Keystone XL - The Facts Remain

Mark Green
Posted November 18, 2014

While the U.S. Senate fell just short of the votes needed to pass legislation advancing the long-delayed Keystone XL pipeline, the issue likely will reach President Obama’s desk when the new Congress is seated in January. API President and CEO Jack Gerard:

“Keystone XL is not going away.  The president will have to deal with it, if not now then next year – when existing bipartisan majority support for Keystone XL in both the House and Senate will only be stronger. We will work with the new Congress to focus on getting this important jobs project approved. We will not give up until the pipeline is built. The significant gains in jobs, economic growth, energy security and national security – which have been firmly established during six years of study – prove beyond any reasonable doubt that Keystone XL is in our national interest. The national interest question is the sole consideration before President Obama, and his failure to answer it is the sole factor standing between Americans and this shovel-ready infrastructure project.”

As the Keystone XL saga continues, opponents continue to offer up a familiar grab bag of myths, half-baked goods and distortions – all designed to keep the pipeline obstructed.  

Nothing new, of course. Keystone XL’s merits have been established over more than six years of close public scrutiny, including five thorough environmental reviews by the U.S. State Department – all of which have similarly concluded that the pipeline would have minimal effect on the environment and that the crude oil it will deliver to the Gulf Coast would have no material impact on U.S. greenhouse gas emissions.

The fact is Keystone XL has been studied, probed, examined, researched and analyzed like no other energy infrastructure project before it. There have been public hearings and hours of congressional debate. Through it all, Keystone XL has maintained strong support from the American people – 60 percent in a new USA Today poll.

So expect the new Senate to put Keystone XL squarely in President Obama’s court. And expect to see a new round of old talking points from those who share much of the responsibility for politicizing Keystone XL, helping to delay its approval and along with it jobs, economic growth and greater U.S. energy security.

Facts and myths about Keystone XL:

Job Creation

What we know: The State Department’s most recent review estimated that Keystone XL construction would create 42,100 jobs – direct jobs, indirect jobs and induced jobs – in other words, the same job-creation modeling used by the White House to build support for its 2009 stimulus package. State also said the project would put $2 billion in workers’ pockets. That’s great news for the construction sector and all of the supporting and associated sectors that would benefit from a project as large as Keystone XL.

Myth: Keystone creates only temporary jobs. Building things for a living also means finishing them and moving on to the next project. In that sense, every construction job is temporary – and our economy depends on them.

President Obama (himself the holder of a temporary job) was in favor of these jobs when he rolled out his 2009 stimulus package, and he has been for them when talking about building roads, bridges and other infrastructure projects.

The men and women of the construction trades are passionate about the opportunities that would come their way by building the Keystone XL pipeline. Laborers International Union of North America President Terry O’Sullivan earlier this year:

“To the tens of thousands of men and women in the construction industry this isn’t just a pipeline, it’s their mortgages, college tuitions, car payments and food on the table. And for our country this isn’t just a pipeline. It’s a lifeline to family security, energy security and national security.”

Building and Construction Trades Department President Sean McGarvey:

“There is every reason in the world to approve this project. The Keystone pipeline is critical to our domestic energy industry. And our domestic energy is proving to be critical to the re-awakening of the American economy. This has been the most scrutinized infrastructure project, perhaps, in our nation's history. And at every juncture, concerns about safety and the environment have been met and satisfied. It is now time to build the Keystone XL pipeline and put thousands of Americans back to work.”

Energy and Security

What we know: The Keystone XL would be able to deliver 830,000 barrels of oil per day from Canada and the U.S. Bakken region to U.S. refineries. Full development of Canadian oil sands, in which Keystone XL would play a significant role, could see 100 percent of the United States’ liquid fuel needs met domestically and from Canada in about 10 years.

Myth: Keystone XL will be an export pipeline. President Obama repeated this last week, perhaps not realizing that his own State Department has dismissed the claim (Section 1.4.6.2):

Export “appears unlikely to be economically justified for any significant durable trade given transport costs and market conditions. Once (oil sands) crude oil arrives at the Gulf Coast, Gulf Coast refiners have a significant competitive advantage in processing it compared to foreign refiners because the foreign refiners would have to incur additional transportation charges to have the crude oil delivered from the Gulf Coast to their location.”

Also:

“Gulf Coast refiners’ traditional sources of heavy crudes, particularly Mexico and Venezuela, are declining and are expected to continue to decline. This results in a situation where the refiners have significant incentive to obtain heavy crude from the oil sands. … Gulf Coast refineries have the potential to absorb volumes of (oil sands) crude that go well beyond those that would be delivered via the proposed Project. On this basis, the likelihood that (oil sands) crudes will be exported in volume from the Gulf Coast is considered low.”

Environment

What we know: The State Department has found that Keystone XL would have negligible effect on rate of oil sands development and therefore negligible effect on the emissions of greenhouse gases (GHG). Other facts:

• Since 1990, GHG emissions associated with every barrel of oil sands crude produced have been reduced by 28 percent.
• Canada accounts for just 2 percent of global GHG emissions, with oil sands accounting for a small fraction of global GHG emissions.
• Keystone XL now has cleared five separate environmental assessments by the State Department over six years of study.

Myths: Oil sands is the dirtiest oil on the planet, more corrosive than other crudes and that oil sands delivered by Keystone XL would threaten water supplies. Actually, according to IHS, oil sands crude is comparable to other crudes refined in the U.S. As the chart below shows, GHG emissions of Venezuelan crude, the most likely alternative to oil sands, are in the same range as oil sands:

As for corrosion potential, a report by the National Academy of Sciences (NAS) found that diluted bitumen is no more corrosive than any other kind of crude oil and therefore not more likely to spill from a pipeline. There are more than 20,000 miles of oil and hazardous materials pipelines under aquifers in the U.S. Keystone XL will exceed federal pipeline safety requirements by adopting 59 extra measures. The State Department found that the project would “have a degree of safety over any other.”

Earlier this month, the International Energy Agency’s chief economist, Fatih Birol, talked to The Globe and Mail about the importance of Canadian oil sands in a global energy context while downplaying its environmental impacts:

“We expect Canadian production will be a very important cornerstone of the security of global oil markets. … The additional contribution [of greenhouse gases] coming from the oil sands in Canada, compared to the same amount of oil from Middle East or Brazil or central Asia, is completely peanuts. It is less than one day of CO2 emissions of China – less than one day; it’s a couple of hours.”

As we said above, the Keystone XL still appears headed for President Obama’s desk. The decision is long overdue – the reason Congress now is involved. On his own the president could approve the pipeline’s cross-border permit. He’s done it before – in 2009, when his administration took less than two years to approve the Alberta Clipper oil sands pipeline that crosses the Canadian border:

“Approval of the permit sends a positive economic signal, in a difficult economic period, about the future reliability and availability of a portion of United States’ energy imports, and in the immediate term, this shovel-ready project will provide construction jobs for workers in the United States.”

Sound analysis more than five years ago is still sound reasoning applied to the Keystone XL pipeline.