The oil pipelines have become controversial due to their potential environmental impact, economic benefits, and effects on national security. The Keystone XL pipeline is a 2147-mile crude oil pipeline from Alberta, Canada, to the Gulf Coast of Texas in the United States. TC Energy and the Government of Alberta were the creators of the Keystone pipeline. The organizations had proposed to create a direct route to move crude oil produced in Canada and North Dakota's Bakken region to refineries along the Gulf Coast.
The Keystone XL pipeline project was stopped by President Obama in 2015, which led to TC Energy pursuing a $15 billion lawsuit under NAFTA. President Trump tried to allow the pipeline's construction in 2017, and TC Energy paused its NAFTA Chapter 11 lawsuit. In 2018, TransCanada announced they had commitments to ship 500,000 barrels daily for 20 years. However, on his first day in office, President Biden revoked the pipeline permit, and TC Energy eventually abandoned the project on June 9, 2021. There are many benefits of the projects in terms of economy and business boot for both USA and Canada. However, the project also has potential demerits. The pros and cons of the Keystone Pipeline project highlight the prominent ones in brief.
The Keystone Pipeline is an oil pipeline system in Canada and the United States, commissioned in 2010. It runs from the Western Canadian Sedimentary Basin in Alberta to refineries in Illinois and Texas and also to a storage terminal in Oklahoma.
The Keystone Pipeline System is owned by TC Energy Corporation (formerly TransCanada Corporation). It consists of the operational Phase I—the 2,147-kilometer (1,337 miles) Keystone Pipeline running from Hardisty, Alberta to Steele City, Nebraska—and Phase II expansion called the "Gulf Coast Project," which began operations in 2014 and runs from Steele City to Port Arthur, Texas.
Construction on the Keystone Pipeline was completed in 2010 as part of Phase I expansion plans, with additional phases added later. Phases II through V have been proposed, including a 639-kilometer (397-mile) Keystone XL expansion that would run from Hardisty to Steele City.
The Keystone Pipeline System would have a total capacity of 1.3 million barrels per day, making it one of North America's largest crude oil pipelines.
The pipeline system currently transports nearly 645,000 barrels daily from Alberta to Illinois and Texas refineries and an Oklahoma storage terminal. Besides transporting crude oil, the pipelines also transport natural gas liquids—propane, ethane, butane, and pentanes—from Alberta to US markets.
As said earlier, the project turned out in favor of economic boost and development through shipping crude oil to remote areas conveniently. The major advantages of the Keystone XL pipeline include:
The construction of the Keystone XL pipeline brought about 42,000 jobs during its installation phase, according to the US State Department. It also created up to 40 permanent jobs after it began operating and generate thousands of indirect employment opportunities from related businesses such as food services and transportation firms.
The Keystone Pipeline provided increased energy security for North America by connecting major oil sources in Canada and the United States. The pipeline was designed to transport heavy crude oil from Alberta, Canada, to refineries on the U.S. Gulf Coast. This transport system increased the supply of secure and reliable oil supplies for both countries. Increasing the connection between these two nations allowed for better collaboration when responding to potential threats or disruptions in either market.
Keystone XL pipeline would bring an estimated $3.4 billion to the US economy, according to the State Department report, and generate about $55 million in local and state taxes annually for communities along the route. It is also estimated that property tax revenues from construction on the pipeline could provide approximately $5 million each year for 13 counties in Nebraska alone.
The Canadian oil industry contributes to one-sixth of the nation's economy but faces transportation constraints due to the location of petroleum reserves. This results in high production costs. The Keystone project can help Canadian producers improve petroleum quality and reduce overhead costs, leading to potential price increases.
According to TransCanada, they plan to extract and transport tar sands oil regardless of whether they build the Keystone pipeline extension or not. Even though there are other transportation options, such as railroads, the pipeline is still considered the safest. In a scenario where the oil will reach its destination regardless, opting for the safest mode of transportation seems like the most reasonable choice: Keystone XL.
Despite the potential benefits, there are some prominent disadvantages of the Keystone Pipeline. These include:
Obtaining oil from tar sands involves combining petroleum with clay, sand, and water to form a very thick mixture called "bitumen." There are only two known methods to extract the oil from this mixture. One involves using steam created from water and natural gas to pump through the tar sands, but this method has the potential to create a toxic runoff. The other method is strip mining.
The technology used in the project guarantees to reduce any environmental impact, but there is still a risk that could damage land or water resources. These risks can include wildlife disturbance, erosion and contamination of water, destruction of local ecosystems due to construction activities, and leakage from the pipeline itself.
The Keystone XL project has also been criticized for increasing carbon emissions. Since tar sands oil extraction requires more energy than traditional methods, it produces higher greenhouse gas emissions. There are also concerns about air pollution levels since the area around Alberta's tar sands facilities already experiences high smog levels from existing production activities.
Since 2005, the oil industry has been reducing its workforce instead of increasing it, despite earning nearly $550 billion in profits between 2005 and 2010. The industry's top companies have cut over 11,000 jobs, and in 2010 alone, the top 5 oil companies laid off 4,400 employees. Interestingly, these companies still paid their executives over $200 million in bonuses while cutting jobs.
The Keystone XL project has been a source of political instability, with some members of Congress and the White House being very vocal in their opposition. This could potentially lead to further divisions between parties, which could have long-term implications for the country's future energy policies.
Conclusion
The Keystone XL pipeline project offers several potential economic and energy-related benefits. But, there are some significant risks that can’t be overlooked. The potential threats led the Obama Administration to stop the project. So, it is necessary to thoroughly assess the environmental risks, economic costs, and benefits of the project before taking any further steps. Overall, the future of Keystone XL currently rests with Congress. Whether or not to approve this project will be one of their most important decisions and long-term implications for America’s energy policies and economy.
The Keystone XL pipeline aims to supply crude oil from North America to US Gulf Coast refiners, ensuring a reliable and secure source of transportation fuel and manufactured products.
By the time, Keystone XL encountered various challenges, including an administration not in favor of it, several legal disputes, falling oil prices, worsening climate impacts, and a rising movement of climate activists along the pipeline's pathway and globally, who refused to ignore the issue.
The pipeline was supposed to pass through over 340 water bodies that don't dry up and could have caused pollution in the Ogallala Aquifer, the primary source of drinking water for millions in the US. The pipeline also endangered Nebraska's Sand Hills, the largest remaining natural habitat in the Great Plains ecosystem.
Keystone XL can potentially increase the value of tar sands oil by creating a pathway to the Gulf Coast. Companies that could profit from this include Canada's Suncor Energy Inc. and Canadian Natural Resources Ltd., as well as Texas-based Exxon Mobil Corp., which Secretary of State Rex Tillerson previously headed.
According to the State Department, Keystone XL's tar sand production, refining, and combustion would generate 147 to 168 million metric tons of carbon dioxide annually. This is equivalent to the emissions from 35.5 million cars.
