TODAY’S STUDY: THE STATE DEPARTMENT REPORT ON THE KEYSTONE XL PIPELINE FINDS MINIMAL IMPACTS

Final Supplemental Environmental Impact Statement for the Keystone XL Project; Applicant for Presidential Permit: TransCanada Keystone Pipeline, LP

Genevieve Walker, January 2014 (United States Department of State and cooperating agencies)

Executive Summary

Overview of Review Process

The Keystone XL Pipeline (the proposed Project) is a proposed 875-mile pipeline project that would extend from Morgan, Montana, to Steele City, Nebraska. The pipeline would allow delivery of up to 830,000 barrels per day (bpd) of crude oil from the Western Canadian Sedimentary Basin (WCSB) in Canada and the Bakken Shale Formation in the United States to Steele City, Nebraska, for onward delivery to refineries in the Gulf Coast area (see Figure ES-1). TransCanada Keystone Pipeline, LP (Keystone) has applied for a Presidential Permit that, if granted, would authorize the proposed pipeline to cross the United States-Canadian border at Morgan, Montana.

The proposed route differs from the route analyzed in the 2011 Final Environmental Impact Statement (2011 Final EIS) in that it would avoid the environmentally sensitive Nebraska Department of Environmental Quality (NDEQ)-identified Sand Hills Region and no longer includes a southern segment from Cushing, Oklahoma, to the Gulf Coast area.

The U.S. Department of State (the Department) prepared this Final Supplemental Environmental Impact Statement (the Supplemental EIS) to assess the potential impacts associated with the proposed Project and its alternatives. The Supplemental EIS takes into consideration over 400,000 comments received during the scoping period and 1.5 million comments received on the Draft Supplemental EIS issued in March 2013.

click to enlarge

Notable changes since the Draft Supplemental EIS include:

• Expanded analysis of potential oil releases;

• Expanded climate change analysis;

• Updated oil market analysis incorporating new economic modeling; and

• Expanded analysis of rail transport as part of the No Action Alternative scenarios.

Presidential Permit Process

For proposed petroleum pipelines that cross international borders of the United States, the President, through Executive Order (EO) 13337, directs the Secretary of State to decide whether a project serves the national interest before granting a Presidential Permit.

To make this decision (i.e., the National Interest Determination), the Secretary of State, through the Department, considers many factors, including energy security; environmental, cultural, and economic impacts; foreign policy; and compliance with relevant state and federal regulations. This Supplemental EIS was produced consistent with the National Environmental Policy Act (NEPA) and will help inform that determination. Before making such a decision, the Department also asks for the views of eight federal agencies identified in EO 13337: the Departments of Energy, Defense, Transportation, Homeland Security, Justice, Interior, and Commerce, as well as the U.S. Environmental Protection Agency (USEPA).

If the proposed Project is determined to serve the national interest, it will be granted a Presidential Permit that authorizes the construction, connection, operation, and maintenance of the facilities at the border between the United States and Canada. The applicant would be required to abide by certain conditions listed in this Supplemental EIS and the Presidential Permit. The Department’s primary role is to make a National Interest Determination. Its jurisdiction does not include selection of specific pipeline routes within the United States.

In addition, the Department acts consistent with the National Historic Preservation Act (NHPA) and the Endangered Species Act (ESA) as part of its comprehensive NEPA consistent review.

click to enlarge

Background

Keystone’s first application for the Keystone XL pipeline was submitted on September 19, 2008, and a Final EIS was published on August 26, 2011. The route proposed included the same U.S.-Canada border crossing as the currently proposed Project but a different pipeline route in the United States. The 2011 Final EIS route traversed a substantial portion of the Sand Hills Region of Nebraska, as identified by the NDEQ. Moreover, the 2011 Final EIS route went from Montana to Steele City, Nebraska, and then from Cushing, Oklahoma, to the Gulf Coast area.

In November 2011, the Department determined that additional information was needed to fully evaluate the application—in particular, information about alternative routes within Nebraska that would avoid the NDEQ-identified Sand Hills Region. In late December 2011, Congress adopted a provision of the Temporary Payroll Tax Cut Continuation Act that sought to require the President to make a decision on the Presidential Permit for the 2011 Final EIS route within 60 days. That deadline did not allow sufficient time to prepare a rigorous, transparent, and objective review of an alternative route through Nebraska. As such, the Presidential Permit was denied.

