Great Plains oil pipeline plan sparks grass-roots activism, high-stakes lobbying

A massive feat of engineering by any measure, the Keystone pipeline expansion project would transport crude oil close to 1,700 miles from "oil sands" in the icy reaches of Hardisty, Alberta, down through the Great Plains to the refineries of Port Arthur, Tex. In doing so, the giant pipe also promises to allay some fears about U.S. energy security: The oil will come from a trusted ally, and its cross-continental path avoids visions of another deep-sea drilling disaster.

But the decision on whether to issue a permit to the project, opposed by environmental groups, rests with the State Department, which has little expertise in engineering or environmental matters. And reflecting the chaos of U.S. energy and environmental policy, the proposed pipeline is pitting Montana landowners against pipe fitters in Nebraska and creating unlikely allies of Nebraska ranchers and chieftains from Alberta's indigenous communities.

On one hand the move to extend TransCanada's existing pipeline - which runs from Hardisty to the Illinois towns of Wood River and Patoka and has a daily capacity of 435,000 barrels - offers obvious benefits. The extension will generate 13,000 construction and 7,000 manufacturing jobs in the United States over roughly two years, according to the company, and could transport as much as 500,000 additional barrels of oil a day. It also could help stabilize electricity prices for several rural co-ops along the route.

"Everyone's saying we've got to get less dependent on Middle East oil, and this is a perfect opportunity to bring this oil in," said William Hite, general president of the United Association, the union for plumbers and pipe fitters.

But the crude comes from an area known as "tar sands" or "oil sands," where operators extract a viscous oil called "bitumen" from formations of sand, clay and water. The process consumes more energy and water than most conventional drilling methods, can require clear-cuts of forests and creates tailings that can pollute nearby waterways. Canada has the world's third-largest reserve of heavy crude after Saudi Arabia and Venezuela and accounts for 20 percent of U.S. crude imports.

At least 65 lawmakers - nearly all Democrats - have written the State Department raising questions about the pipeline, while 40 Republicans have written letters backing it.

"When I think of the State Department I think of many things they do well," said Sen. Mike Johanns (R-Neb.). "But I would tell you, siting pipelines is not anything I would think of when I think of State Department expertise."

Environmental issues

The National Wildlife Federation's senior vice president, Jeremy Symons, said the Obama administration cannot claim to be fighting global warming while signing off on oil imports from such an energy-intensive operation. "What does it mean when the U.S. bellies up to the trough and says, 'Give me your dirty energy?' " Symons said.

Symons also noted that TransCanada submitted a 2009 market assessment in its Canadian permit application suggesting the extension will raise heavy crude prices in the United States by removing the "oversupply" in the Midwest, where the price has been discounted. The analysis said that by extending the pipeline to the Gulf Coast, with many more refineries and buyers, the Canadian heavy crude price could be expected to increase by around $3 a barrel, giving the Canadian oil industry at least $2 billion in additional revenue each year.

But the pipeline will traverse environmentally sensitive areas such as Nebraska's Sand Hills and the Ogalalla Aquifer, which provides drinking water for 2 million people. Local ranchers and farmers have questioned why the pipeline needs to pass through an area where the aquifer runs just a few feet below the ground and the sandy soil makes it harder for vegetation to regrow once it's been disturbed.

"We know what it takes to try to maintain the land in a productive state," said Teri Taylor, who runs a cow-calf operation with her husband and son that would have miles of pipeline laid across it. "We are unable to even fathom what it would take to reclaim the land."

Oil pipelines are not uncommon in the United States. There are nearly 147,000 miles of them already, according to the Transportation Department's 2008 statistics, with 50,000 miles devoted to transporting crude.

An Energy Department-commissioned analysis, which has not been released but has been obtained by The Washington Post, provides some fodder to both sides' arguments. The report says the United States can obtain the Canadian crude it needs for the next decade without the Keystone extension, but it suggests that increasing oil-sands imports and reducing overall U.S. oil demand would "have the potential to very substantially reduce U.S. dependency on non-Canadian foreign oil, including from the Middle East." It also concludes that a decision to block the pipeline would not affect Canadian oil sands production, since the heavy crude would go to Asia instead.

TransCanada chief executive Russ Girling said his company "has done a rigorous review of the rerouting to make sure that it has the least environmental impact," adding that "we will leave the environment in exactly the same condition where we found it."

