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The Canadian Press - ONLINE EDITION

Canadian officials encouraged by forthcoming State report on Keystone XL

WASHINGTON D.C., - Canadian officials say they're encouraged by what they're hearing about a long-awaited report on the environmental impact of the Keystone XL pipeline that could be released imminently by the U.S. State Department.

Those sources in Washington and Ottawa say they've been told the report could be ready for release within a few days — and that it will bolster the case for the controversial energy project.

"What we're hearing is that it's going to be positive for the project — and therefore positive for Canada," said one diplomat in Washington, who spoke on condition of anonymity because he hadn't seen the report himself, although he had discussed its contents with American contacts.

"The rumours certainly are that it's very thorough and that the analysis will support the project."

He said there was optimism amongst Canadian officials but no celebration just yet: "You're not going to be seeing people high-fiving and toasting with champagne," he said.

"It's just another step (in the process)."

Earlier this month, Foreign Affairs Minister John Baird was in Washington pleading for a decision soon. He said enough time had been lost on the project and didn't want to see another construction season wasted.

His U.S. counterpart, John Kerry, responded that there would be no fast-tracking the process.

The actual writing of the report began in August, according to the Canadian source in D.C. With the threat of almost-certain lawsuits looming, regardless of what the final Keystone decision might be, he said he'd heard from U.S. officials that the report authors were under pressure to be especially rigorous.

"What we need is an (environmental impact statement)," he said, "that is so thoroughly done that it will stand up to litigation."

The report is the latest environmental impact statement on the $7-billion TransCanada project to come from the State Department, which has jurisdiction because the pipeline crosses an international boundary.

The last report, released a year ago, concluded the project would not significantly impact the rate of oilsands development or crude oil demand, nor would it pose any greater risk to the environment than other modes of transportation. President Barack Obama has since declared that he will only approve the pipeline if it can be shown that it will not significantly increase greenhouse gas emissions.

Natural Resources Minister Joe Oliver said Wednesday that he expected the forthcoming report to draw the same conclusions as the last one. "There are no new facts on the ground," Oliver said. "So you know, it's to be expected that they would come out in the same way."

Once that step is taken, the U.S. administration will conduct a 90-day review to determine if the project is in the national interest.

Another Canadian diplomat warned against concluding that the report's release is automatically imminent. Even if it's slated to come in the next few days, there's always a chance someone, somewhere, could hold up its release.

For starters, the accepted wisdom in Washington has been that the State Department document would not be released until an inspector general's review of conflict-of-interest allegations against a consultant working on the report.

That review into the activities of contractor Environmental Resources Managament came after news that several of its consultants working on the project had also worked for TransCanada and its subsidiaries, without that previous work having been disclosed.

Gary Doer, Canada's ambassador to the U.S., refused to speculate on the timing or content.

"We have no certainty on the timing," Doer said in an interview.

But he expressed faith that the Canadian position would prevail: that the pipeline would be the safest, cleanest way to ship oil that would be transported to the U.S., one way or the other.

Referring to train accidents, including the tragedy in Lac-Megantic, Que., Doer said events since the last State Department review had only served to reinforce the earlier conclusion.

"We believe that the facts have, regrettably, become only stronger on oil vs. rail," he said. "We believe that (the earlier conclusion by the State Department) will be maintained: higher cost, higher (greenhouse gases) without a pipeline."

A State Department spokesperson wouldn't confirm anything.

"The State Department is working on the Final Supplemental Environmental Impact Statement (Final SEIS), addressing issues in more than 1.5 million public comments, as appropriate. There is no time line for the release of the Final SEIS," the spokeswoman said in an email. "The Department continues to review the Presidential Permit application for the proposed Keystone XL pipeline in a rigorous, transparent, and objective manner."

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