In February 2012, Keystone informed the Department that it considered the Gulf Coast portion of the originally proposed pipeline project (from Cushing, Oklahoma, to the Gulf Coast area) to have independent economic utility, and indicated that it intended to proceed with construction of that pipeline as a separate project, the Gulf Coast Project (see Figure ES-2). The Gulf Coast Project did not require a Presidential Permit because it does not cross an international border. Construction on the Gulf Coast Project was recently completed.

On May 4, 2012, Keystone filed a new Presidential Permit application for the Keystone XL Project. The proposed Project has a new route and a new stated purpose and need. The new proposed route differs from the 2011 Final EIS Route in two significant ways: 1) it would avoid the environmentally sensitive NDEQ-identified Sand Hills Region and 2) it would terminate at Steele City, Nebraska. From Steele City, existing pipelines would transport the crude oil to the Gulf Coast area. In other words, the proposed Project no longer includes a southern segment and instead runs from Montana to Steele City, Nebraska.

In addition to the NDEQ-identified Sand Hills Region, the proposed Project route would avoid other areas in Nebraska (including portions of Keya Paha County) that have been identified by the NDEQ as having soil and topographic characteristics similar to the Sand Hills Region. The proposed Project route would also avoid or move further away from water wellhead protection areas for the villages of Clarks and Western, Nebraska. Figure ES-3 compares the 2011 Final EIS route and the proposed Project route.

click to enlarge

The proposed route in Montana and South Dakota is largely unchanged from the route analyzed in the 2011 Final EIS except for minor modifications that Keystone made to improve constructability and in response to landowner requests (see Figure ES-3).

The Department, after discussions with the USEPA and the Council on Environmental Quality (CEQ), determined consistent with NEPA that issuance of the new Presidential Permit would constitute a major federal action that may have significant environmental impact, and that it would prepare a supplement to the 2011 Final EIS for the new application. This Supplemental EIS provides a thorough analysis of the environmental impacts from the proposed Project; it has been revised, expanded, and updated to include a comprehensive review of the new route in Nebraska as well as any significant new circumstances or information that is now available and relevant to the overall proposed Project.

To assist in preparing this Supplemental EIS, the Department retained an environmental consulting firm, Environmental Resources Management (ERM). ERM was selected pursuant to the Department’s interim guidance on the selection of independent third-party contractors. This guidance is designed to ensure that no conflicts of interest exist between the contractor and the applicant and that any perceived conflicts that would impair the public’s confidence in the integrity of the work are mitigated or removed. ERM works at the sole and exclusive instruction of the Department and is not permitted to communicate with Keystone unless specifically directed to do so by Department officials.

On June 15, 2012, through a Notice of Intent, the Department solicited public comments for consideration in establishing the scope and content of this Supplemental EIS. The scoping period extended from June 15 to July 30, 2012. In total, an estimated 406,712 letters, cards, emails, e-comments, or telephone conversation records (henceforth referred to as submissions) were received from the public, agencies, and other interested groups and stakeholders during the scoping period. In March 2013, the Department issued a Draft Supplemental EIS that included new analysis and analysis built upon the work completed in the 2011 Final EIS, as well as the estimated 406,712 submissions mentioned above that were received during the 2012 scoping process…

Public Comments Received Regarding the Draft Supplemental EIS…About the Final Supplemental EIS…Overview of Proposed Project…Proposed Project Purpose and Need…Proposed Project Description…Overview of Petroleum Markets…Summary of Market Analysis…Environmental Analysis of the Proposed Project…

click to enlarge

Climate Change

Changes to the Earth’s climate have been observed over the past century with a global temperature increase of 1.5 degrees Fahrenheit between 1880 and 2012. This warming has coincided with increased levels of GHGs in the atmosphere. In order for the Earth’s heat and energy to remain at a steady state, the solar energy that is incoming must equal the energy that is radiated into space (see Figure ES-9). GHGs contribute to trapping outbound radiation within the troposphere (the layer of the atmosphere closest to the Earth’s surface), and this is called the greenhouse effect.

Since the beginning of the Industrial Revolution, the rate and amount of GHGs have increased as a result of human activity. The additional GHGs intensify the greenhouse effect, resulting in a greater amount of heat being trapped within the atmosphere. The Intergovernmental Panel on Climate Change, a group of 1,300 independent scientific experts from countries around the world, in its Fifth Assessment Report concludes that global warming in the climate system is unequivocal based on measured increases in temperature, decrease in snow cover, and higher sea levels.

