Memo suggests U.S. light oil threatens approval of Keystone pipeline – by Shawn McCarthy (Globe and Mail – November 28, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

Booming U.S. oil production poses a new threat to TransCanada Corp.’s controversial Keystone XL pipeline project, Canada’s top energy expert in Washington warned in a memo to the ambassador to the U.S.

In an analysis prepared last summer and obtained under Access to Information, Canadian embassy energy counsellor Paul Connors warned Ambassador Gary Doer that Canada could not rely on a previous State Department finding that the pipeline would not increase greenhouse gas emissions, and said the jury was still out on whether the U.S. would approve the project. In June, U.S. President Barack Obama laid out an aggressive new climate policy and said he would only approve the Keystone XL pipeline if it did not “significantly exacerbate the problem of carbon pollution.”

Keystone supporters – including Natural Resources Minister Joe Oliver – have noted that a State Department draft environmental impact statement concluded last March that the oil sands bitumen would get to market with or without the Keystone XL pipeline, and that therefore approval of the project would have little impact on greenhouse gas emissions.

Mr. Connors, however, warned that booming production of unconventional light oil in North Dakota and Texas could give rise to a new rationale for denying the pipeline, since light oil is less greenhouse-gas intensive than oil sands crude. The e-mail – written the day after Mr. Obama’s climate policy announcement – was sent to several embassy staff and obtained by the Calgary-based environmental think tank Pembina Institute after an access request.

The U.S. State Department will soon issue a final analysis of the project, and its conclusion as to whether the pipeline would increase carbon dioxide emissions will be key. A positive determination would create pressure for Mr. Obama to block the project.

However, if the State Department maintains its previous stance, Mr. Obama would have little grounds to reject it.

The federal and Alberta governments – along with the oil industry – see the Keystone XL project as a key link between Alberta oil sands producers and the massive refining complex on the U.S. Gulf Coast, and an important part of Canada’s effort to expand its market for oil exports.

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