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Keystone XL Pipeline Battle Rages On

Mar 26, 2013

Debate over the Keystone XL pipeline is reaching a turning point, with environmentalists and industry groups, as well as Democrats and Republicans, clashing over whether to allow the conduit to supply crude oil to the U.S. While the negative environmental effects of the pipeline may be exaggerated, so are the economic benefits it will provide.

The Keystone XL is the fourth phase of the larger Keystone Pipeline system developed by Canadian energy company TransCanada Corp. to transport crude oil from Canada and the northern U.S. to refineries. According to a March environmental-impact statement from the U.S. Department of State, the XL phase would transport up to 830,000 barrels per day (PBD), through 36-inch pipe, primarily to oil refineries on the Gulf Coast from Alberta, Canada, and the Williston Basin region of Montana and North Dakota.

Surprisingly, the State Department's environmental analysis found that the Keystone project would have relatively little impact on climate change, and that its negative ecological effects could largely be mitigated.

The permit for the project requires President Barack Obama's signature. In January 2012, he rejected an application to route the pipeline through an environmentally sensitive area of Nebraska. The new application now awaiting approval would take the pipeline along a route that would "minimize disturbance of land, water resources, and special areas" in Nebraska, TransCanada claims.

Following the release of the State Department's environmental impact report this month, the public has 45 days to comment on the review. After that, the department will have 90 days to determine whether the project is in the national interest. A decision is expected in August. If it's approved, the pipeline could be built by late 2014 or early 2015.

Opponents of the pipeline are concerned about the environmental effects of its construction and operation, but above all they object to its role as a conduit for dirty tar sands oil from Canada. The State Department report found that Canadian crudes, referred to as Western Canadian Sedimentary Basin crudes, emit an estimated 17 percent more greenhouse gases on a life-cycle basis than the average barrel of crude oil refined in the U.S.

In a recent op-ed, the New York Times insists that that's enough for Obama to kill the project: "A president who has repeatedly identified climate change as one of humanity's most pressing dangers cannot in good conscience approve a project that - even by the State Department's most cautious calculations - can only add to the problem."

On the other side of the spectrum, the Wall Street Journal argues that the pipeline would cause no major damage to the environment and wouldn't make a noticeable impact on climate change: "The Alberta tar sands are the world's third largest reservoir of oil, and Canada is going to develop them one way or another." Keystone XL would actually be the low-carbon alternative, according to the Journal, because the oil would otherwise flow west to China via other pipelines or rail, or "to the Gulf Coast by other means, including pipelines and rail to East Coast ports, and then via tankers in the Atlantic and around Florida."

Apart from the environmental considerations, economic arguments are also shaping the debate. Oil produced in North America benefits domestic companies by providing 80 to 90 cents on the dollar, versus imported oil from places like Venezuela and Saudi Arabia, which only provides Americans with 10 cents on the dollar.

During the one-to-two-year construction period, the State Department found, Keystone XL would create 42,100 jobs with $2.05 billion in earnings. However, it would only create 35 to 50 permanent jobs.

This past Friday, the U.S. Senate voted 62 to 37 in favor of constructing the pipeline in a non-binding amendment to the Senate budget resolution. Seventeen Senate Democrats voted in favor of the resolution, suggesting the project enjoys considerable bipartisan support.

However, critics have implied that those who voted for the amendment had powerful incentives to do so. According to the Washington Post, "the 17 Democrats who voted yes included every single possibly vulnerable incumbent facing reelection next year."

Research and advocacy organization Oil Change International, which is focused on the fossil fuel industry, claimed that Senate supporters of the amendment received 3.5 times more in campaign contributions from fossil fuel interests than those who voted against. Senate supporters received an average of close to $500,000 from the oil industry before voting in favor of the pipeline, for a total of $31 million.

Montana Democrat Max Baucus said in defense of his vote that "approving the Keystone Pipeline is the perfect opportunity to put Americans to work right now. American workers cannot afford to wait any longer for Keystone jobs, and there is absolutely no excuse for further delay."

House and Senate Republicans who met with Obama last week pressed him to go public with a timeline for approval of the pipeline project. However, the Hill reports that "Obama has been noncommittal on Keystone." Some Senate Republicans reported that "the president said his decision would come by year's end."