Concerns mount over oil pipeline

WASHINGTON — Crude oil from western Canada began flowing through a controversial pipeline in Kansas this month.

Pipeline supporters insist that its construction provided an economic boon, producing money and jobs for the state. But local officials along the pipeline's path complain that the state sold them out — unnecessarily — to attract the oil company.

Because of an exemption the state gave the company that owns the pipeline, six Kansas counties won't see a dime in property taxes from the project for a decade, a loss they estimate at $50 million in revenue.

There are environmental concerns, too, in Canada as well as in other U.S. states where the pipeline runs beneath drinking water supplies.

"If we had that pipeline on the tax rolls this year, we could have cut our levy by 30 to 40 percent," said Dan Holub, a Marion County commissioner. "Rural counties don't have much of a tax base and a whole bunch of expenses. We've got 1,600 miles of road."

Supporters of the deal counter that the pipeline company will still owe taxes for 90 years after the abatement expires. They said the project also will help the state's shrunken oil industry and is environmentally sound.

But questions persist about whether Alberta-based TransCanada used the power of eminent domain to improperly acquire access to the land.

That's how it obtained an easement through Greg Roles' 160 acres of wheat and soybeans in Clay Center. He resisted TransCanada's $15,000 offer and is now suing the company in a case that could end up before the Kansas Supreme Court on appeal. Roles lost at the District Court level.

"I'm the only guy who has tried to stand in front of them," Roles said. "I know I'm the only guy in Kansas. This deal just isn't right. Where are our elected officials?"

Risks, benefits

The debate isn't likely to go away.

TransCanada plans to use its existing Kansas pipeline, called the Keystone, as a pivotal piece in a new $7 billion, nearly 1,700-mile project to transport heavy oil from Canadian tar sands to refineries in Texas.

That pipeline, called the Keystone XL, could carry up to 500,000 barrels a day, doubling the amount of oil that TransCanada brings in.

The massive undertaking has galvanized opponents who argue that safety and the environment are at risk.

In Nebraska, where the proposed pipeline would be built to connect to the Kansas portion, it would run beneath the Ogallala Aquifer — a huge, shallow water table that provides drinking water for about 2 million people in eight states, including parts of central and western Kansas.

The Kansas pipeline at present can move 156,000 barrels of oil from northern Alberta to a refinery in Cushing, Okla., by way of several Canadian provinces and several states. The new project would construct a separate pipeline to carry Canadian crude south through six states, including the existing pipeline in Kansas, to refineries in Texas.

The company claims the project would create about 20,000 construction and manufacturing jobs and add $20 billion to the U.S. economy.

It also would "improve U.S. energy security and reduce dependence on foreign oil from the Middle East and Venezuela," Russ Girling, TransCanada's president and CEO, said in a statement.

That's backed up by a recent report from a private energy consultant for the U.S. Department of Energy. It said that Canadian crude oil and reduced demand "could essentially eliminate Middle East crude imports longer term."

But the report also pointed out that if Canadian suppliers export oil to Asia from Canada's west coast, "more Middle East crude moves into the USA."

It further noted that with so many pipelines already bringing crude across the border, TransCanada's new pipeline, if approved, might not be needed for years.

Approval of a cross-border permit will be up to Secretary of State Hillary Clinton.

Several members of Congress wrote in support of the project, while others urged her in a letter last summer to go slow in her decision, which is expected by spring after her department looks at the environmental impact.

The EPA said that the State Department's original report last year was "unduly narrow" because it did not fully examine oil spill response plans, safety issues and greenhouse gas concerns.

If the administration signs off on the pipeline, it would inadvertently be aiding two of President Obama's arch political foes: David and Charles Koch, who own Wichita-based oil giant Koch Industries.

The Kochs have bankrolled conservative efforts and candidates who oppose Obama and the Democratic Party's environmental policies. According to Solve Climate news, an energy and climate online news service, they would stand to gain from the project because their company controls nearly a quarter of all tar sands crude oil imported into the United States.

Extracting the oil from tar sands and liquefying it enough so it will move through a pipeline is an energy-intensive process that adds greenhouse gases to the atmosphere. Getting it out of the ground in Canada involves clear-cutting forests, leaving a wasteland that oil companies promise they will restore. Some scientists contend that rivers also become polluted.

"From start to finish, this a dirty project," said Stephanie Cole, a spokeswoman for the Kansas chapter of the Sierra Club. "Forests in Canada are being destroyed, and increased reliance on fossil fuels will accelerate global warming."

Tax incentive

In Kansas, debates over the environment have taken a backseat to the 5-year-old dispute over TransCanada's tax break, which remains a source of continuing bitterness.

Kansas legislators maintained that granting the 10-year property tax moratorium was crucial to getting the pipeline.

"I got a letter from TransCanada that says clearly that the incentive was one of the considerations to coming to Kansas," said Senate Majority Leader Jay Emler, R-Lindsborg.

TransCanada spokesman Terry Cunha, however, said it wasn't. Cunha said the company did not "originate this tax abatement issue. We weren't part of that discussion. We were already in the process of finalizing our proposed route" for the pipeline.

Rep. Carl Holmes, R-Liberal, who led the moratorium effort, declined to talk about the negotiations that led to the deal or the dispute. He said the tax abatement was designed to aid the state's oil business.

"We had 20 refineries 25 years ago," Holmes said. "Now we're down to three. You want to drive, you've got to have gasoline."