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Andy Kroll writing for MoJo and Grist has found out that the State Department redacted information that linked the contractor that prepared the Supplemental Environmental Impact Statement to the pipeline company applying for state department approval. Experts working for environmental organizations slammed the report as biased and misleading. The contractor carefully ignored factors (such as dilbit is not oil. Dilbit spills are much harder to clean up than oil spills.) that were unfavorable to building the pipeline to reach a rosy conclusion that the pipeline would have little environmental impact.

The contractor's close working relationship with TransCanada, the owner of the Keystone XL pipeline, is an extreme conflict of interest that should have barred the state department from contracting with them. When I managed grants and contracts for the federal government, my understanding of contracting regulations would have made me fear indictment for contract fraud if I had redacted a document to hide conflicts of interest. This cover up of COI appears to me to violate federal contract laws and regs.

Outside contractors (managed by the State Department) wrote the Keystone report, which neither endorsed nor rejected the Keystone pipeline. The contractor that produced the bulk of the report was Environmental Resources Management (ERM), an international consulting firm. On the day the State Department published the Keystone impact report, the agency also released a cache of documents that ERM submitted in 2012 to win the contract to produce the Keystone environmental report. That cache included a 55-page filing in which ERM stated it had no conflicts of interests writing the Keystone report.

But there was something strange about ERM’s conflict-of-interest filing: The bios for the ERM’s experts were redacted.

Here’s what those redactions kept secret: ERM’s second-in-command on the Keystone report, Andrew Bielakowski, had worked on three previous pipeline projects for TransCanada over seven years as an outside consultant. He also consulted on projects for ExxonMobil, BP, and ConocoPhillips, three of the Big Five oil companies that could benefit from the Keystone XL project and increased extraction of heavy crude oil taken from the Canadian tar sands.

Another ERM employee who contributed to State’s Keystone report — and whose prior work history was also redacted — previously worked for Shell Oil; a third worked as a consultant for Koch Gateway Pipeline Company, a subsidiary of Koch Industries. Shell and Koch* have a significant financial interest in the construction of the Keystone XL pipeline. ERM itself has worked for Chevron, which has invested in Canadian tar-sands extraction, according to its website.

This Supplemental EIS is the product of a gross conflict of interest and inappropriate contract management by the state department. John Kerry needs to clean house.


Inside Climate News covered the conflict of interest part of this story two weeks ago.

The State Department's recent conclusion that the Keystone XL pipeline "is unlikely to have a substantial impact" on the rate of Canada's oil sands development was based on analysis provided by two consulting firms with ties to oil and pipeline companies that could benefit from the proposed project.

EnSys Energy has worked with ExxonMobil, BP and Koch Industries, which own oil sands production facilities and refineries in the Midwest that process heavy Canadian crude oil. Imperial Oil, one of Canada's largest oil sands producers, is a subsidiary of Exxon.

ICF International works with pipeline and oil companies but doesn't list specific clients on its website. It declined to comment on the Keystone, referring questions to the State Department.

Keystone XL benefits all companies involved in tar sands production by raising the price.
Keystone XL to Benefit All Oil Sands Players

Koch Industries, like the rest of the oil industry, is well positioned to benefit from a pipeline that would double U.S. oil sands imports.

The company's Flint Hills subsidiary already has an oil terminal in Hardisty, Alberta, the starting point of the Keystone XL. It sends about 250,000 barrels of diluted bitumen a day to a heavy oil refinery it owns near St. Paul, Minn., making that refinery "among the top processors of Canadian crude in the United States," the company website says.

Flint Hills is not among the six shippers that have already signed contracts to send their oil through the Keystone XL. But Steven Paget, vice president of energy infrastructure at FirstEnergy Capital, an oil and gas brokerage firm based in Calgary, said every oil sands player would benefit from the pipeline, because the price of all Canadian crude would rise.

Originally posted to Climate Change SOS on Thu Mar 21, 2013 at 02:06 PM PDT.

Also republished by DK GreenRoots.

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