Misunderstood Keystone XL a Reminder of the Importance of Critical Infrastructure

Mark Green
Posted March 11, 2022

More than a year after its cancellation by President Biden on his first day in office, the Keystone XL crude oil pipeline remains a flashpoint in a larger public debate over the impacts of his administration’s policies – on American energy security, consumer costs and even the Russia-Ukraine war.

Of course, Keystone XL no longer is a viable project; builder TC Energy moved on from it months ago, confirming its termination in June 2021. Yet, as was true when Keystone XL still was on the drawing board and awaiting government approvals, misinformation about it has flowed freely. Let’s take a look at some examples.

KXL would have had no impact on the current energy crisis

U.S. Energy Secretary Jennifer Granholm downplayed KXL’s importance to the overall U.S. energy picture in an interview with CNBC this week, saying the pipeline wouldn’t have increased production and wouldn’t have been completed by now. Granholm called KXL “just a talking point.” White House Press Secretary Jen Psaki has been similarly dismissive, saying last week that KXL was years away from having an impact and on Wednesday calling the pipeline “just a delivery mechanism” and not an “oil field.”

Fact: The Keystone Pipeline System was over half complete. At the time the presidential cross-border permit was revoked, construction of the 1,120-mile Keystone XL segment was on track to be completed in 2022, with operations starting in early 2023.

Fact: Keystone XL would have delivered an additional 830,000 barrels of oil from Canada, our neighbor and trusted ally – not to be confused with some of the regimes the administration has been asking to increase their production.

Analysis: Both Granholm and Psaki overlook the importance of a major piece of energy infrastructure like KXL to American energy security – and the unhelpful signal KXL’s cancellation sent to North American energy producers and consumers.

Energy supply and demand require forward thinking. Oil, natural gas and pipelines often take years of planning and investment to come online. Indeed, Keystone XL was proposed during the Obama administration – and there’s a valid argument that if the pipeline had been properly evaluated only on its merits, it already would be bringing significant volumes of oil to U.S. refiners.

Overall, it’s misguided to assess energy sources and delivery systems against the backdrop of an ongoing emergency. That’s certainly not the way the administration’s goals for renewable energy, still years in the future, are being judged.

Properly executed planning and oversight reduces the likelihood of regretting, during an emergency, that other energy options were available.

Keystone XL oil would be solely for export

Exporting American energy to allies abroad is critical for U.S. interests, including national security and trade. Even so, during Keystone XL’s tortuous journey the past decade, its critics claimed the oil coming through the pipeline would be exported, denying Americans the oil’s energy benefits.

Fact: KXL was planned to connect the world’s third-largest oil reserve in Canada with U.S. Gulf Coast refineries that were configured to process heavier grades of crude like those from Alberta. There’s no evidence KXL crude would have been exported.

Fact: Those U.S. refineries on the Gulf that would have taken oil delivered by KXL still import waterborne heavy and medium crude to meet their demand requirements. KXL would have displaced other crudes imported from OPEC+ and Mexico.

Analysis: KXL was a potential win-win for the U.S. and Canada. Certain U.S. refineries are set up to process heavier crudes, and Canada had ample supplies of it. The cross-border trade would have benefited both countries in terms of jobs and economic growth.

Canadian crude has a large carbon footprint

Fact: Producers in Canada have made significant strides in reducing the carbon footprint of their oil. So much so that Canadian crude is on par with most crude varieties around the world.

Fact: KXL was being built to the highest industry standards, with cutting-edge technologies to ensure that it would have been the safest pipeline ever built.

Fact: The U.S. State Department, which conducted multiple reviews of KXL, said the project wouldn’t significantly impact climate or the environment.

Keystone XL could be built if the Biden administration issues a new presidential permit

Fact: Revocation of the president permit last January triggered the cancellation of other federal, state and local permits to build the pipeline.

Fact: After the president’s decision, TC Energy conducted a review of its options and terminated the project.

Fact: Both TC Energy and the Alberta provincial government filed claims for compensation against the U.S. under the North American Free Trade Agreement.

The administration’s decision last year to cancel the Keystone XL pipeline – the last punt in an unfortunate game of political football – was a misguided setback for American energy. Today, KXL represents a series of missed opportunities: to ensure additional supplies of reliable Canadian oil to U.S. refiners, to realize benefits of North American energy trade, to strengthen the energy relationship between the U.S. and Canada, to create jobs and spur economic growth and to be a factor in times of global disruption, such as the current Russian war in Ukraine.

Current misstatements about Keystone XL reemphasize how flawed the decision was to cancel it – an unforced error and a setback in the effort to keep America energy secure. The KXL story also is a lesson, that America needs more energy infrastructure, today and in the future, to harness its vast energy resources and efficiently and safely deliver energy to homes and businesses across the country.