Keystone Pipeline

Keystone Pipeline (Finished Phase 1)
Location
Country	Canada United States
From	Hardisty, Alberta
Passes through	Regina, Saskatchewan Steele City, Nebraska
To	Wood River, Illinois Patoka, Illinois (end)
General information
Type	Crude oil
Owner	TransCanada
Construction started	2008
Commissioned	June 2010
Technical information
Length	3,456 km (2,147 mi)
Maximum discharge	0.59 million barrels per day (~2.9×10^7 t/a)
Diameter	30 in (762 mm)
No. of pumping stations	39

Cushing Extension (Finished Phase 2)
Location
Country	United States
From	Steele City, Nebraska
To	Cushing, Oklahoma
General information
Type	Crude oil
Commissioned	February 2011
Technical information
Length	480 km (300 mi)
Diameter	36 in (914 mm)
No. of pumping stations	4

Gulf Coast Expansion (XL) (Proposed Phase 3)
Location
Country	United States
From	Cushing, Oklahoma
To	Port Arthur, Texas Houston, Texas
General information
Type	Crude oil
Expected	Unknown
Technical information
Length	700 km (430 mi)
Diameter	36 in (914 mm)

Steele City Expansion (XL) (Proposed Phase 4)
Location
Country	Canada United States
From	Hardisty, Alberta
Passes through	Baker, Montana
To	Steele City, Nebraska
General information
Type	Crude oil
Expected	Unknown
Technical information
Length	526 km (327 mi)
Diameter	36 in (914 mm)

The Keystone Pipeline System is a pipeline system to transport synthetic crude oil and diluted bitumen ("dilbit") from the Athabasca Oil Sands in northeastern Alberta, Canada to multiple destinations in the United States, which include refineries in Illinois, Cushing oil distribution hub in Oklahoma, and proposed connections to refineries along the Gulf Coast of Texas. It consists of the operational "Keystone Pipeline" (Phase 1) and "Keystone-Cushing Extension" (Phase 2), and two proposed Keystone XL pipeline expansion segments. After the Keystone XL pipeline segments are completed, American crude oil would enter the XL pipelines at Baker, Montana and Cushing, Oklahoma.

The Keystone XL has faced lawsuits from oil refineries and criticism from environmentalists and some members of the United States Congress. The U.S. Department of State in 2010 extended the deadline for federal agencies to decide if the pipeline is in the national interest, and in November, 2011, President Obama postponed the decision until 2013. On November 30, Senate Republicans introduced legislation aimed at forcing the Obama administration to approve the Keystone XL pipeline within 60 days, unless the president declares the project is not in the national interest.

History

Keystone Pipeline

TransCanada Corporation proposed the project on February 9, 2005. In October 2007, the Communications, Energy and Paperworkers Union of Canada asked the Canadian federal government to block regulatory approvals for the pipeline, with union president Dave Coles stating that 'the Keystone pipeline will exclusively serve US markets, create permanent employment for very few Canadians, reduce our energy security, and hinder investment and job creation in the Canadian energy sector'. However, the National Energy Board of Canada approved the construction of the Canadian section of the pipeline, including converting a portion of TransCanada's Canadian Mainline gas pipeline to crude oil pipeline, on September 21, 2007. On March 17, 2008, the U.S. Department of State issued a Presidential Permit authorizing the construction, maintenance and operation of facilities at the United States and Canada border.

On January 22, 2008, ConocoPhillips acquired a 50% stake in the project. However, on June 17, 2009, TransCanada agreed that they would buy out ConocoPhillips' share in the project and revert to being the sole owner. It took TransCanada more than two years to acquire all the necessary state and federal permits for the pipeline. Construction took another two years. The pipeline became operational in June 2010.

Keystone XL

The Keystone XL extension was proposed in 2008. The application was filed in the beginning of 2009 and the National Energy Board of Canada started hearings in September 2009. It was approved by the National Energy Board on March 11, 2010. The South Dakota Public Utilities Commission granted a permit on February 19, 2010.

