Keystone XL delay seen giving time for climate concessions

A decision on whether to approve the Keystone XL oil pipeline may slip into next year, giving opponents time to marshal efforts against it while offering President Barack Obama a chance to wring concessions from Canada.

The U.S. State Department is reviewing TransCanada Corp.’s request to build the $5.3 billion link from Alberta’s oil sands to U.S. refineries in the Gulf Coast. The department said it won’t complete its environmental-impact review of the pipeline until after reviewing and publishing 1.5 million public comments it received, a months-long process that could be completed as soon as this week.

Once the environmental assessment is completed, the department begins a 90-day review of whether Keystone is in the national interest, weighing factors such as foreign relations, national security and economic impact. After that, other agencies have 15 days to appeal, which would send the matter to Obama to adjudicate -- potentially pushing a decision into mid- December or January.

“The prospects for the green lighting of Keystone have been diminishing as time goes on,” Anthony Swift, an attorney tracking Keystone for the Natural Resources Defense Council in Washington, which opposes the project, said in an interview. Delays have “significantly reduced its chances.”

2008 Application

Some analysts say the extra time may give Obama the opportunity to develop offsetting policies to undercut the opposition, either pursuing other climate-change priorities in the U.S. or getting Canada to agree to its own measures to offset the impact of oil sands production.

TransCanada first applied to build Keystone XL in September 2008. It revised the route to avoid a sensitive ecosystem in Nebraska after officials in the state said the line presented too many environmental risks. The administration is compiling its supplemental environmental impact statement, or SEIS, to account for the changes to the pipeline’s path.

The March draft environmental impact statement found that the project wouldn’t significantly increase greenhouse gas emissions because the oil sands would be developed without Keystone, and shipped out through other pipelines or by rail.

The Environmental Protection Agency questioned that conclusion in its response. Environmental groups such as the Sierra Club issued a report on Aug. 29 saying the analysis, written by a contractor, is flawed and that production targets set by the Canadian oil industry can’t be met without Keystone.

Questions raised about the contractor also may mean more delay.

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