CASE STUDY: Keystone XL Pipeline

Last Update: JULY 29, 2012 | The Keystone XL Pipeline (or “Keystone Expansion” / KXL) is a proposed extension of the Keystone Pipeline, a system to transport synthetic crude oil and diluted bitumen from the Athabasca Oil Sands in northeastern Alberta, Canada to various locations in the United States, reaching south down to the Gulf of Mexico. The final say in the matter goes to the President of The United States, as the pipeline would be a transnational affair, crosses the northern border of the US in both Montana and North Dakota. There have been numerous deadlines regarding various stages of the decision-making process – to this date the project is indefinitely under review.

• In June,  State Department formally invited public comment on the issues it should consider in a new environmental assessment of the Keystone XL
• As of March 22 2012, there are now plans to proceed with the southern portion of the original KXL (extension) pipeline. Part of this recent resurgence in completing the pipeline has to do with rising gas prices and pressure from GOP and oil companies to make KXL an election-year issue.
• As of May 25, 2012, the issue remains deadlocked. New concerns about Iran and the potential of the International Energy Agency to encourage the release of global strategic petroleum reserves only further complicates the KXL situation.

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While some covering the issue stress that the environmental and economic impact of KXL would be minimal, the pipeline has become a highly visible symbol in US politics, one which various groups lay claim to for championing their cause – be it environmentalism, energy security, jobs. What’s more, during the 2012 election season and the campaigning of the preceding Republican Primary, KXL has become a method for Republicans declaring Democratic President Obama to be ”anti-jobs” or “anti-US energy”. Democrats have been somewhat more concerned about the environmental consequences of the pipeline, as well as considering alternate foci for energy rather than ’dirty fuels’. Nevertheless, there isn’t necessarily a clear divide amongst the parties in terms of Keystone XL itself; rather, it is somewhat proxy war battleground where multiple issues collide and each side attempts to claim significance in a victory of some form.

Ollagalla Aquifer (or High Plains Aquifer)

Logistically, the full Keystone XL extension would create the longest pipeline outside of Asia. It is the center of a debate concerning economic verse environmental well-being. Environmental factors include Carbon Dioxide emissions, problems arising from extraction from tar sands, general spill issues, and specifically the contamination of the Ogalalla Aquifer.

The original decision was to be made by President Obama during December of 2011, but in November of that year, the Department of State was authorized to consider alternate routing for the pipeline:

Executive Order 13337 authorizes the Department of State to lead the review of Presidential Permit applications for transborder pipelines, granting the Department discretion in determining what factors to examine to inform a determination of whether the proposed project is in the national interest. Since 2008, the Department has been conducting a transparent, thorough and rigorous review of TransCanada’s application for the proposed Keystone XL Pipeline project. As a result of this process, particularly given the concentration of concerns regarding the environmental sensitivities of the current proposed route through the Sand Hills area of Nebraska, the Department has determined it needs to undertake an in-depth assessment of potential alternative routes in Nebraska.

Domestically, the decision to delay the decision about Keystone XL may be seen as Obama playing it safe for the upcoming 2012 Presidential elections. But in terms of the oil industry, there remains substantial competition to meet the demands of the oil refineries in southern US, which Keystone XL would have supplied. Canada has also state open frustration There is also great dispute about the actual number of jobs that would be created – with some reports published on TransCanada’s website indicating ~20,000 direct jobs (permanent and temporary construction jobs), but other supporters stressing closer to 100,000+ jobs because of indirect developments and money brought to surrounding areas of the pipeline.

The existing Keystone Pipeline (solid lines) became operational in June of 2010. The fate of the proposed Keystone XL extention (broken lines) is currently under review by the US Department of State, with the review process expecting to last well into 2013.

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Keystone XL Timeline

2005

FEB09 Keystone Pipeline proposed by TransCanada

2008

JUN12 TransCanada Proposes Keystone Pipeline Extension (Lincoln Journal-Star)

2009

JUN19 Will Canada’s oil sands make us choose between energy security and climate disaster? – Slate Magazine. ” After interviewing scientists, policymakers, industry insiders, and environmentalists, scouring reams of studies, and doing some of my own calculations, I concluded that both the security upsides and climate downsides of oil-sands exploitation have been overblown.”

2010

JUNE Keystone Pipeline becomes operational

JULY21 EPA needs more time to assess impacts of Keystone XL (Lincoln Journal-Star) .

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2011

SEP01 Separating Fact from Fiction on Keystone XL. CFR’s Michael Levi debugs recent claims coming out of the Keystone XL debate.

SEP19 Nobel Peace Laureates Urge Obama to Reject Pipeline – NYTimes.com

OCT11 Awash in Oil, Canada Looks Toward China – NYTimes.com. “Change is about the only constant in the rapidly shifting global energy business. And one of the most significant changes is the seeming role reversal between what was once considered the periphery of energy production and consumption and what was considered the center.”

OCT21 York News-Times – TransCanada 1, Nebraska 0. Game over?