The Nebraska Farmers Union has passed a resolution demanding the pipeline project be relocated or blocked. Relocation would entail the running the pipeline through more populated areas as well as wetlands, and it could delay the process by another six months.

TransCanada said it will employ extra precautions that are usually reserved for a high-pressure operation. But Nebraska state Sen. Tony Fulton (R), a former engineer who chairs the legislative sportsmen's forum, said he would be more comfortable with the pipeline if another Canadian company, Enbridge, could explain why its pipeline in Michigan ruptured and released more than 800,000 gallons of oil last summer into the and a nearby creek.

"Why are we so hellbent on moving this so quickly?" Fulton said.

At the State Department

The State Department is under pressure to reach a conclusion this year on the permit application, which was filed in September 2008. The draft Environmental Impact Statement it issued in April sparked an unusually high number of comments. The Environmental Protection Agency sharply criticized it, saying it did not fully explore the potential environmental impact or the prospect of a more rapid transition to alternative energy that would make the imports unnecessary.

Daniel Clune, the principal deputy assistant secretary in the Bureau of Oceans and International Environmental and Scientific Affairs, said State Department officials have "been engaged in very serious discussions with" the EPA and other relevant agencies.

Lobbying on both sides has been intense. TransCanada has run television and radio ads in Nebraska and Washington, D.C., and Laborers' Local 1140 in Nebraska has made more than 600,000 robo-calls to Nebraskans. More than 100 activists demonstrated outside Nebraska's capitol early this month, and the Texas-based Stop Tarsands Oil Pipelines has gotten local politicians to demand a more-detailed environmental analysis.

Opponents such as Bold Nebraska director Jane Kleeb are using e-mail, Facebook and monthly conference calls to strategize with others along the pipeline's route - in states including Montana, South Dakota, Kansas and Texas. They have also forged connections with Canadian First Nations activists through the Indigenous Environmental Network, which has sent speakers to Nebraska to help mobilize opposition there.

While Secretary of State Hillary Rodham Clinton prompted an uproar in mid-October when she declared that the department was "inclined" to grant the permit, officials now say they will not release a final environmental analysis before next month. Once that process is complete, the state has another 90 days to make a "national interest determination" that focuses on economic and security considerations.

"All other things being equal, there would be an advantage in getting our oil from a close ally like Canada," Clune said. "What we're trying to do is make the best decision for the country."

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Early cleanup efforts of gulf oil spill marred by communication woes, scammers

PASCAGOULA, MISS. -- Johnny Ray Harris hunted for oil in the gulf near his home for 45 days straight, radioing in coordinates to cleanup crews when he spotted large, inky patches floating in the choppy waters.

"I would call it in, but no one ever came. Not once," Harris said, sitting on his 73-foot-long shrimp boat beside a box filled with unused rubber boots, gloves and coveralls. "What a waste."

Harris is a part of BP's Vessels of Opportunity program that promised to turn out-of-work fishermen into a powerful task force, skimming and scooping up oil before it reached the shores of Alabama, Mississippi, Louisiana and Florida. At its peak, the program dispatched 3,200 boats at an average cost of $2,000 a day. In recent weeks, with a successful capping operation containing the spewing well, the oil company has scaled back to about 1,400 vessels.

Fishermen involved in the program and the company that runs it both say the effort -- costing $450 million so far -- has been fraught with problems. Much of the money doled out by BP probably went to opportunists rather than to commercial fishermen and charter boat operators whose livelihoods were disrupted by the spill. Harris and dozens of other fishermen said in interviews with The Washington Post that the amateur effort, which included laying and maintaining boom, failed to prevent oil from reaching the beaches, marshes and islands near their homes.

BP officials acknowledged that payments as high as $100,000 might have gone to recreational boat owners and others who enrolled multiple boats in the program and quickly seized an opportunity to cash in. But the officials said that it took time to identify problems and make needed reforms. "When a response of this size gets pulled together that quickly, things fall through the cracks," BP spokesman George Gigicos said.

Boat sales spiked in states around the gulf. And even though fishing was banned in as much as 40 percent of the water, officials saw a double-digit rise in demand for fishing licenses in three gulf states in April through July over last year's totals, according to data analysis done for The Post by wildlife officials in the four affected states. In Alabama, license sales shot up 66 percent; in Mississippi, they rose 30 percent; and in Louisiana, they went up 13 percent.

In late June, more than two months into the program, BP began asking participants for proof that their licenses had been issued before the oil spill, company officials said. The company also started a rotation system in mid-July that officials said they hope will pull in fishermen who have been passed by.

