MONTREAL – On one side is TransCanada, a Canadian company planning a $5 billion-plus pipeline project dubbed Keystone XL, which starting in 2013 will be able to move 1.3 million barrels of oil per day from the oil sand fields of Alberta to the Gulf of Mexico. One the other side, American citizens and groups of both U.S. and Canadian ecologists concerned about how the 3,000-kilometer pipeline will impact the environment.

Then there are the governments of the United States, which is keen to assure a continued supply of oil, and Canada, which sees Keystone XL as a crucial step toward expanding the country's crude oil exports.

What was first a battle pitting economic interests against environmental concerns has since become a political hot potato as well. That is hardly surprising given the fact the pipeline – KXL for short – would cross no fewer than six American states.

A series of protests staged this past August in front of the White House resulted in some 1,200 arrests. Among those detained was Hollywood film star Daryl Hannah. Since then the U.S. State Department has hosted public – and often rowdy – meetings in the states through which the pipeline would cross. In late September, Greenpeace organized an anti-KXL demonstration in front of the Canadian Parliament building in Ottawa. The project's American opponents have called for a major demonstration to take place Nov. 6 in Washington, D.C.

Jury's still out

The project should, in principle, be approved before the end of the year by the State Department, which is expected to declare it of "national interest." U.S. Secretary of State Hillary Clinton has come out in support of the pipeline. Environmental groups say her stance will bias the final decision. Clinton disagrees, saying the jury is still out on the project.

President Barack Obama has said the same thing. During an Oct. 26 visit to Denver, Colorado, he stated that "no decision has been made. He added: "I know your deep concern about it, so we will address it."

Last week, Lisa Jackson, who heads the Environmental Protection Agency (EPA), raised her own concerns about the project, saying the pipeline will increase production both in Canada's oil sand fields and in American refineries and thus contribute to higher emissions of greenhouse gasses. There's also a risk that the pipeline – which according to Jackson will "literally cut the country in half" – could spawn leaks.

There's clearly been a change of tone. Even a few months ago, the project seemed like a done deal. Three years ago, in fact, TransCanada had no trouble getting the green light to construct a similar pipeline.

That pipeline is the reason why in reality, KXL isn't a new project at all. Instead it's the continuation of a series of pipelines that have already been partially built. A 2,981-km pipeline stretching from Alberta to Steele City, Nebraska and then Patoka, Illinois has already been in operation since June, 2010. Another 480-km stretch, from Steele City to Cushing, Oklahoma, has been open since February.

The next phase would involve construction of a 700-km section between Cushing and Houston, Texas, with a separate leg that would run over to Port Arthur, also in Texas. The final stage of the KXL project involves building a second pipeline between Hardisty, Alberta and Steele City that would run approximately 1,900 km and be used principally to meet high oil demand in the United States.

For the Obama administration, KXL is a win-win situation: more Canadian oil means more refining in the United States, which means as many as 20,000 more jobs. It also means less energy dependence on the Middle East. The State Department insists, furthermore, that the project is safe and that, even in the case of a leak in the environmentally sensitive region of Sand Hills Nebraska, it would only affect a limited area of local groundwater.

Sand Hills, a picturesque region of mixed-grass prairie and sand dunes, is one of the major sticking points for opponents of KXL. Joining the opposition is Nebraska state Senator Ken Haar, who didn't mince words when he said: "We are in a fight for our water. TransCanada is in a fight for money."

Even before the pipeline controversy, Canada's oil sands industry already had a somewhat tarnished image. The process by which the industry extracts its "dirty oil" – as environmentalists on both sides of the border call oil derived from Bituminous sands – leaves a heavy carbon footprint. The pipeline, they warn, will mean increased production in Alberta, which will mean even more CO2 emissions.

A ‘no-brainer"?

But from the Canadian government's perspective, it will also mean huge revenues and new jobs – as many as 140,000 of them, on both sides of the border. In late September, Canadian Prime Minster Stephen Harper told a reporter in New York City that approving the pipeline should be a "no-brainer" as far as U.S. authorities are concerned.

On the other side of the debate are no fewer than eight Nobel Peace Prize winners, including South African Archbishop Desmond Tutu, who support KXL's environmental opponents. In August, Tutu and his colleagues penned a letter to President Obama asking him to block the pipeline. A month later they wrote Prime Minister Harper citing climate change as a reason he should ban oil sands production altogether.

"It would be wrong for humanity to choose a path that drives hundreds of thousands of species to extinction," the letter stated. "It would be wrong for a rich minority of the world's inhabitants to create a problem like climate change, and then refuse to do its fair share to fix it."

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