NOV07 Inquiry Planned Into Keystone XL Pipeline Permit Process – NYT. “Harold W. Geisel, the senior official in the inspector general’s office, told top agency officials in a memorandum dated Friday that he would open the review “to determine to what extent the department and all other parties involved complied with federal laws and regulations” relating to the pipeline permit process. “

NOV10 PIPELINE DECISION DELAYED FROM DEC 2011 TO ~2013,
alternate routine through Nebraska to be reviewed by US Dept. of State

NOV11 NEWS: Keystone XL decision delayed, Obama buys time | INFLUENCE

DEC 23 In a heated debate concerning whether or not the US Payroll Tax should be extended, KXL becomes a political bargaining chip, as Republicans seek to force Obama to decide within a 60 day time period: “Democrats believe they already made a major concession when they included a provision in the two-month bill that forced the Obama administration to approve or disapprove the Keystone XL oil pipeline from Canada to the Gulf Coast.”

2012

JAN 18 INFLUENCE • The latest of the Keystone XL saga… President Obama’s statement: “Earlier today, I received the Secretary of State’s recommendation on the pending application for the construction of the Keystone XL Pipeline. As the State Department made clear last month, the rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment. As a result, the Secretary of State has recommended that the application be denied. And after reviewing the State Department’s report, I agree. …” Environmentalists rejoice, and some democrats are encouraged by Obama’s resolved, but the GOP focuses on the lack of job creation. Laborers’ International union angrily declared: ” “The Administration and environmentalists have blown the whistle on workers trying to feed their families and keep a roof over their heads,” said O’Sullivan. “Instead of celebrating their victory by hugging a tree they should hug a jobless construction worker because they’re the ones who are going to need it.” “

JAN 25 State of The Union 2012 & Energy (KeystoneXL Saga: #4) | INFLUENCE President Obama praises domestic energy potential, but GOP cite his lack of action on KXL.

FEB02 INFLUENCE with Jesse Parent • NYT For G.O.P., Pipeline Is Central to Agenda

FEB20 EDITORIAL: Keystone XL tied to Senate Highway bill. Political football continues | INFLUENCE with Jesse Parent

MAR21 Nebraska legislative committee advances bill that could help Keystone XL pipeline proposal | The Republic ”Howard said the bill would give Nebraska’s Department of Environmental Quality the clearance it needs to move forward, regardless of what happens at the federal level. He said TransCanada plans to file a new federal application within the next 4 to 6 weeks, possibly after the Nebraska Legislature has adjourned.

MAR22 Obama Putting Keystone XL Pipeline’s Southern Segment On Fast-Track

MAY07 NEWS: New Keystone XL Plan Still Finds Discontent in Nebraska | INFLUENCE with Jesse Parent

MAY18 COMMENT: Washington Post on Keystone XL – ‘Do It, But It Won’t Help Energy Independence’ | INFLUENCE with Jesse Parent. “The Washington Post editorial board has recently commented on the legitimacy of support for the Keystone XL Pipeline (A better case for Keystone XL ), but Sunday also released commentary about the limitations of KXL (What the Keystone pipeline won’t do). What the editors argue is  energy security for the US is not going to come by way of the Keystone pipeline (they agree with Michale Levi of the Council on Foreign Relations, Brad Plumer, and, in fact, the author of this article). But they still see the completion of the Keystone project as a wise move in terms of economic reality – and potentially environmental reality as well. The editors offer a complex recommendation for dealing with “the most important energy priority: climate change”, with rationale that seems contradictory at first glance.”

MAY22 Report Shows Keystone Tar Sands Pipeline Will Raise Gas Prices and Cut Midwest Oil Supplies | Rocky Kistner’s Blog | Switchboard, from NRDC

The bottom line is that Gulf refineries are clamoring for crude they can turn into diesel, the most lucrative petrochemical product right now on the international market. Here’s how NRDC’s Anthony Swift describes it in his recent blog;

Keystone XL is going divert crude oil from the Midwest, a region of the United States where refineries are designed to produce as much gasoline as possible from a barrel of oil, to the Gulf Coast of Texas, where refineries have reconfigured themselves to produce as much diesel as possible from a barrel of crude.

These differences are due to recent changes in the world market for oil and refined products. Historically gasoline commanded higher prices than diesel, driven largely by increasing U.S. consumption. That has changed over the last ten years as U.S. gasoline consumption has plateaued, due in large part to increasing automobile efficiency standards, and global demand for diesel continues to rise. Today, diesel commands a higher price than gasoline, particularly in the international market. 

JUN28 North American Oil – Caught Between The Sands and the Pipelines ”The two biggest sources of oil in North America produce significantly different types of oil, and the lack infrastructure to link those sources to proper refineries results in higher costs and less competitiveness on the global oil market.”

JULY29 NYT Editorial: Canada’s Oil, the World’s Carbon. “Last month, the State Department formally invited public comment on the issues it should consider in a new environmental assessment of the Keystone XL, a 1,200-mile pipeline that would connect the Alberta oil sands to an existing pipeline in Nebraska. The review process was  triggered when TransCanada filed a new pipeline application after its  first proposal was rejected by President Obama in January. The  department’s first environmental assessment was grossly inadequate, one  of the main reasons President Obama rejected the proposal.

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