The State Department is expected as soon as today to release its final environmental impact statement (FEIS) on the proposed 1,700-mile Keystone XL pipeline to bring up to 850,000 barrels per day (bpd) of Canadian heavy crude from Alberta’s oil sands down to refineries on the U.S. Gulf Coast.

According to anonymous sources at State, the FEIS will confirm the agency’s earlier finding that construction and operation of the pipeline will have ”limited adverse environmental impacts,” reports Juliet Eilperin in the Washington Post. This will remove a key obstacle to State issuing an assessment that the pipeline is in the U.S. national interest. Then, presumably, this $7 billion, shovel-ready project could start creating thousands of high-wage jobs.

In July, the House passed H.R. 1938, the North American-Made Energy Security Act, by 279-147. The bi-partisan bill would require President Obama to issue a final order granting or denying a permit to construct Keystone XL by no later than November 1, 2011. The Center-Right is putting pressure on Team Obama, in the run-up to an election year, to expand U.S. access to oil from our friendly, democratic, politically stable neighbor to the north.

At the same time, Eilperin notes, Keystone XL “has strained President Obama’s relationship with his environmental base and become a proxy for the broader climate debate. Protesters from across the country have gathered daily in front of the White House since Saturday, resulting in 275 arrests so far.”

First to be arrested was Canadian actress Margot Kidder, who played Lois Lane in several Superman films. Her top reason for opposing the pipeline: “It’s bound to leak, there’s no way it’s not going to…. They always assure us these things are safe, and they never are.” By that logic, no pipeline should ever be built, and all should be dismantled. And then we could all live in Medieval squalor. Planet Saved!

I’ve been a Keystone booster for some time, but the fracus at the White House has taught me new reasons to love the pipeline.

Here are my original reasons for loving Keystone XL:

1. Keystone XL is totally market-driven. This $7 billion shovel-ready project will be funded entirely by private investment. Taxpayers will not be on the hook for any new government spending or loan guarantees.
2. Keystone XL will help alleviate pain at the pump. As the Perryman Group explains, a stable expectation of “incremental supplies from reliable sources leads to lower costs, thereby putting downward pressure on prices.” Or, as James Burkhard of IHS Cambridge Energy Research Associates puts it, “A more flexible and robust supply system is better able to manage supply and demand developments, which is a big positive for the U.S. economy and consumers.”
3. Keystone XL will help stabilize gasoline prices. As former Canadian Energy Minister Murray Smith observes, unlike tanker oil, which may be traded several times and marked up by speculators, the price of pipeline oil is mostly fixed at the start of its journey to the refinery.
4. Keystone XL will stimulate the ailing U.S. economy. The Perryman Group estimates the pipeline will induce $20.9 in new business expenditures, add $9 billion to U.S. GDP, increase personal incomes by $6.5 billion, generate $2.3 billion in retail sales, and create 118,935 person years of employment.
5. Keystone XL will enhance U.S. energy security. It will deliver up to 850,000 bpd of crude from a friendly, stable, democratic neighbor. Every barrel of oil we import from Canada is a barrel we don’t have to import from despotic, unfriendly, or volatile countries like Saudi Arabia, Venezuela, or Nigeria.

Here are my new reasons:

1. A win for Keystone XL is a defeat for the global warming movement. Green groups view Keystone as an opportunity to regain momentum and offset their losses after the death of cap-and-trade. If friends of affordable energy win this fight, which seems likely, the greenhouse lobby will take another hit to its prestige, morale, and influence.
2. Keystone XL strains relations between Obama and his environmentalist base. If Obama approves the pipeline, greenies will be less motivated to work for his re-election. If he disapproves, Republicans and moderate Democrats will hammer him for killing job creation and increasing pain at the pump. Either way, the prospects for new anti-energy legislation should be dimmer.
3. Keystone XL is bringing aging, New Lefties out of the woodwork, where they can misbehave and get themselves arrested.

The United States imports almost half of its oil (49%), and about 25% of our imports come from one country — our friendly neighbor to the North, Canada. Today, Canada supplies more oil to the USA than all Persian Gulf countries combined.

