10 Things You Should Know about the Keystone XL Pipeline

The Keystone XL Pipeline was designed to bring Canadian crude oil down to the large U.S. refining markets along the Gulf Coast. The project drew intense political opposition from environmental groups over the development of oil sands, while supporters touted its energy security benefits, including much-needed pipeline capacity.

In January 2012, the Obama administration denied the project’s necessary permit to cross the international border citing arbitrary deadlines set by Congress to force a decision. The company backing Keystone XL now has decided to break up the project in two phases, which will allow domestic construction to proceed while it reapplies for a permit needed to cross the international border.

1. Jobs

While opponents and supporters hotly debate total job numbers, an independent study conducted on behalf of project owner TransCanada estimated that Keystone XL would create 20,000 direct jobs and, potentially, 120,000 indirect jobs. The State Department has estimated that approximately 5,000 construction jobs would be created over a two-year period to construct the pipeline.

2. Bottlenecks

The 1,700-mile project is designed to bring 830,000 barrels per day of Canadian heavy crude oil to Gulf Coast refineries and alleviate the glut of crude oil supplies at Cushing, Okla., the storage hub, origination and terminus of our nation’s oil pipeline network. Historically, the oil pipeline network is designed to run from Gulf Coast refineries in the South to Northern markets. Declining imports of heavy crude oil from Venezuela and Mexico, and a lack of pipeline capacity, have created bottlenecks at Cushing that have ripple effects across energy markets.

3. Siting

Before the permit debate, few knew the State Department was in charge of the siting process for oil pipelines crossing international borders. A 2004 executive order directs the State Department to review all permit applications for oil pipelines and consult with at least eight federal agencies to determine if a project is in the national interest. Typically, interstate oil pipeline projects are sited on an ad hoc basis in each state.

4. Production

The Keystone XL pipeline is expected to transport 100,000 barrels of crude oil from Montana and North Dakota each day.

5. Previous Approval

The Obama administration approved two oil sands pipeline projects before the Keystone XL decision. Alberta Clipper was approved in 27 months in 2009 and the first phase of the Keystone pipeline was approved in 23 months in 2010.

6. Oil Imports

Canada is the largest supplier of imported oil to U.S. markets, providing 25 percent of the nation’s overall imports. According to a study commissioned for the U.S. Department of Energy, the Keystone project could reduce imports from the Middle East and Venezuela by 40 percent.

7. Oil Sands

The Canadian oil sands, from which the pipeline would originate, are a mixture of sands, clay, water and bitumen, which is heavy, thick oil that must be heated or diluted before pumping it into a pipeline. Oil sands are recovered in two ways: surface mining or in situ—Latin for “in place”—drilling that injects heat into the formation and sends the bitumen into wells. Canada has 174 billion barrels in total reserves, second only to Saudi Arabia, and 97 percent of those reserves are oil sands.

8. Greenhous Gas Emissions

Environmental advocates are strongly opposed to oil sands development because of the large amount of energy used during the extraction process that increases greenhouse gas emissions. Last summer, Environment Canada—the nation’s environmental regulator—estimated that greenhouse gas emissions from oil sands operations would triple from 33 million tons in 2005 to 101 million tons by 2020. Oil sands production now makes up about 6.5 percent of Canada’s overall greenhouse gas emissions.

9. The Sandhills

This fragile area in Nebraska has an important groundwater resource, the Ogallala Aquifer, which stretches across eight states and where the original route of the Keystone project was planned. Objections by many elected leaders in Nebraska to the proposed route formed the basis of state legislative action to direct the company to reroute the project.

10. Status

The Obama administration originally delayed a final decision on the Keystone project until the first quarter of 2013 based largely on objections raised by Nebraska. This came after more than 40 months of review. Congress included a provision in the payroll tax extension in December 2011 to force a decision on the presidential permit within 60 days. The administration rejected the application due to the short review period. TransCanada resubmitted its application for the project with the State Department for the segment crossing the international border, but the company recently announced its intention to construct a 435-mile leg that will run from Cushing, Okla., to the Gulf Coast, which needs no federal permit. The company expects the entire project to be completed by 2015.

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