U.S. edges closer to decision on Canada pipeline

Fri Aug 26, 2011 12:52pm EDT
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By Timothy Gardner and Ayesha Rascoe

WASHINGTON (Reuters) - A proposed $7 billion Canada-to-Texas pipeline cleared a major obstacle on Friday with the release of U.S. State Department review that suggested it would have limited environmental impact.

The report found that the Keystone XL pipeline by itself would not likely boost output of Alberta's oil sands because demand for the oil means it will get to the market one way or another.

"Even without it ... the oil is going to develop and is going to get to different refineries that are demanding it," a State Department official said.

A broad environmental movement has coalesced against TransCanada Corp's pipeline that would bring more than 500,000 barrels per day of oil sands crude from Alberta to refineries in Texas.

More than 320 Keystone protesters have been arrested this week in demonstrations in front of the White House in an action expected to continue into early September.

The opponents want President Barack Obama to block the line, arguing that producing oil sands emits more carbon dioxide than developing other kinds of crudes.

Critics also say the pipeline risks polluting a massive aquifer in the center of the United States, which would hurt surrounding communities. TransCanada's existing Keystone pipeline suffered two small leaks this year.

Backers of the pipeline say it will create thousands of jobs and boost oil imports from a close ally.   Continued...