"I've been waiting by the phone for three months. I've heard nothing. I'm still not in," said Jerry Walker, who fishes for kingfish and red snapper in Louisiana. "I've been a fisherman for 40 years. I make 100 percent of my living from fishing. These guys out on the water, I've never seen any of them before in my life."

Gigicos said: "It did take some time to weed out the recreational vessels and the out-of town-vessels. It wasn't perfect at first." He added, "But for a while, our motto was 'All hands on deck.' We needed everyone we could get out there."

Fishermen and harbor chiefs describe the program's early days as chaotic and unproductive. Coast Guard planes flew overhead and spotted oil, but their crews were unable to communicate with the rag-tag bands floating beneath them. Repeatedly, boat owners in the program said in interviews that they thought they were part of a "show."

"The entire task force was on different radio frequencies," said Michael White, harbor chief in Long Beach, Miss. "I had to surf through 15 channels to find someone. From a distance, it looked good to have all those boats out there, but it was a mess."

At the height of the program, participants thought their boats would be equipped to skim oil from the surface of the gulf waters. Retired Coast Guard Adm. Thad Allen, who is coordinating the oil spill response, said in a June 11 news briefing that BP and the Coast Guard wanted to get "the skimming equipment in the hands of the vessels of opportunity out there."

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Three books on the gulf oil spill

Just six months after BP stopped the oil that had been flowing into the Gulf of Mexico, a gusher of books about the spill has begun to wash ashore. The first wave includes three very different approaches to the disaster that riveted the nation most of last summer.

How we interpret the spill is important. A 1969 spill off Santa Barbara soiled the shores, killed birds and helped give rise to the modern environmental movement. Exxon's tanker accident in Valdez, Alaska, 20 years later became another symbol of reckless disregard for the environment. What makes the BP oil spill not just shocking but also dispiriting is that it might have relatively little impact on ocean-drilling policy beyond a retooling of the regulatory bureaucracy and the imposition of a few more technological safeguards. The spill has had no effect on the world's appetite for oil, and drilling will continue because the best prospects are offshore in the Gulf of Mexico, off Africa and Brazil, in the Caspian Sea, and in the Arctic.

The recent spill received massive coverage. At the Associated Press alone, more than 40 reporters and editors were thrown into the fray; teams of reporters were mobilized at papers such as The Washington Post, the Times Picayune in New Orleans, the New York Times and the Wall Street Journal. But even though the books under review present little if anything new, readers seeking overviews between two neat covers might find them useful.

"In Too Deep," by Bloomberg News journalists Stanley Reed and Alison Fitzgerald, opens with a brief account of the blowout, then moves on to BP's history, starting in Iran during the 1950s, when the U.S. and British governments overthrew the democratically elected regime for fear that it would hurt foreign oil interests. The authors shift quickly into more recent BP history, describing the enormous and lasting impact of former chief executive John Browne. Browne not only engineered giant mergers with Arco and Amoco, he also helped lead BP into post-Soviet Russia, Alaska and the Gulf of Mexico.

An intellectual, an engineer and a politically savvy executive with passions for art and opera, Browne guided the company into deep-water exploration in the gulf. He is credited with recognizing that the size of the discoveries in deeper water was increasing, not leveling off.

The book also profiles lower-level BP geologists who figured out where to find the likeliest prospects. A striking chart shows that BP's average cost to add a barrel of oil to its proven reserves was lower than any other major oil company's, and a tiny fraction of current prices.

Yet Browne was also a relentless cost-cutter who squeezed money out of operations that should have invested more in maintenance and equipment. The authors blame BP culture for a focus on personal rather than process safety, for leaks in the company's Alaska pipeline, for an explosion at its Texas City refinery and for the gulf blowout.

In this account, Browne's successor, Tony Hayward, who resigned in the wake of the spill last year, was the unfortunate inheritor of the company Browne built. Chosen in part because he wasn't flashy - the board of directors was weary of Browne's celebrity - Hayward lacked the skills to manage this environmental and public relations disaster.

In "Blowout in the Gulf," William R. Freudenburg, a professor of environmental studies at the University of California at Santa Barbara who died late last year, and Robert Gramling, a sociology professor at the University of Louisiana at Lafayette, concentrate on the regulatory framework that failed to prevent the accident. They compare offshore-drilling regulation to airline regulation and discuss whether regulation might be better handled by the Occupational Safety and Health Administration. They examine cleanup techniques and the prolonged and futile efforts made in Valdez. A sign of how their perspective differs from that of Reed and Fitzgerald: The two reporters write that Hayward's parting pay package was not "huge" so that "there would be no reward for failure." Freudenburg and Gramling call Hayward's $17 million package a "golden parachute."

