FACTBOX-Keystone XL dominates US energy, environment agenda

Wed Nov 2, 2011 11:28am EDT

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Nov 2 (Reuters) - TransCanada Corp's Keystone XL pipeline is at the center of an emotional debate in the United States, pitting promoters of energy security and job creation against advocates of a green economy who fear the environmental risks of moving oil across the length of the country.

Here are the facts and figures of the proposal and the major issues surrounding it:

PROJECT

Proponent: TransCanada, its country's largest pipeline and power generation operator, is best known for running the most extensive natural gas pipeline network in Canada and much of the northern United States. Current market value is $30.5 billion. Company is led by Chief Executive Russ Girling.

Estimated Cost: $7 billion. When added to the initial Keystone pipeline, which started moving crude to southern Illinois and Cushing, Oklahoma, in 2010, the overall cost is $13 billion, making it one of the largest infrastructure projects on the continent.

Capacity: 700,000 barrels a day. When combined with Keystone I the capacity would be 1.3 million bpd.

Scope: Keystone XL would move crude 1,661 miles (2,673 km) to the Port Arthur, Texas, area from Hardisty, Alberta, a pipeline terminal that serves supply from the Canadian oil sands. In between, it would cross Saskatchewan, Montana, South Dakota and Nebraska. In the southern part of the state, it would be incorporated with the current Keystone line through Kansas and Oklahoma. At the storage hub of Cushing, Oklahoma, it would extend south to the Gulf Coast refineries.

State of play: Keystone XL received Canadian approval in March 2010, but the U.S. State Department has yet to rule following a lengthened environmental process that has included draft and final impact statements and public meetings. The department has said it aims to make its decision before year end, but one official told Reuters that deadline could slip.

U.S. President Barack Obama raised the possibility of further delay on Nov. 1. He said he expected the department's report in the next several months, and then would make his decision based on health, environmental and economic factors.

ISSUES

Pro: TransCanada and supporters say the project would be key to improving U.S. energy security. These include the Canadian government, the oil industry, some U.S. Republican lawmakers and politicians of all stripes from energy-producing states, as well as unions such as the Teamsters.

TransCanada has said the project, which will result in the most advanced pipeline ever built, will create 20,000 jobs in the United States at a time of high unemployment.

Backers say it would reduce dependence on oil from unfriendly nations in the Middle East and from Venezuela and would bolster supplies from a stable and reliable ally that has the world's third-largest crude deposit. It would also provide a large new source of oil in the Gulf Coast, where supplies from Mexico and Venezuela are dwindling.

Canada already ships more than 2 million bpd to the United States, representing 22 percent of U.S. imports, according to the U.S. Department of Energy. Keystone XL, if fully used, could displace up to 8 percent of supplies from other countries.

Canada and its oil industry say the line will improve returns for producers, which now sell much of their crude into the U.S. Midwest and Oklahoma, where a glut of supply has depressed prices.

Con: Opponents include a broad range of environmental groups, such as the Natural Resources Defense Council and Friends of the Earth, celebrities, Canada's energy workers' union, many Democrats and politicians from Nebraska.

Some fear the risks of oil spills in environmentally sensitive regions, chiefly the area around the huge Ogallala aquifer, much of which is in Nebraska. As much as 27 percent of U.S. irrigated land overlies the water source, which yields nearly a third of U.S. ground water used for irrigation, according the the U.S. Geological Survey. It also provides drinking water for 82 percent of residents within the aquifer boundary.

Critics contend oil derived from oil sands is more corrosive to pipeline walls, although there is no conclusive science on that. Recent spills in Michigan and Montana were due to ruptures of pipes carrying Canadian oil, albeit older ones.

Opponents also say the line will encouage more development of the Alberta tar sands, which they call detrimental to the fight against global warming due to the high carbon intensity of the operations. They say Keystone XL will dash hopes for a move to renewable energy sources and a green economy.

Opponents dispute TransCanada's projections for job creation, pointing to a Cornell University Global Labor Institute study that argues the project will create just 2,500-4,650 temporary construction jobs.

Some analysts say the pipeline could boost U.S. pump prices by reducing the gasoline glut at Cushing, Oklahoma.

PIPELINE POLITICS

The project poses political risks for U.S. President Barack Obama as he seeks to hold on to the White House in 2012.

Green-lighting the pipeline would upset environmentalists, part of his liberal political base, who are disappointed that he has not passed broad climate change legislation.

But blocking the project would allow Obama's opponents to suggest he has not done all he can to tap new sources of fuel or create jobs. Obama, a Democrat, has advocated "green energy" while Republicans have pressed for more oil drilling.

At the state level, Nebraska's governor and other lawmakers threaten to delay the proceedings. The legislature is debating a measure requiring TransCanada to move the proposed right-of-way away from the aquifer, but some question whether such a state law would violate the U.S. Constitution.

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