With an estimated 175 billion barrels of technically recoverable oil, Canada has the world’s third largest oil reserves. About 170 billion of those barrels, or 97%, are located in geologic formations called oil sands — a mixture sand, water, clay, and bitumen, a sticky tar-like form of petroleum.

Unlike “conventional” oil, bitumen is too viscous to be pumped without being heated or diluted.

Last Wednesday and Thursday, courtesy of the good folks at American Petroleum Institute (API), I and other bloggers toured two large Canadian oil sands projects near Fort McMurray, Alberta.

The Surmont Project, operated by ConocoPhillips, uses a technology called steam assisted gravity drainage (SAGD) to melt the bitumen so that it can be pumped back to the surface. At each well site, two parallel pipes descend to about 1,000 feet below the surface and then extend horizontally for several thousand feet. Heated steam in the upper pipe melts the bitumen, which then flows back up to the surface through the lower pipe. Natural gas may also be injected in the upper pipe to further reduce the viscosity of the bitumen. Along with the melted bitumen, the lower pipe brings hot water and natural gas back up to the surface for capture and reuse in a closed cycle.

This process is relatively new but within a few years it is expected to dominate Canadian oil production, because about 80% of Canada’s oil sands are too deep to be mined. The Surmont Project, which started production in 2007, currently produces about 23,000 barrels per day (bpd). It is expected to be producing 136,000 bpd by 2015.

The Millennium site, operated by Suncor Energy, relies mainly on mining to access the bitumen. The oil sands here are at a relatively shallow layer — about 350 feet below the surface. Millennium started production in 1967, making it the world’s first commercially-successful oil sands venture and the longest-running oil sands project in Canada.

Millennium’s scale is truly breathtaking. Suncor’s leases (which also include SAGD drilling sites) cover more than 1,800 square kilometers. A fleet of giant trucks with shovels that remove 100 tons of earth at a bite operate day and night. Some trucks remove the “overburden” — a surface layer composed of muskeg (a peat-like substance), clay, and rock, while others dig up the oil sands beneath. The largest of these trucks, which are built by Caterpillar, haul loads up to 400 tons. Each day, the trucks haul about 2,000 loads of overburden and 1,600 loads of oil sands.

The next photo is me pretending to be the master of all I survey. The distant object to the left of my outstretched hand is a monster truck.

After being mined, the oil sands are sent to massive facilities that use water and steam to extract the bitumen from sand and other minerals, separate the bitumen from water, and chemically treat the bitumen until it has the consistency required for transport as crude oil through pipelines.

My reaction to the Millennium project was one of awe. I could not but marvel at the immense scale of market-driven coordination that has turned an otherwise worthless material – sticky, smelly, black sand – into a valuable resource empowering literally millions of ordinary people to enjoy a degree of mobility unknown to the kings and potentates of old.

Some of course may only see — and decry — the industrial footprint, the “scars upon the land,” as the John Denver song put it. What they may not know is that Suncor also engages in land reclamation on a gigantic scale.

The overburden is not only removed, it is also saved, so that it can used to restore landscapes and create habitat after mining operations are completed. In addition, Suncor has developed a process (Tailings Reduction Operation, or TRO) for accelerating the extraction of suspended particles called “mature fine tailings” (MFT) from its tailing ponds (small lakes where water, sand, and clay are sent after separation from the bitumen). After drying, the MFT hardens and is used as landscaping material.

Suncor’s first tailings pond operated for 40 years from 1967 through December 2006. This 220-hectare area today is a contoured medowland with more than 600,000 planted trees and shrubs. Called the Wapisiw Lookout Reclamation, the area’s rock piles provide habitat for small animals, its tree poles provide habitat for raptors, and its wetland provides habitat for aquatic waterfowl. The picture below shows three raptor poles. While our tour group was there, we spotted a black bear cub moving among the hillocks a few hundred yards away.

Canada already ships almost 2 million barrels of oil a day to the USA, but the existing pipeline infrastructure must be expanded not only to handle the larger volumes that Canada will produce in the future but also to transport Canadian oil to U.S. Midwest and Gulf Coast refineries, where it can be turned into gasoline, jet fuel, and other finished petroleum products.