This Supplemental EIS evaluates the relationship between the proposed Project with respect to GHG emissions and climate change from the following perspectives:

• The GHG emissions associated with the construction and operation of the proposed Project and its connected actions;

• The potential increase in indirect lifecycle (wells-to-wheels) GHG emissions associated with the WCSB crude oil that would be transported by the proposed Project;

• How the GHG emissions associated with the proposed Project cumulatively contribute to climate change; and

• An assessment of the effects that future projected climate change could have in the proposed Project area and in the proposed Project.

click to enlarge

Greenhouse Gas Emissions from the Proposed Project

The proposed Project would emit approximately 0.24 million metric tons of carbon dioxide (CO2) equivalents (MMTCO2e) per year during the construction period. These emissions would be emitted directly through fuel use in construction vehicles and equipment, as well as, land clearing activities including open burning, and indirectly from electricity usage. During operations, approximately 1.44 MMTCO2e would be emitted per year, largely attributable to electricity use for pump station power, fuel for vehicles and aircraft for maintenance and inspections, and fugitive methane emissions at connections. The 1.44 MMTCO2e emissions would be equivalent to GHG emissions from approximately 300,000 passenger vehicles operating for 1 year, or 71,928 homes using electricity for 1 year.

Lifecycle Analysis

To enable a more comprehensive understanding of the potential indirect GHG impact of the proposed Project, it is important to also consider the wider GHG emissions associated with the crude oil being transported by the proposed Project. A lifecycle approach was used to evaluate the GHG implications of the WCSB crudes that would be transported by the proposed Project compared to other crude oils that would likely be replaced or displaced by those WCSB crudes in U.S. refineries. A lifecycle analysis is a technique used to evaluate the environmental aspects and impacts (in this case GHGs) that are associated with a product, process, or service from raw materials acquisition through production, use, and end-of-life.

The lifecycle analysis considered wells-to-wheels GHG emissions, including extraction, processing, transportation, refining, and refined product use (such as combustion of gasoline in cars) of WCSB crudes compared to other reference heavy crudes. The lifecycle analysis also considered the implications associated with other generated products during the lifecycle stages (so-called co-products) such as petroleum coke. WCSB crudes are generally more GHG intensive than other heavy crudes they would replace or displace in U.S. refineries, and emit an estimated 17 percent more GHGs on a lifecycle basis than the average barrel of crude oil refined in the United States in 2005. The largest single source of GHG emissions in the lifecycle analysis is the finished-fuel combustion of refined petroleum fuel products, which is consistent for different crude oils, as shown in Figure ES-10.

The total lifecycle emissions associated with production, refining, and combustion of 830,000 bpd of oil sands crude oil transported through the proposed Project is approximately 147 to 168 MMTCO2e per year. The annual lifecycle GHG emissions from 830,000 bpd of the four reference crudes examined in this Supplemental EIS are estimated to be 124 to 159 MMTCO2e. The range of incremental GHG emissions for crude oil that would be transported by the proposed Project is estimated to be 1.3 to 27.4 MMTCO2e annually. The estimated range of potential emissions is large because there are many variables such as which reference crude is used for the comparison and which study is used for the comparison.

click to enlarge

The above estimates represent the total incremental emissions associated with production and consumption of 830,000 bpd of oil sands crude compared to the reference crudes. These estimates represent the potential increase in emissions attributable to the proposed Project if one assumed that approval or denial of the proposed Project would directly result in a change in production of 830,000 bpd of oil sands crudes in Canada (See Section 4.14.4.2, Emissions and Impacts in Context, for additional information on emissions associated with increases in oil sands production). However, as set forth in Section 1.4, Market Analysis, such a change is not likely to occur under expected market conditions. Section 1.4 notes that approval or denial of any one crude oil transport project, including the proposed Project, is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios.

The 2013 Draft Supplemental EIS estimated how oil sands production would be affected by long-term constraints on pipeline capacity (if such constraints resulted in higher transportation costs) if long-term WTI-equivalent oil prices were less than $100 per barrel. The Draft Supplemental EIS also estimated a change in GHG emissions associated with such changes in production. The additional data and analysis included in this Supplemental EIS provide greater insights into supply costs and the range of prices in which pipeline constraints would be most likely to impact production.

