The words "Keystone Pipeline" invoke strong reactions. It seems that people are either very much in favor of or very much against TransCanada's proposed construction of the Keystone XL Pipeline, which would transport diluted bitumen, a viscous form of crude oil, from Alberta, Canada to Steele City, Nebraska, with another branch from Cushing, Oklahoma to Port Arthur, Texas. The pipeline consists of 36-inch diameter pipes, buried 4 feet underground, which would carry up to 830,000 barrels of crude per day. What makes it most controversial is that the proposed route runs near several aquifers that provide drinking and irrigation water, in particular the Ogallala Aquifer in Nebraska, which provides drinking water for two million people and supports $20 billion in agriculture. It also crosses an active seismic area, which had a 4.3 earthquake in 2002. The threat of pipeline leaks and spills is a very valid one, and on its face, this pipeline seems particularly risky. But, like many issues involving the extraction and transport of crude oil, a closer look reveals a much more complex and tricky to solve situation. This post is a bit fact-heavy, so bear with me.
Many people don't realize that large parts of the Keystone pipeline are already operational. Phase One, from Hardisty, Alberta to Patoka, Illinois, which went online in June 2010, runs for 719 miles in Canada and 1379 miles in the United States. Phase Two, which went online in February 2011, extends 291 miles from Steele City, Nebraska to Cushing, Oklahoma. Permits were issued and construction began on the original Keystone sections in 2008 with very little fanfare or controversy. Keystone XL was meant to solve the problems of oil bottlenecks in Cushing, and to get oil all the way to the Gulf Coast. TransCanada also touted the property tax revenue the pipeline would bring to landowners, and the jobs created to construct and maintain the pipeline. But in 2010, the Environmental Protection Agency said the State Department's draft environmental impact study for Keystone XL was inadequate, indicating that it didn't fully look at oil spill response plans, safety issues and greenhouse gas concerns. In November 2011, after State released another environmental impact statement that the pipeline would have “limited adverse environmental impacts", the President sent the proposal back again for a more in-depth study, effectively delaying a decision until 2013. In December 2011, Congress passed, and President Obama signed, an extension of the payroll tax cut. Tucked into that legislation was a requirement that the President make a decision on the Keystone XL project within 60 days. Backed into a corner, with incomplete information on the environmental and economic impact of the pipeline, President Obama denied the Keystone XL permit last month, indicating that TransCanada was welcome to re-apply for the pipeline construction. TransCanada does, in fact, plan on re-applying.
In addition to the risk of water contamination, another environmental controversy surrounding Keystone XL is the source of the oil itself: the Athabasca Oil Sands in Alberta, Canada. Athabasca is largest known reservoir of crude bitumen in the world, containing over 1 trillion barrels of the sticky, viscous oil product. The problem is that extraction of crude oil from oil sands is more labor-intensive, more damaging to the land above the mine, and emits much more carbon dioxide than average crude oil production. Approximately two tons of oil sands are needed to produce one barrel - roughly 1/8 of a ton - of oil. Strip mining is the most common mining method used in Athabasca, which essentially scrapes the oil sands off the surface , damaging the land for future uses. Oil sands extraction emits 10 to 45% more greenhouse gases than conventional crude. Once extracted, the bitumen must then be thinned so that it can travel through a pipeline, and oil companies have not revealed exactly what chemicals are used to dilute it, or if there is potential for pollution from these chemicals.
Another issue is the cost of the pipeline itself. TransCanada nearly doubled its construction estimates in October, 2007, from $2.8-billion to $5.2-billion. Refiners argue that these construction overruns have raised the cost of shipping on the Canadian portion of Keystone by 145% while the U.S. portion has run 92% higher. The current estimated cost of the Keystone XL extension is $7 billion; if the same overruns occur in this phase, the final cost will be nearly 14 billion dollars, much of which will be made up by raising shipping costs, and potentially the price of oil.
TransCanada has responded to many of the criticisms of the Keystone XL project. It has insisted that new technology makes its pipelines closer than ever to being leak-free. As to the risk to the Ogallala Aquifer, TransCanada pointed out that fourteen different routes for Keystone XL are being studied, including one alternative route in Nebraska that would entirely avoid Ogallala aquifer, and six that would have reduced pipeline mileage crossing the aquifer. However, TransCanada is an energy storage company, not an oil company. It can make no guarantees regarding the environmental impact of the oil extraction, nor can it promise how the pipeline will affect the cost of oil in the United States.
Clearly, many factors go into the decision to build this pipeline. Environmental concerns have always been balanced with the United States' acute need for energy when it comes to the extraction and use of fossil fuels. But the biggest question is this: should the United States make a multi-billion dollar investment in a resource - foreign oil - upon which we are ultimately trying to reduce our dependence? Obtaining oil from Canada may be politically preferable to getting it from Venezuela or the Middle East, but it is still foreign oil. If the cost itself is justified, is it then worth the potential for environmental damage from spills and leaks, as well as the damage caused to the land and atmosphere by the extraction of the oil? I don't blame President Obama for refusing to be rushed into a decision. When the decision whether to build Keystone XL finally comes down, it will determine the energy future of the United States for at least a generation. Once a commitment of this magnitude is made, there will be no turning back, and there will be little money left for any alternatives.