The authors make solid points about the way the U.S. government has allowed big oil companies to march into public waters, about how the much-admired interstate highway system contributed to a fateful boom in U.S. oil consumption and about the way Americans ravenously consume oil and gas today. "Despite our habit of referring to oil 'production,' the reality is that the twentieth century was an unprecedented exercise in oil 'destruction,' " they write. "The oil was actually produced during the time of the dinosaurs."

Bob Cavnar brings an insider's view to "Disaster on the Horizon," but not one the industry will like. Cavnar has spent three decades, first on a rig and later as a chief executive, working for drilling companies in Texas, Louisiana and offshore areas. But he has a dim view of many industry practices and blogs about them for the Huffington Post.

Here, he focuses on the oil rig disaster itself and what caused it, constructing a narrative based on extensive testimony at hearings, newspaper accounts and his own experience. He makes a strong case that the spill was caused by human error. "An older engineer taught me, years ago, that wells actually talk to you," he writes. "In the hours leading up to the disaster, the Well from Hell was screaming at the crew that it was going to blow out, but nobody could understand the language it was speaking." And he notes that in deep water, "bad situations can escalate very quickly into catastrophes."

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Administration reverses offshore drilling policy in eastern gulf, Atlantic

The Obama administration announced Wednesday that it will not allow offshore oil drilling in the eastern Gulf of Mexico or off the Atlantic coast through 2017, reversing two key policy changes the president embraced in late March.

The revised Interior Department drilling plan, which took industry officials and many environmentalists by surprise, will also delay the next two lease sales in the central and western Gulf of Mexico. It marks a sharp political shift by the White House - yanking concessions to conservatives and oil companies - in the wake of the massive BP oil spill and the collapse of comprehensive climate legislation.

Interior Secretary Ken Salazar told reporters that the decision to remove large swaths from the 2012-17 offshore lease plan was "based on our nation's experience with the Deepwater Horizon oil spill." Instead of opening up new areas to oil and gas exploration, Salazar said, the United States should "focus and expand our critical resources on areas that are currently active."

Salazar said the department would also gather new environmental information about drilling off the coast of Alaska, potentially postponing activity there.

The move eliminates the prospect of any drilling taking place off the coast of Virginia for several years, although as recently as eight months ago state and federal officials had envisioned holding a lease sale there in 2011. On March 31, President Obama declared his administration would study the prospect of energy exploration off the Atlantic coast from Delaware to Florida, along with areas in the eastern gulf and in Alaska's Chukchi and Beaufort seas.

Virginia Gov. Robert F. McDonnell (R), who spoke to Salazar by phone Wednesday, called the new policy "an irresponsible and shortsighted decision."

"It demonstrates a complete lack of confidence in the entrepreneurial spirit of American industry and its ability to fix the problems experienced in the gulf spill, and no confidence in the ability of the U.S. government to better plan for and react to offshore emergencies," said McDonnell, who had made drilling off Virginia's coast one of his top priorities.

"The cost of today's decision will be seen in major lost job opportunities, surrendered economic growth and increased dependence on foreign sources of energy, from nations often hostile to American interests," he said.

Criticism was bipartisan. A spokesman for Sen. Mark Warner (D-Va.) said that "while it is appropriate to take the time to incorporate lessons learned from the gulf disaster, Senator Warner sees no reason to delay this process for what realistically could be another seven years or more."

Offshore oil production from state and federal waters accounts for 9 percent of U.S. liquid fuel consumption and 32 percent of U.S. crude oil production. The Interior Department draws up five-year plans for lease sales to companies seeking to explore federal waters, which begin three miles from shore. If oil or gas is discovered, commercial production can begin some years later. The next five-year plan starts in 2012.

Interior said the lease sales scheduled for March and August 2011 in the central and western gulf would be postponed until the end of next year, if not later.

In addition, Interior will conduct a "supplemental" environmental analysis of Shell's plan to drill an exploratory well in the Beaufort Sea next summer. Officials said that Interior was "processing" Shell's permit request but that the new analysis will require another public comment period, ending Dec. 22. Shell has warned that delays could jeopardize its ability to prepare in time to drill next year.

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