Lobbyists are mobilizing to advance it. Environmentalists are mobilizing to stop it. The newly-elected Republican House has already voted to approve it. So has the newly elected Republican Senate. Obama has threatened a veto. The media are having a field day. What’s so important about Keystone XL?
Well nothing, really. Keystone XL is basically just another pipeline; a little longer and larger than most, but not unusually so, and it goes nowhere pipelines don’t already go. All it does is increase the capacity of the existing Keystone pipeline system, which has already transported over 550 million barrels of Canadian heavy crude from Alberta to the US. The crude Keystone XL delivers will make no difference to US crude imports; it will simply displace crude imports from elsewhere. And if Keystone XL doesn’t get built the crude it would have carried will go somewhere else, meaning that no CO2 emissions would be saved by not building it. (Although building it probably would save CO2 emissions because much of the Canadian crude that now moves south on trucks and rail tankers would pass through Keystone instead.)
So what’s all the fuss about?
What’s happened, of course, is that Keystone XL has been blown totally out of proportion, to the point where it’s become a cause célèbre. But how it got to this point is something for the psychologists, sociologists and political scientists to argue about. Here we will confine ourselves to the facts.
First, the purpose of Keystone XL. Its purpose is simply to supply more Canadian heavy crude to US Gulf Coast refineries that are facing potential feedstock shortages because of declining heavy crude production from Mexico and Venezuela, their main historic suppliers. This is a perfectly reasonable business proposition. Canada is motivated to sell, the refineries are motivated to buy and both will profit from the transaction. (Scotland has the same motivation in wishing to sell its surplus wind power to England. The difference is that Canada can deliver a product the client wants when the client wants it.)
Second, the Canada-US pipeline system. There’s a perception that Keystone XL will be the first pipeline to bring Canadian crude to the US, but as shown in Figure 1 a substantial network of oil pipelines linking the two countries already exists. (Keystone XL is the purple line running northwest of Steele City):
Figure 1: Existing and planned pipelines serving the tar sands “boom”
The numbers in the box reveal that Canada already has ~1.7 million bpd of pipeline export capacity – 591,000bpd going to US refineries via Keystone I, and 800,000bpd in Alberta Clipper plus 300,000bpd in TransMountain going to ports from which the crude can be shipped overseas. And Canada plans to add 3.1 million bpd more. The total will decrease by 830,000 bpd if Keystone isn’t built, but 2.3 million bpd is still enough capacity to allow Canada to ship a lot of its crude to other countries if there isn’t enough pipeline capacity to ship it to the US. (Note also that Keystone XL isn’t exclusively for the use of Canadian oil. 100,000 bpd of its capacity is allocated to Bakken crude.)
And these aren’t the only pipelines linking Canada and US refineries. Figure 2 gives a more detailed picture:
Figure 2: Canadian and US crude oil pipelines and refineries
The question, however, is whether these existing pipelines can accommodate all the Canadian crude going south, and the plot below of crude shipments by rail to the US from the WCSB (Western Canadian Sedimentary Basin) shows that they can’t. The rapid growth in rail shipments confirms that pipeline capacity is presently insufficient and growing more so all the time. (The graphic is from the US State Department Final Supplementary Environmental Impact Statement on Keystone XL of January 2014):
Figure 3: Crude oil transported by rail from Western Canadian Sedimentary Basin
Clearly Keystone XL has a raison d’être. Building it would also eliminate not only the CO2 emissions generated by rail transport (and by truck, for which the State Department provides no data) but the environmental and safety hazards posed by shipping crude by road and rail as well.
Third, the impact of Keystone XL on US crude oil imports. Figure 4 shows US crude imports from Canada and other countries since 1973 (data from EIA). US imports fluctuated over a range of 7 million bpd over this period, ten times as much as Keystone XL can ship from Canada at maximum capacity. Keystone clearly wouldn’t be a game-changer even if all the crude it brings in added to US imports.
Figure 4: US crude oil imports from Canada and others suppliers since 1973
But Keystone crude won’t add to US imports, which are determined by refinery demand. It will just replace imports from elsewhere. This is already happening with the recently-completed Seaway pipeline between Cushing and Freeport (Figure 1), which as reported in the Columbus Dispatch “will almost double the amount of heavy Canadian crude arriving at Gulf of Mexico terminals and plants to about 400,000 barrels a day in January …….. even without the Keystone XL pipeline.“ Seaway has, in fact, already sparked a low-key price war between Canada and the Gulf Coast refineries’ traditional suppliers Mexico and Venezuela, who are losing market share to Canada faster than their production is declining.
Fourth, the impact of Keystone on Alberta tar sands development. It’s been argued that construction of Keystone XL would contribute to increased CO2 emissions by stimulating further development of “dirty” Alberta tar sands, which generate about 20% more CO2 than “conventional” oil. But doing the sums shows that the quantities involved are negligible (a million barrels/day of tar sands oil replacing conventional oil would generate only about 11 million extra tons of CO2 a year; global CO2 emissions are around 40 billion tons a year.) There’s also the question of how much additional development of Alberta tar sands will even take place if current oil prices persist.
Fifth, environmental impacts. Keystone XL has been re-routed to avoid the Nebraska Sand Hills and now passes through mostly farmland. It will add only 875 miles of oil pipeline to the ~150,000 miles of oil pipelines that already exist in the US, an increment of 0.6%.
In summary, Keystone XL is a worthwhile project that would have a minor but positive impact on the economies of US and Canada and a negligible impact on anything else. And the only remaining legislative obstacle to building it is the gentleman featured in the cartoon at the top.
By Euan Mearns
Source - http://euanmearns.com/
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