State Department sees no environmental red flags on Keystone route

March 1, 2013: 5:33 PM ET
NEW YORK (CNNMoney)

The State Department said Friday that the Keystone pipeline expansion should have no significant effect on the environment along its proposed route, but stopped short of saying whether or not the controversial pipeline should be approved.

If the company behind the pipeline, TransCanada, follows all the rules, its "construction and normal operation" of the pipeline should pose no major risks, the State Department said in its draft environmental impact statement. That statement is now open for a 45-day public comment period. The Obama administration will make its decision about the pipeline later this year, likely in mid-summer.

The project was delayed last year because of concerns about how it would affect Nebraska's sensitive Sand Hills region. The Obama administration -- which needs to approve the project because it crosses an international border -- turned down those plans, forcing TransCanada to draft a new proposed route.

The pipeline has touched off an intense debate in the United States. Supporters like it because it will carry 830,000 barrels a day of oil from Alberta, Canada, to the U.S. Gulf Coast, potentially reducing imports from other, more volatile areas. Its construction will create an estimated 5,000 jobs, according to the State Department. TransCanada forecasts even higher job growth.

Related: America has an energy boom. Now what?

Opponents hate it because oil from Canada's oil sands region produces 5% to 30% more greenhouse gases than other types of conventional crude. Extracting oil from the sands also uses massive amounts of water and can result in deforestation. Transporting it runs the risk of spills.

The State Department report did take into account the environmental impact of the sands' heavy oil, which it said is 17% dirtier than the average barrel of oil used in the United States. However, it also said that not building the pipeline would not significantly limit oil sands development, or U.S. consumption of heavy oil.

If Keystone is not constructed, that oil would be still be extract and used, State believes. It would simply be transported to buyers by rail or other means instead of through the pipeline.

The report was not well-received by environmentalists.

"It's a good thing this is a draft," said Susan Casey-Lefkowitz, international director at the Natural Resources Defense Council. "Certainly the public is going to have a lot to say in response."

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