WASHINGTON -- A State Department report has concluded that the Keystone XL pipeline will not significantly worsen climate change, according to congressional aides briefed on the study, in a setback for opponents of the project.
While the report deviates from a March draft in some ways to the liking of environmentalists, the revisions aren't as sweeping as climate advocates had sought, several people familiar with the government's review told Bloomberg News.
The report also concludes that the pipeline won't have a big impact on the pace of oil sands development in Alberta, starting point for the pipeline, according to aides who requested anonymity to discuss the briefing. The report recommends more safety measures, such as sensors to warn of leaks, the people said.
The much-anticipated findings will influence whether President Barack Obama's approves TransCanada Corp.'s $5.4 billion project, which Republicans are pushing as a way to create thousands of construction jobs and boost North American energy independence. Obama has said he will consider the report's conclusions on climate change in his final decision.
White House press secretary Jay Carney said release of the report doesn't mean a decision is imminent. He declined to say Friday when Obama will make a final determination, referring to the process for public comment and his speech last June in which he said the pipeline will only serve the national interest if it doesn't "significantly exacerbate" carbon emissions.
TransCanada applied more than five years ago for a permit to build the pipeline through the U.S. heartland, connecting the oil sands with refineries along the coast of Texas and Louisiana. The project has spawned a multimillion-dollar lobbying fight and is forcing Obama to choose between angering an ally in Canada or his supporters in the environmental movement.
The March draft report concluded that the Canada-U.S. oil pipeline would have only a minimal impact on carbon emissions, because the oil sands in Alberta will be developed anyway.
Release of the Supplemental Environmental Impact Statement will kick off a separate review in which Obama must determine whether building the pipeline is in the U.S. national interest.
"No matter what the SEIS 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," said Daniel J. Weiss, senior fellow at the Center for American Progress, a Washington-based research group opposed to the pipeline.
The updated report is likely to contain some changes, the people said. At the request of the Environmental Protection Agency, the State Department asked TransCanada to agree to additional measures to prevent leaks, which it did.
The agency is updating its analysis of how much greenhouse- gas emissions come from a barrel of tar sands compared to a barrel of heavy crude from Venezuela or Mexico. And analysts are including new information about constraints on railroads to move the same amount of oil if the pipeline weren't built, another person said.
The State Department is handling the review because the project crosses an international border. Its environmental assessment is important because Obama said in a June speech on climate change that he wouldn't approve Keystone if it would "significantly exacerbate the problem of carbon pollution."
The March draft said the heavy crude from Alberta would be developed and delivered to market by rail or through other pipelines if Obama rejected Keystone, which TransCanada first proposed in 2008 to link Alberta with refineries on the U.S. Gulf Coast. Environmentalists had focused their lobbying push on the capacity of trains to make up for the 830,000-barrel a day capacity of Keystone.
"We haven't heard anything yet regarding the timing of an announcement, but we are hopeful the report on Keystone XL is released soon," Shawn Howard, a TransCanada spokesman, said in an email. "We don't see how the final report would come to a different conclusion" than previous drafts.
A State Department official, speaking on condition of anonymity, said last night that the environmental review was in its final stages of preparation.
Environmental groups, which pushed hard to get the State Department to reverse its conclusion that the pipeline would have a minor climate impact, are now looking to the next step in the process as their chance to defeat Keystone.
Eight federal agencies have 90 days to give their views to the State Department as it develops its national interest determination. The final decision rests with Obama.
"This report is important, but we've just wrapped up the third quarter and we're tied," Kate Colarulli, associate director of the Sierra Club's Beyond Oil campaign, said in an interview. "I don't think we should get carried away that the decision" has been made, she said.
The national interest determination will weigh issues other than environmental risks, including its importance to the U.S.- Canada relationship, the economic benefits it offers to local communities and how it would improve U.S. energy security.
The State Department has said it will also give the public another opportunity to comment during the national interest determination. The executive order that establishes the process for weighing international pipeline projects doesn't set a deadline for the department to make a final recommendation.
Separately, the State Department's Inspector General is weighing a complaint from Friends of the Earth that the department's contractor reviewing the project is biased because of its ties to TransCanada and the oil industry. Friends of the Earth, which opposes Keystone, says it hopes that report would undercut any of the State Department's conclusions, and force a re-start of the review process.
Douglas Welty, a spokesman for the inspector general, said no date had been set for the release though it is expected early this year.
"Since the beginning of the assessment, the oil industry has had a direct pipeline into the agency," Erich Pica, president of Friends of the Earth, said in a statement Friday. "In what could be perceived as eagerness to please the oil industry and Canadian government, the State Department is issuing this report amidst an ongoing investigation into conflicts of interest, and lying, by its contractor."
Production and refining of Alberta's oil sands release more greenhouse-gas emissions than conventional forms of oil. Canadian supporters have argued that the oil will displace heavy crude from Venezuela and Mexico that has a similar carbon footprint and that the project will create thousands of construction jobs.
A decision by Obama to approve the pipeline would anger the thousands of activists who've held dozens of protests, written hundreds of letters. That won't be the end of the process, though.
"Let's be honest folks, if State Dep't can't get this right we will sue because ranchers' water is more important then flawed status quo process," Jane Kleeb, the head of Bold Nebraska, a local group fighting the pipeline, tweeted.
And just Thursday, the Sierra Club and 15 other groups filed a petition to Secretary of State John Kerry asking the Keystone be considered together with a separate pipeline expansion request. That could also provide a reason to sue.
Credo Action, Rainforest Action, and the Other 98 Percent have enlisted about 76,000 volunteers to sign a "pledge to resistance" and risk arrest for civil disobedience if the project moves forward.
Rejecting Keystone carries its own consequences for Obama. It would anger Canadian officials and could hurt Democrats up for re-election in the Senate from oil states, including Alaska's Mark Begich and Louisiana's Mary Landrieu.
"The president has had five years of inaction on the Keystone XL pipeline," said Brian Straessle, a spokesman for the American Petroleum Institute, a Washington-based representative for the oil industry. "If 2014 is really his 'year of action,' he should start by approving Keystone."