Commentary
Keystone Pipeline Side-tracked But Not De-railed
Faced with a February 21 deadline imposed by Congress, President Obama rejected, at least temporarily, a permit to allow a Canadian energy company, TransCanada Corporation, to build and operate the $7 billion, 1,700-mile Keystone XL pipeline. The proposed pipeline would carry over 700,000 barrels a day of tar sands crude from Alberta, Canada across six states in America’s heartland to the Texas Gulf Coast.
Tar sands, also known as oil sands, are a combination of clay, sand, water and a heavy, black viscous oil called bitumen. Tar sands can be mined and processed to extract the oil-rich bitumen, which is then refined into oil. The bitumen in tar sands cannot be pumped from the ground in its natural state, but must be mined, usually using strip mining or open pit techniques, or extracted by using steam injection, solvent injection or other underground heating techniques. Because it is so thick, bitumen also requires dilution with lighter hydrocarbons before it can be transported by pipeline and refined. About one barrel of oil is produced for every two tons of tar sands.
In rejecting the application, President Obama stated that the deadline for the decision was “rushed and arbitrary” and had "prevented a full assessment of the pipeline's impact". As a practical matter, the President really had no final pipeline route to approve. As originally proposed, the pipeline would have crossed the Sandhills region of Nebraska, a large wetlands ecosystem, and the Ogallala Aquifer, one of the largest fresh water aquifers in the world, spanning eight states, providing drinking water for two million people, and supporting $20 billion in agriculture. Concerned that a major leak could ruin this vital water supply and devastate the mid-western U.S. economy, the State of Nebraska opposed the pipeline’s original route, and asked TransCanada to reroute the pipeline. TransCanada agreed to do so and has been working towards an acceptable pipeline route through the state. The President’s decision has temporarily halted the environmental-review process underway in Nebraska for a new pipeline route, and it is presently unclear if the permit process there must start over or if the parties can continue working on a route that takes the pipeline away from the environmentally sensitive region.
The President’s decision was praised by environmentalists, but decried by the U.S. oil and gas industry and Republican presidential candidates and lawmakers, who had pushed the President to approve the project as a way to create jobs. TransCanada claims that the project will create 20,000 jobs and pump $7 billion into the U. S. economy. However, an independent study conducted at Cornell University found that the project would result in only 2,500 to 4,650 temporary construction jobs, and the State Department likewise reported that the pipeline would create only 5,000 to 6,000 temporary construction jobs during the two years needed to build the pipeline.
Pipeline proponents also argue that it will allow the U.S. to increase its energy security by reducing dependence on foreign oil. They also argue that if this Canadian oil doesn't reach the Gulf through an environmentally friendly buried pipeline, the alternative is oil being brought in by tanker, a mode of transportation that produces higher greenhouse gas emissions and puts the environment at greater risk. However, in 2011, it was reported that the U.S., for the first time since 1949, had become a net fuel exporter. This fact has led many to question the validity of the energy security argument since it appears that additional Canadian tar sands oil processed in the Gulf region is likely to be exported to foreign nations.
On the environmental front, even if the pipeline is rerouted to avoid the environmentally sensitive Sandhills region of Nebraska and the Ogallala Aquifer, both the mining and processing of the tar sands still involve a variety of environmental impacts, such as global warming and greenhouse gas emissions; disturbance of mined land; impacts on wildlife and air and water quality; and the consumption of great amounts of energy and water.
Texas has a strong interest in the pipeline’s fate. The proposed route runs the length of East Texas from the Oklahoma border to refineries in Houston and Port Arthur. Its construction and presence in the state means jobs, temporary and long-term, and thus positive economic impacts. However, as with Nebraska, there are significant environmental concerns here in Texas. Chiefly, the proposed pipeline route crosses the Carrizo-Wilcox Aquifer, which supplies water to 60 Texas counties and millions of Texans.
So, where does the pipeline stand as a result of all this? Unquestionably, the Keystone XL pipeline is not dead. First, immediately after the President’s action, legislation was filed that would take approval authority over the pipeline away from the President and place it with the Federal Energy Regulatory Commission. That legislation, which would also require the permit to be approved for construction within 30 days of a new application, has already been scheduled for a hearing before the friendly House Energy and Commerce Committee’s energy and power subcommittee.
Finally, and importantly, even in rejecting the application, the President invited TransCanada to reapply once a final route for the pipeline has been established, and the company has promptly indicated that it will do so. The company has also indicated that it may build U.S.-only pipeline segments, which won't require federal approval, and apply later for permission to connect the pipeline to Canadian oil sands, thus completing it as originally proposed. After a thorough review of TransCanada’s final proposals for the pipeline and all attendant risks and benefits, in a less politically charged setting than presented by the current national election cycle, it is highly likely that the Keystone XL pipeline ultimately will be approved and built. After all, the Keystone pipeline extends and expands an existing pipeline --- one that is part of approximately 2.5 million miles of pipeline infrastructure that already crisscross the nation, moving essential the same type of products. And, defeating the pipeline won’t stop the production of Canadian tar sands, nor force a move to alternative energy sources here in the U. S.
