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Wed 2 Feb 2011 12:17 PM

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Canada-US pipe would cut Mideast oil imports - study

Oil deliveries from the $7bn pipeline, combined with a projected drop in US fuel demand, could turn the US into a net exporter of products like gasoline

Canada-US pipe would cut Mideast oil imports - study
OIL PIPELINE: An oil pipeline to send oil from the UAE directly to the Indian Ocean is likely to be finished this year. (Getty Images)

A proposed pipeline from Canada's oil sands to refineries along the Gulf of
Mexico would help "essentially eliminate" US oil imports from the
Middle East in a decade or two, according to a new study commissioned by the
Department of Energy.

Oil deliveries from the $7bn pipeline, combined with a projected drop in US
fuel demand, would potentially turn the US into a net exporter of
products like gasoline, jet fuel and diesel, said the report, called
"Keystone XL Assessment."

The Obama administration is divided over Keystone XL, a project that could
ease reliance on oil from politically unstable regions, but boost dependence on
Canadian oil sands, a crude that many environmental groups oppose.

The State Department, which is determining whether the pipeline would be
necessary to improve US energy security, recently put the report by energy
consultancy EnSys on its website. .

The department says it is also considering input from the public and
agencies as it decides whether to press ahead with the project.

The Environmental Protection Agency is worried about greenhouse gas
emissions from production of Alberta's tar sands, and also has expressed
concern the oil bounty could hurt efforts to produce more-efficient cars and
electric vehicles.

Not everyone believes the pipeline would cut US oil imports from the Middle
East. Energy economist Phil Verleger characterized the report's findings of an
essential elimination of those shipments as a "fairy tale."

"The US believes in free trade, and if the oil is priced
right, we will get it from the Middle East," he said.

Oil from Saudi Arabia is among the world's cheapest to produce. Crude from
Canada's oil sands is more expensive because companies must use a lot of energy
to separate usable crude from sticky grit.

Saudi Arabia's state oil company Saudi Aramco co-owns an oil refinery in
Texas which probably would continue to process oil from the kingdom.

In addition, the West Coast gets large amounts of oil from Saudi Arabia and
other Middle Eastern producers. That dependency could grow to 2 million to 2.5
million barrels per day by 2020 as production wanes in both California and in
Alaska, Verleger said.

California's environmental concerns also make it less likely that a pipeline
would be built from the oil sands to that state.


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