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Keystone XL pipeline clears US State Department review

US State Department has report is positive for the Keystone XL pipeline

A long-awaited US State Department report has concluded the controversial Keystone XL pipeline is "unlikely to have a substantial impact' on the environment or the US" appetite for Canadian heavy crude. 

The report's findings appear to pave the way for approval of the $7 billion pipeline, which would carry 830,000 barrels a day (b/d) of oil-sands crude from Canada to US refineries on the Gulf Coast. The report, though, did not call for the pipeline's approval or rejection.

The draft supplemental environmental impact statement (Seis) was released on 1 March and will be followed by a 45-day public consultation process, after which the Obama administration is expected to make a final decision on the project.

Opponents of the planned pipeline have urged US President Barack Obama to reject Keystone XL, claiming, among other things, the link will contribute to an increase in greenhouse gas (GHG) emissions. But the report suggests that rejecting the pipeline would do little to slow the development of Canada's carbon-intensive oil sands or reduce lifecycle GHGs from transportation fuels produced in the US.

"Approval or denial of any one crude-oil transport project, including the proposed project, remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the US," the report said.

It further concludes that oil-sands crude would find its way to market with or without the Keystone XL pipeline, either by rail or tanker, for example. 

"Given that production of WCSB (Western Canadian Sedimentary Basin) and Bakken crude oil will proceed with or without the proposed project, the denial of a presidential permit would likely result in actions by other firms in the US (and global) petroleum market, such as use of alternative modes to transport WCSB and Bakken crude oil," the Seis said.

Once the 45-day comment period on the Seis is complete, a final version will be given to Secretary of State John Kerry, who has authority to make a decision. However, Obama has indicated it will be his call to make.

Canadian officials viewed the report as positive, but said they would accept whatever Obama decides. "We have received the statement and we are reviewing it. The US has a process for reviewing the project and we respect their process," environment minister Joe Oliver said.

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