Obama’s Decision on Keystone XL Pipeline

Keystone XL pipeline is a proposed 1700-mile extension of the already existent Keystone pipeline, which stretches from Canada’s Athabasca oil sands to Steele City, Nebraska, Cushing, Oklahoma and Wood River, Illinois [4]. The $7 billion dollar extension would have the entire Keystone megaproject pumping 1.1 million barrels per day from the oil sands to refineries in Nederland and Port Arthur, Texas [2].

 

In order for TransCanada to begin construction, they must obtain a Presidential Permit. On January 18, Obama rejected congressional Republican’s deadline for a decision saying that “a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment” could not be accurately completed in the time allotted by the arbitrary deadline. [3]

Yes, there are profound environmental risks associated with construction. The pipeline runs through the Nebraskan sand hills, a very a delicate ecosystem in which an oil spill would devastate. Also, the pipeline would cross the Ogallala aquifer, which provides 30% of the nations’ irrigation water [5]. However, TransCanada has no history of oil spills and I believe that if the proper safety and environmental precautions are taken, then hopefully there will be no leaks. There are already 55,000 miles of petroleum pipelines in the US and many of them cross sensitive areas [1]. I feel that because of the BP Deepwater Horizon’s spill, there is more attention on the topic of environmental preservation than necessary.

Given that this is an election year, I also feel that Obama is just postponing the decision so as to not deter voters.  The purpose of the presidential permit is to decide if the pipeline would be in the nation’s best interest. I believe that it would. House Speaker John Boehner of Ohio stated Keystone XL’s construction would “create 100,000 new jobs [3]. Also, if we buy Canada’s oil, then we are less dependent on foreign sources. Besides, if we don’t buy this oil, then someone else will (i.e. China). Obama promised that he’s create jobs and push the US to cleaner energy. Having to make a decision on the Keystone XL pipeline would force him to break one of his campaign promises, a move that could ruin his chances for 2012. Deferring the decision is in the best interest of his campaign, not of the nation. The first permit to build Keystone XL was submitted in 2008 and was continually delayed until a proper EIS (Environmental Impact Statement) was completed. Continuing to defer decision is just going to push TransCanada to look for a different nation to buy its oil.

 

[1] http://www.pipeline101.com/Overview/energy-pl.html

[2] http://www.hartwrfs.com/HomePageNewsDetails.aspx?Id=5062

[3] http://abcnews.go.com/Politics/OTUS/president-obama-rejects-keystone-xl-pipeline/story?id=15387980#.TyXF8WDAU1c

[4] http://www.washingtonpost.com/national/health-science/keystone-xl-oil-pipeline-battle-has-only-just-begun/2012/01/19/gIQAUa47BQ_story.html

[5] http://www.kerrcenter.com/publications/ogallala_aquifer.pdf

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4 responses to “Obama’s Decision on Keystone XL Pipeline

  1. I agree that the Keystone XL should and will be passed, since it’s too convenient for us not to do it, and like you said, someone else is going to burn that oil if we don’t do it. I have heard talks about changing the route so as to avoid the Olgalla, as well as completing the EIS before XL can get approved. I think in a lot of ways this is a more of a political issue than an environmental one, but it wouldn’t hurt to finish the EIS and change the route so as to avoid the Olgalla. Folks on the high plains have already had to deal with one recent oil spill (http://billingsgazette.com/special-section/news/oil-spill/), and it isn’t too much to ask to be extra careful not to contaminate potable water (especially with the current scarcity).

  2. sahtt

    It is easy to become lost in the sheer scale and complexity of the Keystone Pipeline Project. Once can accurately characterize the pipeline as both a huge component of securing safe, reliable fuel supplies and at the same time a potential environmental disaster; both in the short term through leaks and the long term through seemingly fortifying our relationship with oil.

    TransCanada is no stranger to pipeline leaks. In May 2011 the company shut down the existing Keystone Pipeline to repair a pump station leak in Kansas (1). A leak earlier that year in Missouri produced what witnesses say resembled a “six story geyser” of oil. By mid 2011, the Keystone Pipeline alone experience at least 10 official leaks (2). I am not sure of additional leaks the company was responsible for on other pipelines it owns.

    It is true that the tar sands are difficult, expensive, and energy intensive to both acquire and refine. The pipeline leaks and pollution rhetoric in general is probably not overstated.