The pipeline, however, has faced strong opposition from the environmental community. In its March 2010 report, the Natural Resources Defense Council stated that "the Keystone XL Pipeline undermines the U.S. commitment to a clean energy economy," instead delivering dirty fuel from oil sands at high costs. On June 23, 2010, 50 Democrats in Congress spoke out against the Keystone XL pipeline. In their letter to Secretary of State Hillary Clinton, they warned that "building this pipeline has the potential to undermine America's clean energy future and international leadership on climate change." On June 30, 2010, TransCanada replied by saying that development of oil sands will expand regardless of whether the crude oil is exported to the United States or alternatively to Asian markets through the Enbridge Northern Gateway Pipelines or the Kinder Morgan's Trans-Mountain line.

On July 6, 2010, House Energy and Commerce Committee chairman Henry Waxman urged the State Department to block Keystone XL, saying in a letter to the department that 'this pipeline is a multi-billion dollar investment to expand our reliance on the dirtiest source of transportation fuel currently available'. On July 21, 2010, the Environmental Protection Agency said the draft environmental impact study for Keystone XL was inadequate and should be revised, indicating that the State Department's original report was "unduly narrow" because it didn't fully look at oil spill response plans, safety issues and greenhouse gas concerns. The final environmental impact report was released on August 26, 2011. It stated that the pipeline would pose "no significant impacts" to most resources if environmental protection measures are followed, but it would present "significant adverse effects to certain cultural resources." However, summer/fall, 2011, protests brought the challenge to the White House, leading ultimately to the President's November, 2011 postponement of the decision until 2013.

On November 10, 2011, TransCanada stated they have spoken with the U.S. Department of State and will have conversations to discuss next steps. TransCanada pointed out fourteen different routes for Keystone XL were being studied, eight that impacted Nebraska. They included one potential alternative route in Nebraska that would have avoided the entire Sandhills region and Ogallala aquifer and six alternatives that would have reduced pipeline mileage crossing the Sandhills or the aquifer. On November 22, 2011, the governor of Nebraska signed two bills that enacted a compromise agreed upon with the pipeline builder to move the route, and approved up to US$2 million in state funding for an environmental study. On November 30, 2011, a group of leading Republican senators introduced legislation aimed at forcing the Obama administration to make a decision on the Keystone XL pipeline within 60 days. On December 13, 2011, the Republicans attached this provision on a bill that also would extend the payroll tax cut set to expire at the end of the year, despite Obama threatening to veto it.

In December 2011, Congress voted to give the Obama Administration a 60-day deadline to make a decision on TransCanada's application for the construction of the Keystone XL Pipeline. On January 18, 2012, President Obama rejected the application, stating that the deadline for the decision had "prevented a full assessment of the pipeline's impact." Legislation proposed by congressman Lee Terry would place the Federal Energy Regulatory Commission in authority over the pipeline and require the commission to approve a permit for construction within 30 days of receiving a new application. Following the rejection by Obama, a hearing by the House Energy and Commerce Committee’s energy and power subcommittee was planned for January 25, to consider that bill.

Route

Phase 1

The 3,456 kilometres (2,147 mi) long pipeline runs from Hardisty, Alberta to the United States refineries in Wood River, Illinois and Patoka, Illinois. The Canadian section involves approximately 864 kilometres (537 mi) of pipeline converted from the Canadian Mainline natural gas pipeline and 373 kilometres (232 mi) of new pipeline, pump stations and terminal facilities at Hardisty, Alberta. The United States section is 2,219 kilometres (1,379 mi) long. It runs through Buchanan, Clinton and Caldwell counties in Missouri, and Nemaha, Brown and Doniphan counties in Kansas. Phase 1 went online in June 2010.

Phase 2

From Steele City, Nebraska, the 291 miles (468 km) Keystone-Cushing pipeline was routed through Kansas to the oil hub and tank farm in Cushing, Oklahoma in 2010 and went online in February 2011.