If WTI-equivalent prices fell to around approximately $65 to $75 per barrel, if there were long-term constraints on any new pipeline capacity, and if such constraints resulted in higher transportation costs, then there could be a substantial impact on oil sands production levels. As noted in E.S.3.1, Summary of Market Analysis, this estimated price threshold could change if supply costs or production expectations prove different than estimated in this analysis. This is discussed in Section 1.4.5.4, Implications for Production.

click to enlarge

Climate Change Effects

The total direct and indirect emissions associated with the proposed Project would contribute to cumulative global GHG emissions. However, emissions associated with the proposed Project are only one source of relevant GHG emissions. In that way, GHG emissions differ from other impact categories discussed in this Supplemental EIS in that all GHG emissions of the same magnitude contribute to global climate change equally, regardless of the source or geographic location where they are emitted.

As part of this Supplemental EIS, future climate change scenarios and projections developed by the Intergovernmental Panel on Climate Change and peer-reviewed downscaled models were used to evaluate the effects that climate change could have on the proposed Project, as well as the environmental consequences from the proposed Project.

Assuming construction of the proposed Project were to occur in the next few years, climate conditions during the construction period would not differ substantially from current conditions. However, during the subsequent operational time period, the following climate changes are anticipated to occur regardless of any potential effects from the proposed Project:

• Warmer winter temperatures;

• A shorter cool season;

• A longer duration of frost-free periods;

• More freeze-thaw cycles per year (which could lead to an increased number of episodes of soil contraction and expansion);

• Warmer summer temperatures;

• Increased number of hot days and consecutive hot days; and

• Longer summers (which could lead to impacts associated with heat stress and wildfire risks)

This Supplemental EIS assessed whether the projected changes in the climate could further influence the impacts and effects attributable to the proposed Project. Elevated effects due to projected climate change could occur to water resources, wetlands, terrestrial vegetation, fisheries, and endangered species, and could also contribute to air quality impacts. In addition, the statistical risk of a pipeline spill could be increased by secondary effects brought on by climatic change such as increased flooding and drought. However, this increased risk would still be much less than the risk of spills from other causes (such as third-party damage). Climate change could have an effect on the severity of a spill such that it could be reduced in drought conditions but increased during periods of increased precipitation and flooding.

click to enlarge

Potential Releases…Socioeconomics…Environmental Justice…Water Resources…Wetlands…Threatened and Endangered Species…Geology and Soils…Terrestrial Vegetation…Wildlife…Fisheries…Land Use…Air Quality and Noise…Cultural Resources…Cumulative Effects…Environmental Impacts in Canada…Alternatives…No Action Alternative…Major Pipeline Route Alternatives…Other Alternatives Considered…

Comparison of Alternatives

Consistent with NEPA and the CEQ regulations, the Department compared the proposed Project with the alternatives that met the proposed Project’s purpose and need, and that were carried forward for detailed analysis in this Supplemental EIS. The alternatives carried forward for detailed analysis were: the 2011 Steele City Segment Alternative, the I-90 Corridor Alternative, and the three identified No Action Alternative scenarios (i.e., the Rail and Pipeline Scenario, the Rail and Tanker Scenario, and the Rail Direct to the Gulf Coast Scenario).

The two pipeline alternatives compare different routes that meet the purpose and need of the proposed Project, and the No Action Alternative scenarios describe the likely potential impacts associated with transport of crude oil from the WCSB and the Bakken formations if the Presidential Permit is denied or if the proposed Project is not otherwise implemented. The comparison focuses on three categories of impacts: physical disturbance, GHG emissions, and potential releases.

Physical Disturbance Impacts Alternatives Comparison

The primary differences between the proposed Project and the alternatives related to physical disturbance are summarized in Table ES-5.

click to enlarge

Greenhouse Gas Emissions Alternatives Comparison

To facilitate comparison of GHG emissions across all alternatives for operational GHG emissions, an assessment was made for all alternatives along the entire route from Hardisty, Alberta, to the Gulf Coast (including pipelines in Canada and from Steele City to the Gulf Coast). GHG emissions from the two pipeline route alternatives would be similar in scale to those of the proposed Project. The direct emissions during the operation phase of the 2011 Steele City Segment Alternative would be essentially the same as those generated by the proposed Project because they would have the same number of pump stations (20). The I-90 Corridor Alternative is expected to have similar but slightly higher GHG emissions because it would have one more pump station than the proposed Project and could generate slightly higher amounts of indirect GHG emissions from electricity consumption.

