October 20, 2010 / 6:38 PM / in 7 years

Water concerns grow over Canada-U.S. mega oil pipe

WASHINGTON (Reuters) - Nebraskan officials are urging the State Department to ensure a proposed $7 billion pipeline that plans to send Canadian crude to refineries along the Gulf of Mexico would avoid a massive water reservoir that irrigates agriculture in the nation’s breadbasket.

Calgary-based TransCanada Corp had hoped to start building the 2,000 mile Keystone XL pipeline next year, which would send crude from the country’s oil sands.

The project could bring 510,000 barrels per day of crude from one of America’s closest allies to refineries in Texas and Louisiana reducing the U.S. dependence on oil from Venezuela and the Middle East.

But environmental concerns on issues such as greenhouse gas emissions from producing, refining and burning oil sands, have delayed the project.

The concern about water contamination follow recent high-profile pipeline leaks in Illinois and Michigan on Enbridge Inc ducts that deliver Canadian oil.

Nebraska’s Governor Dave Heineman wrote a letter to Secretary of State Hillary Clinton that said the proposed pipeline route would run 300 miles over Nebraska and the Ogallala aquifer. The aquifer, one of the world’s largest, spans eight states and yields nearly a third of the country’s water used for irrigation.

“Nebraskans are concerned that the proposed pipeline route could contaminate the Ogallala Aquifer and I share that concern,” Heineman wrote in a letter dated October 11, a copy of which was obtained by Reuters on Wednesday.

Nebraska’s farm sales in 2008 hit $17 billion, Heineman, wrote.

The State Department has indicated it may approve a line bringing Canadian oil to the United States for energy security reasons.

“We’ve not yet signed off on it,” Clinton said at an event in San Francisco last week. “But we are inclined to do so and we are for several reasons ... we’ll either going to be dependent on dirty oil from the (Persian) Gulf or dirty oil from Canada,” Clinton said.

She said she has to consider all the energy factors in when it comes to the nation’s energy security.

Greenhouse gas emission concerns surrounding the oil sands were one of factors that led the U.S. Environmental Protection Agency to request the State Department in July to revise its draft environmental impact statement on the pipeline.

The EPA requested the State Department’s final impact statement include information concerning pipeline safety and spill response capabilities. The State Department has the final say on the project and has said it could make the decision by the end of the year.

Crude from the oil sands, a tarry mix of petroleum and grit, requires companies to burn large amounts of fossil fuels to process and refine it. The lifetime carbon emissions of the crude are higher than those of average oils burned in the United States, though experts differ on how much worse they are.

Senator Mike Johanns, a Republican from Nebraska, also sent a letter to Clinton on October 14 urging the State Department to consider other routes that would reduce risks to the aquifer.

TransCanada spokesman Terry Cunha said the company chose the rural route because it was less exposed to third party bulldozers and other diggers that sometimes cause pipeline leaks, and that there were fewer property owners along the path.

Reporting by Timothy Gardner;editing by Sofina Mirza-Reid

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