    There is, however, one small problem with focusing primarily on these issues. It is one much of the media and many politicians, the President included to a certain extent, tend to overlook. We use enormous, almost incomprehensible amounts of oil with no short-term, concrete plans to reduce consumption or utilize alternatives. Dramatically increased domestic oil production on an absolute scale and the new EPA fuel requirements may put a dent in our demand for imports, but we’ll still need 9-10 million barrels a day.

    The reality is the physical properties of the oil we already import from Venezuela, consistently one of our top 3 suppliers, is extremely similar to that of Canada’s unconventional sources (4). The heavy crude we import from Saudi Arabia is not much better. In addition, pipelines are unquestionably the most reliable and environmentally friendly means of transporting oil. Oil tankers burn gargantuan amounts of the dirtiest diesel fuel available crisscrossing the earth and once a large scale hull failure occurs, no man made system can stop it. 80% of pipeline leaks are less than 10 barrels of oil and newer designs, like the Keystone Pipeline, have extremely sophisticated automatic shut off systems to curtail the flow of oil when leaks do occur (3).

    Whether the Keystone Pipeline XL is good or bad is irrelevant. What matters is whether or not its construction and the availability of the oil it will carry is rational in the context of our energy situation. There are a lot of negative externalities associated with the project, but to simply say no without a damn good plan B is illogical, if not reckless. Let TransCanada take all the risk and invest billions in the U.S. If we end up needing the oil, it will be there. If we are all driving Tesla’s and Leaf’s powered by wind turbines and solar panels by 2025, it is TransCanada’s loss, not ours.

    (1) http://www.canadianbusiness.com/article/28525–transcanada-s-suspends-oil-shipments-on-keystone-pipeline-to-deal-with-leak
    (2) http://www.stltoday.com/news/local/metro/article_dae7b66e-e0c5-5677-9acd-0773efb0d8d1.html
    (3) United States Coast Guard. Cumulative Spill Data and Graphics. http://www.allcountries.org/uscensus/390_oil_spills_in_u_s_water.html 2007.
    (4) http://www.eia.gov/petroleum/

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  4. lexhochner

    I think it is important to note that the negative economic impact caused by the rejection of Keystone XL is not limited to TransCanada, Canadian oil interests, would-be pipeline construction jobs and Gulf Coast refiners (although these are the stakeholders on which mainstream media tends to focus). We also have to consider the negative economic impact to the beneficiaries of Williston Basin (Bakken Shale) development, which lost significant planned take-away capacity with the death of Keystone. The Williston Basin was to be hooked up to Keystone in Baker, MT via the Bakken Marketlink Pipeline. Initially, the link was to provide 100 MBbls of daily off-take with capacity to increase volumes to 300 MBbls/d. With Bakken production in the current range of +500 MBbls/d and expected to reach +700 MBbls/d in the next few years, the Marketlink was slated move approximately 20% of volumes.

    The Bakken represents one the largest US oil fields ever discovered. Estimated ultimate recovery ranges from 4-18 billion Bbls, ranking the Bakken somewhere between #1 and #5 in US history. As such, the Bakken is vital to the future of our domestic energy security.

    With the death of Keystone, the Bakken Marketlink is no longer viable in its current form (TransCanada’s economics don’t work). The Williston Basin take-away bottleneck will now persist for a longer than expected period, and Bakken producers will be forced to continue using costly rail and truck transportation. As Bakken development and oil volumes are delayed and transportation costs cut into profits, all Bakken stakeholders will be negatively impacted. E&P profits will be pushed lower, negatively impacting workers, investors, trade partners and suppliers. Mineral rights holders will received reduced royalty streams. Local, state and federal governments will receive less tax revenue.

    The takeaway: Keystone XL has economic and energy security implications beyond pipeline construction jobs and securing friendly crude. Policy decisions must consider these points.

    Sources:
    http://transportationnation.org/2011/11/24/without-keystone-xl-pipeline-railroads-see-boom-time-from-bakken/
    http://www.businessweek.com/news/2012-02-01/transcanada-may-shorten-keystone-xl-bypass-federal-review.html
    http://seekingalpha.com/article/318745-bakken-boom-north-dakota-breaks-its-oil-production-record
    http://www.ogfj.com/articles/2011/01/bakken-may-double-production-in-10-years.html

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