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Enbridge's Wisconsin Pipeline Spill Provides Fodder For Keystone XL Critics

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* Environment groups ask for more climate, safety analysis

* Comment period on scope of review closes Monday

* Industry: review should focus on Nebraska only

By Ayesha Rascoe

WASHINGTON, July 30 - Environmental groups demanded the U.S. State Department conduct a new, thorough analysis of the risks of transporting oil sands crude through TransCanada Corp's proposed Keystone XL pipeline as a Wisconsin oil spill renewed concerns about pipeline safety.

The Canada-to-Texas project has become a potent political symbol ahead of the Nov. 6 presidential election, with Republicans using its delay to criticize President Barack Obama's energy policies, and environmental groups pushing to try to stop a project they see as too risky to the climate and clean water.

The latest criticism comes as the State Department is preparing to undertake a new environmental review of the project, with the public comment period on the scope of the review set to close on Monday.

Environmentalists said the department has so far failed to properly weigh the climate change consequences of developing energy-intensive oil sands and the impact of oil sands crude on pipelines.

"This will be the test of whether the State Department is serious about climate change," said Bill McKibben, founder of 350.org and a key organizer of the anti-Keystone movement.

Pipeline safety came into renewed focus after Enbridge's 318,000 barrel per day Line 14, which carries Canadian crude to refiners in the Midwest, was shut Friday after spilling more than 1,000 barrels of crude oil in Wisconsin.


TransCanada first submitted its Keystone XL plans for U.S. government study and approval in 2008. President Barack Obama rejected the initial plan for the project in January because he said more study was needed for a revision for the pipeline's route to skirt a sensitive ecological area in Nebraska.

TransCanada re-applied in May for the project's approval. The southern portion of the pipeline, which does not require State Department approval, received the final permit needed for construction on Friday.

Green groups submitted more than 400,000 comments to the State Department in support of a more robust review, said Anthony Swift, an attorney with the Natural Resources Defense Council.

Environmentalists argue that oil sands crude is more corrosive than traditional crude oil.

"It is time the State Department look into growing evidence that tar sands pipelines are more likely to leak and tar sands spills are far more devastating than conventional oil spills," Swift said.

Industry groups dispute claims that oil sands crude is damaging to pipelines and say Canadian oil sands will be developed with or without Keystone.

The American Petroleum Institute said on Monday that the State Department should confine its review to the new route planned for Nebraska.

"The rest of the project has already received a thorough environmental assessment ... Every day of delay is a delay on getting Americans back to work, and America leading on energy," said Cindy Schild, API's refining issues manager.

The State Department's prior analyses found the pipeline would not have significant impact on the environment, but after protests from Nebraska lawmakers, ranchers and environmentalists the department late last year said additional study of the pipeline's route was necessary.

Republican lawmakers have tried to legislate a faster approval for the pipeline, which they said would create much-needed construction jobs. They have argued that the State Department's latest study should not hold up the project during Nebraska's review of the new route.

Republicans have pointed to the planned takeover of Canadian oil firm Nexen Inc by China's state oil company CNOOC as evidence that the United States needs to approve the pipeline and more aggressively expand its oil production.

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