UPDATE 1-US to hold meetings in heartland over Canada oil pipe

Mon Jun 6, 2011 8:56pm EDT

Related Topics

* State Dept to hold meets in 5 states pipe would cross

* CERA says Keystone XL would reduce gasoline prices

* State Dept. got 8,000 comments on environmental review (Adds in second paragraph name of pipeline's owner)

By Timothy Gardner

WASHINGTON, June 6 (Reuters) - As a proposed $7 billion pipeline to bring Canadian oil sands petroleum to refiners in Texas faces local opposition, the State Department will hold public meetings in five states the line would travel through before it decides whether the project can go forward.

The State Department, which hopes to decide whether to grant TransCanada Corp's (TRP.TO) Keystone XL line a so-called "presidential permit" before the end of the year, said on Monday it would hold public meetings in Montana, South Dakota, Nebraska, Oklahoma, and Texas as well as a meeting in Washington, D.C.

The meetings would be held within 30 days after the department makes issues a final environmental impact statement on the line.

"These meetings will give the public an opportunity to voice their views on economic, energy security, environmental and safety issues, in addition to any other issues the public thinks should be taken into account in determining whether granting or denying the Presidential Permit would be in the national interest," the State Department said in a release.

The Department was forced to issue a supplemental review of the 700,000 barrels per day pipeline in April after the Environmental Protection Agency complained an initial report did not adequately assess risks to water tables, output of greenhouse gases from production of oil sands petroleum, and alternative routes. [ID:nN15298301]

Leaders in Nebraska and other states in the U.S. heartland have complained the proposed line would be built over the Ogallala Aquifer, a vast, but shallow water table farmers depend on to irrigate a large swath of U.S. crops.

The opposition to the Keystone XL has intensified after two spills last month on the original line, known simply as the Keystone pipeline.

The comment period on the State Department's supplemental review ended on Monday and a spokeswoman there said some 8,000 comments on the line were received.

The oil consultant group IHS CERA submitted comments in the form of a a report that said the pipeline would provide more flexibility to U.S. crude supplies and enable more domestic crude output in the Bakken region of North Dakota. Production of Bakken oil has spiked recently as drilling technologies have advanced.

One of the report's authors said the Keystone XL line could reduce fuel prices for Americans. "If all things are equal, and you bring more crude to the Gulf Coast, more supply would mean a lower gasoline price," said Jackie Forrest, IHS CERA director of global oil.

The report also said greenhouse gas emissions of imports from the Canadian oil sands, which is energy-intensive to produce, are about 6 percent higher than from the average crude oil consumed in the United States, a figure lower than estimates from the EPA.

Supporters of the line, including many Republicans in Congress, have said it would lower fuel prices and provide jobs and that China would use the oil if the United States did not.

U.S. agencies, including the Department of Energy and the EPA, will get a chance to comment for 90 days once the State Department finalizes its environmental review. If the agencies oppose the final review, they could force the final decision to be made by the White House. (Additional reporting by Jeffrey Jones in Calgary; editing by Carol Bishopric)

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