In March 2008, the U.S. State Department granted TransCanada Keystone Pipeline a permit authorizing the company to construct pipeline facilities from Alberta to refineries in Illinois and Oklahoma.

Then in June 2008, Keystone proposed to build an extension, called the Keystone XL Pipeline, to move Canadian oil to refineries in Port Arthur and Houston, Texas. Initially, Keystone XL would be able to deliver 700,000 bpd of heavy crude to U.S. refineries.

From 2010 to 2035, this “shovel ready” project could create 85,000 U.S. jobs, provide $71 billion in U.S. employee compensation, and boost cumulative U.S. GDP by $149 billion, according to the Canadian Energy Research Institute.

Predictably, green pressure groups and their allies on Capitol Hill have mounted a campaign to block the Keystone project, alleging that the pipeline will expose neighboring communities, aquifers, and wetlands to oil spill risk and increase America’s “dependence” on “dirty” energy. Let’s briefly consider these accusations.

The State Department’s massive April 2010 Environmental Impact Statement (EIS) notes that the pipeline “would be designed, constructed, and maintained in a manner that meets or exceeds industry standards and regulatory requirements” (ES 6.13.3). Although some leaks and small spills are bound to occur, “There would be a very limited potential for an operational pipeline spill of sufficient magnitude to significantly affect natural resources and human uses of the environment” (ES 6.13.2). If zero risk of even minor spills is the only acceptable standard, then no petroleum should ever be shipped anywhere. That may be what green groups ultimately have in mind. Such a standard, however, would condemn mankind to Medieval squalor, not enhance public health and welfare.

By “dirty,” Keystone XL opponents refer to the fact that the process of transforming oil sands into petroleum emits more carbon dioxide (CO2) than conventional petroleum extraction. However, whatever Canadian oil does not get shipped to the United States will eventually go elsewhere — mainly to China and other Asian countries, which are investing billions of dollars in Canadian oil sands projects. Just last month, for example, the Chinese company CNOOC agreed to buy Canadian oil sands producer OPTI for $2.1 billion. On a life-cycle basis, shipping oil to China is more carbon-intensive than shipping oil to the USA, because it must be transported on mammoth CO2-emitting tankers.

As for the Keystone XL Pipeline itself, yes it will deliver more Canadian oil to U.S. refineries, but this will mostly offset declining oil shipments from Mexico and Venezuela. Thus, “the incremental impact of the Project on GHG [greenhouse gas] emissions would be minor,” concludes State’s EIS (ES 6.14.2). Again, if no incremental CO2 emissions is the only acceptable standard, then we should welcome high unemployment rates, because there’s nothing quite like a deep recession for cutting CO2 emissions.

The long and the short of it is that building the infrastructure to deliver oil from friendly, democratic, politically-stable, environmentally-fastidious Canada is in the U.S. national interest, as the State Department concluded in March 2008. The review process has dragged on, with State in March 2011 issuing a Supplemental EIS that affirms the findings of the earlier document. In May, the House Energy and Commerce Committee held a hearing on legislation to expedite a presidential decision on Keystone XL, and in July the House passed H.R. 1938, the North American-Made Energy Security Act, by 279-147. The bill would require the President to issue a final order granting or denying a permit to construct Keystone XL by no later than November 1, 2011.

Global demand for oil is growing and America will continue to import oil over the next 25 years even if biofuels and electric vehicles achieve unexpected breakthroughs. As Mark Milke of the Fraser Institute explains in a new report, what this means is that blocking Keystone XL and restricting U.S. access to Canadian oil would not move the world closer to some imaginary environmental utopia. The effect, rather, would be to increase U.S. imports from unsavory regimes where corruption is the norm, environmental safeguards are weak, autocrats brutally suppress dissent, and women are denied economic opportunity and equal protection of the laws.

Alas, I suspect this is actually one of the main reasons green groups oppose Keystone XL. They would like us to believe (a) that oil is a rapidly dwindling resource from which we will soon have to decouple our economy anyway, and (b) that using oil = sending $$ to OPEC. The vast potential of Canada’s oil sands and Canada’s emergence as the leading source of U.S. petroleum imports fractures both pillars of their gloomy, scaremongering narrative.