During operation of all No Action rail scenarios, the increased number of unit trains along the scenario routes would result in GHG emissions from both diesel fuel combustion and electricity generation to support rail terminal operations (as well as for pump station operations for the Rail/Pipeline Scenario). The total annual GHG emissions (direct and indirect) attributed to the No Action scenarios range from 28 to 42 percent greater than for the proposed Project (see Table ES-6).

The indirect GHG emissions over the lifecycle of oil sands crude oil production, transportation, refining, and product use are compared between the proposed Project and the evaluated alternatives in Section ES.4.1.2, Lifecycle Analysis

click to enlarge

Potential Spill Risk Alternatives Comparison

Similar to the GHG emissions comparison, potential spill risk was evaluated for alternatives along the entire route from Hardisty, Alberta, to the Gulf Coast (including portions of the route in Canada and including existing pipelines from Steele City to the Gulf Coast). Table ES-7 provides a summary of calculated potential release impacts for the various alternatives analyzed in terms of the number of potential releases per year and the potential volume of oil released per year.

Both of the major route alternatives would begin at the same border crossing as the proposed Project (near Morgan, Montana) and end at the same location as the proposed Project (near Steele City, Nebraska); as such, the pipelines in Canada north of the border crossing and the pipelines south of Steele City down to the Gulf Coast would be identical for all three overall pipeline routes. Compared to the proposed Project, the two major pipeline route alternatives would have similar potential spill risks (see Table ES-7). In addition, both of these major route alternatives would require aboveground facilities that are similar to those for the proposed Project; therefore, potential releases impact areas would be similar. Because the I-90 Corridor Alternative is slightly longer than the proposed Project, it would carry a slightly higher spill risk (with an estimated 533 bbl released per year compared to 518 annual bbl released for the proposed Project).

The three No Action Alternative scenarios differ from the proposed Project in that they would use alternative modes of transportation to deliver crude oil to refinery markets in the Gulf Coast rather than just a pipeline (although one of the three scenarios includes a pipeline as a significant part of its delivery system). Potential spill risks for these alternative modes differ from the proposed Project in terms of both average spill frequency and average spill size.

Volume of crude oil transportation by rail in the No Action Alternative scenarios would generally be limited to the volume contained within individual railcars. This volume constrains the total volume of crude oil that could potentially impact groundwater relative to the proposed Project in the event of a release. This constraint is offset by the increased statistical likelihood of spills associated with these alternative modes of crude oil transport relative to pipelines.

Historical rail incident data were analyzed to evaluate potential releases associated with rail transport in the United States. The results help provide insight into what could potentially occur with respect to spill volume, incident cause, and incident frequency for the No Action Alternative scenarios that involve rail transport. In addition, rail incident frequencies were compared to frequencies for other modes of transport (i.e., pipeline, marine tanker). Although the product to be transported by the proposed Project is crude oil, incidents for petroleum products were also analyzed to provide a comparison to a larger dataset. In order to make comparisons between the modes of transportation, the statistics regarding releases are expressed in terms of ton-miles (1 ton-mile is transporting 1 ton of product 1 mile; to calculate total ton-miles in a given year, one multiplies the total tons transported by the total number of miles transported).

The rates of releases and average size of releases vary between modes of transportation. For instance, rail transport has more reported releases of crude oil per ton-mile than pipeline or marine transport but, overall, pipeline transport has the highest number of barrels released per ton-mile. Comprehensive data from 2010 to 2013 are not yet available and therefore this analysis does not include incidents subsequent to 2009 such as the 2013 Lac-Mégantic rail tragedy or the Tesoro Logistics pipeline incident. The number of barrels released per year for the No Action scenarios is higher than what is projected for the proposed Project or the other pipeline alternatives (as detailed in Table ES-7) because of the alternate modes of transport in the No Action scenarios.

There is also a greater potential for injuries and fatalities associated with rail transport relative to pipelines. Adding 830,000 bpd to the yearly transport mode volume would result in an estimated 49 additional injuries and six additional fatalities for the No Action rail scenarios compared to one additional injury and no fatalities for the proposed Project on an annual basis…

Tweet