* Issuing report in August keeps decision in 2011 on track
* TransCanada pleased State sticking to schedule
* Pipeline would help ease U.S. Midwest supply glut
(Adds details on how pipeline would ease Midwest oil glut)
By Timothy Gardner and Tom Doggett
WASHINGTON, July 22 The U.S. State Department
will issue a final environmental report next month on
TransCanada Corp's pipeline that would ship Canadian oil sands
crude to Texas refineries, keeping the project on track for a
final decision by the end of this year.
The $7 billion line has faced opposition from many
lawmakers and environmentalists for greenhouse gas emissions
associated with oil sands production, and because the line
would run across the one of the world's largest freshwater
resources, the Ogallala Aquifer.
"We still expect to complete the process and make a
decision on the permit before the end of the year," Daniel
Clune, the State Department's Principal Deputy Assistant
Secretary in the Bureau of Oceans and International
Environmental and Scientific Affairs, told reporters on
The Environmental Protection Agency last month asked the
State Department to do the more extensive environmental review
of the line, citing two leaks that occurred on an existing
Keystone line in May.
It also pushed the State Department to carefully consider
both the route of the pipeline and what measures are needed to
prevent and detect spills.
Supporters of the up to 700,000 barrels-per-day line say it
would reduce U.S. dependence on oil producers that are less
friendly to the country and provide construction and
In addition, the line would help ease a glut of crude at
the Cushing, Oklahoma delivery point for the New York
Mercantile Exchange, shifting crude to the Texas refining
center where more oil can be processed, analysts say.
Inventories in Cushing and throughout the Midwest have
swelled this year due to rising Canadian supplies and a lack of
pipeline capacity to ship it to refiners in the Gulf Coast,
helping to push the premium of London oil futures to U.S. oil
futures to record levels.
The controversy had pushed some analysts to wonder if the
United States would delay a final decision until next year.
ENVIRONMENT VS. ENERGY SECURITY
After the State Department issues the assessment in August
federal agencies, including the EPA, would have 90 days to
comment on the department's final report.
Then the agencies would have 15 days to decide whether to
push the the decision up to the White House, if they felt the
State Department had not adequately assessed the environmental
risks. Such a move is unlikely as it could open President
Barack Obama to direct criticism from environmentalists.
TransCanada was happy that the State Department was on
track. "We're pleased that they are sticking to the schedule
that they had highlighted and we can move the project forward,"
said James Millar, a spokesman for TransCanada (TRP.TO).
The State Department's final environmental impact statement
which will total more than 1,000 pages, will consider whether
oil sands are corrosive to pipelines, said Clune.
It will also consider energy security issues, including the
impact of the disruption in Libyan oil exports, when deciding
whether to issue a permit, Clune said.
Environmentalists said the State Department is moving too
fast. "The State Department cannot possibly address the many
glaring gaps in its environmental analysis in the next few
weeks, let alone consider lessons from the worrying string of
recent pipeline spills," said Damon Moglen, climate and energy
director at Friends of the Earth.
The department is planning to hold a series of meetings in
September in the capitals of the states where the pipeline
would cross, which are Montana, South Dakota, Nebraska,
Oklahoma and Texas.
(Reporting by Timothy Gardner, additional reporting by Tom
Doggett; and Scott Haggett in Calgary; Editing by Alden
Bentley, Russell Blinch and Sofina Mirza-Reid)