Keystone XL has been called the world’s best known pipeline that has not been built. Controversy over the pipeline itself has largely subsided but this project linking the oil sands of Northern Alberta to the large refineries of the Gulf Coast has become a rallying point for an “off oil” campaign.
A presidential permit for import facilities is the sole remaining requirement before construction can begin. KXL would be the 82nd major pipeline in the US, and is the safest and most technologically advanced. It would provide diluted bitumen from Alberta’s oil sands and Bakken crude from Montana and North Dakota to the Gulf Coast, where 40% of the world’s heavy oil refining capacity is located. Those refineries are now largely supplied by Venezuela and Mexico, from whom supplies have declined by 2.5 million barrels per day since 2005.
The controversy focuses on several key points:
1] JOBS & ECONOMIC BENEFIT: This multi-billion dollar project will employ thousands of highly skilled tradesmen. The pipe is manufactured in Arkansas and unions are highly supportive. Unlike other international suppliers, the Alberta oil sands is served by over 1,000 US companies. For each dollar invested in Alberta, 90 cents is returned to the US in purchases. Critics allege few permanent jobs are created to operate a high technology pipeline, but the construction phase and oil sands operation involve much indirect employment throughout many regions of the US.
2] ENERGY INDEPENDENCE: Critics have alleged KXL is essentially an export line for Canada to access Asian markets through a US route. In fact, 40% of the world’s refining capacity for heavy oil is located on the Gulf Coast, employing tens of thousands and supplying products such as transportation fuels, petrochemicals, and asphalt to US markets and beyond.
3] PRICE AT THE PUMP: While KXL may reduce a current discount for Alberta crude in the market place, refiners price their product on Brent, which sets the consumer price. Reducing the discount will impact refinery margins but not the consumer price at the pump. Increasing supply to the marketplace has a generally negative impact on price.
4] ENERGY AND THE ENVIRONMENT: Alberta instituted a carbon charge in 2007 and continues to review its rate and effectiveness. Large emitters are required to reduce their emissions of CO2 by 12%. Failure to do so requires a purchase of offsets or payment to the Alberta Innovation Fund, rather than the Province’s general revenues. The Fund now totals about $400 million and is used exclusively to develop technologies and projects to reduce CO2. Oil sands operators have reduced emissions over 26% between 1990 and 2011. Suncor alone is experiencing a 2% per year continuous improvement.
The next step in the regulatory process will be the issuance of a final EIS by the State Department. The President has publicly stated that the project will be approved if it does not significantly increase CO2. Given the vast increase in shipment by rail and alternate pipelines, the KXL line will not contribute to additional CO2.
Should the Keystone XL pipeline be approved? Are there other costs and benefits to building the pipeline?
What I do not quite understand is that if the tar sands offer such a large resource to be tapped, why not build a local refinery in Alberta and then… Read more »
There are refineries in Alberta to serve that market. Practically, it makes the most sense to refine products as close to the market as possible, as a range of products are… Read more »
Mr. Manning, I beg to differ with your comment. “There is no difference between how various forms of crude oil behave in a pipeline.” Tar sands crude has proven… Read more »
In a business-as-usual scenario where global oil-based transportation fuels demand continues to grow, increasing Alberta oil sands supplies to world markets makes good sense. Alberta oil sands are a secure,… Read more »
Manning makes a strong case. It should be clear that obstructing completion of the Keystone XL pipeline will in no way reduce production from Canadian oil sands or have any… Read more »
“Game over.” James Hansen, one of the world’s leading climate scientists on the consequences of processing the Canadian tar sands oil — dubbed the world’s dirtiest oil — which would… Read more »
Lewis Perelman’s argument for the Keystone XL pipeline revolves around the assumptions that Alberta oil sands development will continue whatever the case, ways will be found to export this oil,… Read more »
Climate concerns of the Keystone XL pipeline, such as James Hansen’s “game over,” are vastly overblown. Further, the differences between the State Department’s estimates of increased carbon dioxide emissions resulting… Read more »
Criticism of Alberta ignores their leading efforts as a producing region to address climate change. As the first jursidiction in North America to impose a carbon charge, the Province and… Read more »
I agree that David Manning makes an excellent case for what is ultimately just another pipeline, albeit one that will have the most exacting environmental and safety standards to date.… Read more »
The concern expressed by Mr Peterson on Sept. 13 (oil sands oil is abrasive and leads to deterioration of piping systems) has been answered by several studies. The most recent… Read more »
Thanks to David Manning for entering this forum and making the case for the Keystone pipeline. The debate won’t be resolved here, but I think that reading the comments and… Read more »
Dear All, Please take a look at the following information and understand the issue between refining Oil Sands in Canada or in Florida, USA, then ask yourselves the question; which… Read more »
Of course it should be approved. The on-going drama is nothing more than government abuse of markets, not to mention a stick in the eye of Canada. Markets take a… Read more »
Christopher Sand’s observations and comments hit the nail on the head. The main issue is not at all about the pipeline. The problem is the precedent that is being set… Read more »
John Sarter’s candor is refreshing. The energy politburo cares little about constitutionally-guaranteed liberties. Sarter is ready to czar, dictator, monarch, “dear leader”, and all to willing to decide who needs… Read more »
The best reason to approve Keystone is the foreign policy reason. Approval of Keystone is something Canada has placed at the top of its priority list. To say no to… Read more »