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U.S. State Department set to disclose Keystone review

The stakes are high in the Keystone XL decision.

Protestors opposed to the Keystone XL pipeline hold signs outside the office of Rep. Lee Terry, R-Neb., in Omaha, Neb., Tuesday, July 26, 2011. (Photo: Nati Harnik/AP)

While most attention is being focused on the U.S government’s haggling over the debt ceiling and the upcoming “drop-dead date”, August will be an equally important month for Canada’s oil industry.

In mid-August, the U.S State department is scheduled to disclose its final review of a $7 billion pipeline project which, if constructed, would begin sending diluted bitumen—an acidic crude oil—from Hardisty, Alberta to Houston, Texas, just off the shores of the Gulf of Mexico.  And earlier this week, American lawmakers passed a bill directing the Obama administration to make a final decision on the project, which is to be built by TransCanada Corp.

Stakes are high. Known as the Keystone XL, the pipeline will open up new markets for Canadian oil, delivering a reported 900,000 additional barrels of diluted bitumen per day, according to the Natural Resources Defense Council. And at least one oilsands (or “tarsands”, depending on your political leanings) processor is planning to quadruple their output and are banking on approval to deliver that extra crude to markets down south.  

Proponents say the pipeline, in addition to the economic windfall for Canada, will generate 20,000 direct jobs and provide America with a stable supply of oil. TransCanada, which already operates the similarly named Keystone Pipeline that delivers crude oil to Nebraska and Illinois, says Keystone XL will pump $20 billion into the U.S economy. Detractors say a major spill would have catastrophic consequences for water resources, including the massive Ogallala aquifer, which provides drinking water for millions in the Midwest. American environmental groups are also fuming about sending unrefined oil down south, thus exporting the bulk of the pollution that comes with processing. In addition to environmental factors, critics say Keystone could raise the price of gas and take away processing jobs from Canada.

Public relations battles are also brewing. Alykhan Velshi, a former communications director for Immigration Minister Jason Kenney, has left Ottawa to take up the cause of Alberta’s tarsands by taking over the reigns of EthicalOil.org, which as of Friday, was headlining an article titled, “Saudi woman arrested for driving herself to the ER.” And on July 20, the New York Times joined the debate by publishing an op-ed piece highly critical of the pipeline, describing it as the “wrong pipeline for the wrong oil.”

Can we just leave the oilsands alone, as some would like? That would seem like a betrayal of humanity’s 10,000 year-old legacy of destroying the earth’s delicate ecosystems in an attempt to create material wealth, a legacy that began with the advent of agriculture. An ideal situation of course would be to harness the economical benefits of our hydrocarbon endowments while working towards a goal of eliminating all potential environmental risks. While that could chew into the profit margins, it’s not hard to see how the innovation and development of environmental protection mechanisms would provide a boost to the economy, while mitigating environmental catastrophes that the petroleum industry is so famous for.

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