Keystone clears major hurdle

Hollywood actors, climate experts and other opponents of the proposed Keystone XL pipeline will have ninety days to prevent the final approval of the project after the U.S. State Department ruled on Friday that the pipeline would have “no significant impact” on the environment. The State Department will make a final decision on the pipeline before the end of the year, after a public comment period and more hearings in the five states the pipeline will pass through.

Protests in front of the White House entered their second week yesterday with at least  275 arrests so far, according to the Rain Forest Action Network. Those arrested include Hollywood actress Darryl Hannah and NASA scientist and climate expert Dr. James Hansen. 

TransCanada Corp.’s (TRP-T, TRP-N) proposed 2,700-km pipeline will carry about 580,000 barrels of oil per day from Canada’s oil sands in Alberta to Texas.

“Support for Keystone XL continues to grow because the public, opinion leaders and elected officials can see the clear benefits that this pipeline will deliver to Americans,” Russ Girling, TransCanada’s president and chief executive, said in a statement announcing the news that the State Department had “reaffirmed the environmental integrity of the project.”

Girling added that the fundamental issue is energy security. “Through the Keystone system, the U.S. can secure access to a stable and reliable supply of oil from Canada where we protect human rights and the environment, or it can import more higher-priced oil from nations who do not share America’s interests or values.”

During its operation, the pipeline will also over US$5 billion in property taxes to the communities it passes through, Girling noted, and the project is expected to create US$20 billion in economic stimulus to the U.S. during the construction phase alone. The pipeline builder also argues the project will “put 20,000 Americans to work” and will create “an additional 118,000 indirect and spin-off jobs for local businesses.”

TransCanada expects that if construction gets underway in early 2012,  the pipeline can be completed by 2013.

Environmental groups argue that oil sands production releases more carbon dioxide into the air than conventional oil production. Opponents of the pipeline also worry that an oil spill would severely damage the Ogallala Aquifer, a key source of water in states through which the pipeline will pass. There have already been spills from TransCanada’s existing Keystone pipeline and recently Exxon’s Silvertip pipeline spilled about 1,000 barrels of crude oil into the Yellowstone River of Montana in July. Enbridge also experienced two major oil pipeline spills in Michigan and Illinois last year.

If the pipeline goes ahead, Keystone XL will have to comply with 57 conditions that have been tailored specifically to the project. The conditions were drawn up by the U.S. Pipeline and Hazardous Materials Safety Administration, according to the Energy Intelligence Group.

At presstime in New York TransCanada was trading at US$42.77 per share, near the higher end of its 52-week range of US$34.77-US$45.09.