proposal was welcome news to a nation suffering from the 2008 financial crisis. The State Department estimates the current $5.3 billion project will create 42,000 temporary jobs over the two-year construction period. Opponents note that just 35 permanent jobs would be created for pipeline maintenance and argue that the project will kill more jobs than it creates by diverting investment away from more labor-intensive green energy alternatives like wind and solar power.

ENERGY SECURITY:

"Drill baby, drill" was a common chant at Republican political rallies ahead of the 2008 election, and many Americans still believe climate change is a farce. TransCanada argues that bringing another 830,000 barrels of oil per day from friendly, neighboring Canada would reduce US dependence on the Middle East and Venezuela by up to 40 percent.

Opponents argue that Keystone will have no impact on energy security because much of the oil will be shipped to refineries in tax-free foreign trade zones and then exported.

SAFETY:

TransCanada argues that buried pipelines are far safer for transporting oil than ships or trains and claims to have "one of the best safety records in the industry." It also notes that there are more than 2.6 million miles of oil and gas pipelines in the United States "that deliver 99.9998 percent of their products safely and reliably every day."

The pipeline will also be equipped with 21,000 sensors that provide updates every five seconds via satellite and the ability to isolate a problem within minutes through remote-controlled valves. Critics note the existing Keystone pipeline developed a dozen leaks in its first year of operation.

Newly-empowered Republicans keen to strike a symbolic blow against President Barack Obama's divisive energy policy have a ready-to-launch opening salvo: Keystone, a controversial pipeline transporting Canadian tar-sands oil to US refineries.

Tuesday's midterm elections ushered in a new Republican majority in the Senate, and incoming leader Senator Mitch McConnell is believed to have enough votes to overcome blocking tactics by Democrats when he puts forward legislation to approve the $7-billion pipeline.

The environmentally sensitive, 1,179-mile (1,897-kilometer) project has been under consideration since virtually the first day of Obama's presidency six years ago, and has served as a rallying cry for Republicans -- and some Democrats in energy-industry states -- desperate to boost US oil and gas production and create jobs.

When the new Congress opens for business on January 3, the Senate leadership will join the Republican-led House of Representatives in pressing ahead with energy legislation.

The Republicans elected to the Senate this week are on record supporting Keystone, as are all Republicans currently in the chamber.

And senators in Alaska, Indiana, Louisiana, Missouri, Montana, North Dakota, Virginia and West Virginia were among Democrats who wrote a letter to Obama last April urging him to use his executive authority to push the Keystone process forward.

With those Democrats -- along with pro-Keystone Republicans who may prevail in undecided races in Alaska and Louisiana -- McConnell would have at least 60 votes, enough to overcome a filibuster.

- 'Boxed in' -

McConnell and House Speaker John Boehner penned an op-ed in Thursday's Wall Street Journal laying out a package of pro-energy bills, including on Keystone, that will get early votes and "will mean lower energy costs for families and more jobs for American workers."

On Tuesday, the head of the Republican National Committee, Reince Priebus, predicted to MSNBC that Keystone would succeed.

"I actually think the president will sign the bill on the Keystone pipeline, because I think the pressure -- he's going to be boxed in on that, and I think it's going to happen," Priebus said.

Obama has said he would only approve Keystone if it was shown to have minimal carbon emissions impact.

The State Department, which has authority over Keystone because of its international link, released a review in January finding that the project's carbon emissions would not be significant.

But there is a hitch, one that Obama noted Wednesday in a press conference where he said "there's an independent process" that he intends to let "play out."

The proposed pipeline route goes through Nebraska, where a judge is considering litigation on whether state lawmakers short-circuited the approval process in order to expedite Keystone's construction.

- Economic boon? -

But Tuesday's vote has clearly enhanced the project's momentum.

Canada's Minister of Employment and Social Development Jason Kenney on Wednesday hailed the US Republican victory as "good news" for Canadian jobs and the economy.

"It looks like the new US Senate will have the 60+ votes needed to ensure that Keystone XL is approved," Kenney tweeted.

Canadian officials have long pushed for Keystone's approval, and TransCanada has stressed it would be an economic boon.

TransCanada shares gained 2.5 percent Wednesday, with markets anticipating a Republican-controlled Congress will help speed implementation of the project.

Obama has argued that once built, Keystone would support just 50 permanent jobs.

But Republicans point to the State Department report saying the project would create 42,000 jobs during the two years of construction.

Obama acknowledged there was room for cooperation on energy beyond Keystone, insisting "our energy sector is booming. And I'm happy to engage Republicans with additional ideas for how we can enhance that."

Republican energy efforts go well beyond Keystone.

Congressman Fred Upton, who chairs the House Energy Committee, this year unveiled an energy "architecture of abundance" that would include a new modern energy infrastructure and expanded gas operations, like fracking in shale deposits.

"This is also our chance to govern on energy and environmental policy," Upton said after the election.

McConnell, who is from Kentucky, has accused Obama of waging a "war on coal," and has consistently called for the administration to take more aggressive steps to boost energy production.


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