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Euan Mearns

Euan Mearns

"Euan Mearns is a geologist and geochemist. In recent years he was a principal at The Oil Drum, the worlds leading energy blog, until it…

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Keystone XL Pipeline: Why The Big Fuss?

Keystone XL Pipeline: Why The Big Fuss?

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?

KeystoneXLCartoon

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.

Related: Should President Obama Veto Keystone XL?

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):

ExistingPipelines

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:

CanadianUSRefineriesPipelinesRefineries

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):

CrudeOilTransportedByRail

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.

USCrudeOilImportsFromCanada

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 Dispatchwill 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.

Related: Is Keystone Still Viable Amid Low Oil Prices?

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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  • Matt Robinson on January 19 2015 said:
    As a nuclear energy supporter, I can see some very close similarities between Keystone XL and new nuclear. It's the same struggle between reasoned argument based on facts, and the distorted dogma-based emotional obstructionism of others.

    Good luck with that, folks. I hope you have more success than we've had.
  • ron wilton on January 20 2015 said:
    If I were to give a lecture on why not to complete KXL, I would read this article almost verbatim.

    Add into the lecture the unusual political interference by the governments of Alberta and Canada in promoting KXL as 'needed' to ensure 'energy security' for the U.S., which is easily demonstrated to be a blatant falsity, (so why the political hype?) and their environment minister calling conscientious objectors 'radical environmentalists' (as if that's a crime) and their prime minister insulting Americans by telling them and their president that completing the KXL pipeline is a 'no brainer', had the effect of raising their ire and causing significantly more pushback by the 'radical environmentalists'.

    Now they insult us even more by saying that after the 'obstinate' and 'recalcitrant' president Obama leaves office, they will get their pipeline when in truth they would have gotten their unnecessary pipeline much sooner if Canadians and Albertans had sent their present governments to the curb years ago.
  • Observer on January 20 2015 said:
    It is interesting that this article refers to tar sands oil as if it were conventional crude oil. It is not. It is bituminous sands (i.e. tar) located beneath boreal forests that require an absurd amount processing and refining prior to pipeline injection. It takes time, energy, and money, while being extremely detrimental to the environment. CO2 concerns aside, this is why it is referred to as "dirty" as the article puts it. This article also fails to mention one of the most important sources of fresh water in North America, the Ogallala aquifer, that this pipeline will transect and put at risk of groundwater contamination in the event of spills. Hundreds of thousands of people rely on this source for drinking water and many more millions rely on it for the food they eat every day.
  • Sharonsj on January 20 2015 said:
    I'm against Keystone for the simple reason that the politicians and the oil shills are lying about the benefits and jobs.

    This is Canadian-owned oil and the owners testified before Congress that the refined oil was destined to be sold to China and India. It will not make America energy independent.

    The original claim of Keystone creating 20,000 jobs comes from bureaucratic math. The pipeline, estimated to last 100 years when built, will create 20 permanent jobs, so:

    1st year, 20 jobs
    2nd year, same 20 jobs, counted as 40
    3rd year, same 20 jobs, counted as 60.
    Do this for 100 years and you get 20,000 jobs but actual jobs are the same 20 jobs.

    Next claim, that the State Department report says 42,000 jobs will be created. The report actually says that 42,000 existing jobs and businesses will benefit during the short time the pipeline is being built in their vicinity; it does not say that 42,000 new jobs will be created and it lists the same 20 permanent jobs.

    Finally, I despise the national media that has yet to give any real facts to the American public about this boondoggle.
  • David on January 20 2015 said:
    There might be an initial job boost while constructing pipeline but I think that will go way down once pipeline is finished and in place. So it is not a long term job booster. Whereas train and trucking oil create way more jobs with long term results.

    If there were a spill, how much oil would be spilled from one truck or train derail as opposed to a break in a pipe line out in the wilderness? It would just keep pouring and pouring until it was fixed. How long would it take to get clean up and repair crews to an isolated pipeline?

    Montana officials said Sunday that an oil pipeline breach spilled up to 50,000 gallons of oil into the Yellowstone River

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