Phase 3

This phase, known as Cushing MarketLink, is part of the Keystone XL pipeline. This proposed phase would start from Cushing, Oklahoma where domestic oil would be added to the pipeline, then it would expand 435 miles (700 km) to a delivery point near terminals in Nederland, Texas to serve the Port Arthur, Texas marketplace. Also proposed is an approximate 47 miles (76 km) previous pipeline to transport crude oil from the pipeline in Liberty County, Texas to the Houston, Texas area.

Domestic oil producers in the USA are pushing for this phase so the glut of oil can be distributed out of the large oil tank farms and distribution center in Cushing, Oklahoma. On November 16, 2011, Enbridge announced it is buying ConocoPhillips' 50% interest in the Seaway pipeline that flows from the Gulf of Mexico to the Cushing hub. In cooperation with Enterprise Products Partners LP it plans to reverse the Seaway pipeline so that an oversupply of oil at Cushing could reach the Gulf. This project will replace the earlier proposed alternative Wrangler pipeline project from Cushing to the Gulf Coast. However, according to industries, the Seaway line alone is not enough for oil transportation to the Gulf Coast.

Phase 4

This phase is part of the Keystone XL pipeline and would start from the same area in Alberta, Canada as the main pipeline. The Canadian section would consist of 529 kilometres (329 mi) of new pipeline. It would enter the United States at Morgan, Montana and travel through Baker, Montana where domestic oil would be added to the pipeline, then it would travel through South Dakota and Nebraska, where it would join the existing Keystone pipelines at Steele City, Nebraska. This phase has generated the greatest controversy because of its routing over the top of the Ogallala Aquifer in Nebraska.

Truck hauling 36-Inch pipe to build Keystone-Cushing Pipeline (Phase 2) south-east of Peabody, Kansas, 2010

Description

The initial capacity of Keystone Pipeline is 435,000 barrels per day (69,200 m³/d) which will be increased up to 590,000 barrels per day (94,000 m³/d). The diameter of the pipeline is 36 inches (910 mm). It will have a minimum ground cover of 4 feet (1.2 m). The Keystone XL will add 510,000 barrels per day (81,000 m³/d) increasing the total capacity up to 1.1 million barrels per day (170×10^³ m³/d).

The original Keystone Pipeline cost US$5.2 billion with the Keystone XL expansion slated to cost approximately US$7 billion. The Keystone XL is expected to be completed by 2012–2013.

Partnership

The project was originally developed as a partnership between TransCanada and ConocoPhillips. Certain parties who have agreed to make volume commitments to the Keystone expansion have an option to acquire up to a combined 15% equity ownership. One of such companies is Valero Energy Corporation. On August 12, 2009, however, TransCanada received regulatory approval to purchase ConocoPhillips' interest in the project and is now the sole owner of the Keystone Pipeline System.

Lawsuits

In September 2009, independent refiner CVR sued TransCanada's for Keystone Pipeline tolls seeking $250 million damage compensation or release from transportation agreements. CVR alleged that the final tolls for the Canadian segment of the pipeline were 146% higher than initially presented, while the tolls for the US segment were 92% higher. In April 2010, three smaller refineries sued TransCanada to break Keystone transportation contracts, saying the new pipeline has been beset with cost overruns.

In October 2009, a suit was filed by the Natural Resources Defense Council that challenged the pipeline on the grounds that its permit was based on a deficient environmental impact statement. The suit was thrown out by a federal judge on procedural grounds, ruling that the NRDC lacked the authority to bring it.

Keystone XL controversies

Environmental issues

See also: Environmental risks of the Keystone XL pipeline

Some environmental groups, citizens, and politicians have raised concerns about the potential impacts of the Keystone XL extension. One concern is that the pipeline could pollute air and water supplies and harm migratory birds and other wildlife. Its original route crosses the Sandhills in Nebraska, the large wetland ecosystem, and the Ogallala Aquifer, one of the largest reserves of fresh water in the world. The Ogallala Aquifer spans eight states, provides drinking water for two million people, and supports $20 billion in agriculture. A major leak could ruin drinking water and devastate the mid-western U.S. economy. After opposition for laying the pipeline in this area, TransCanada agreed to change the route and skip the Sand Hills.

Portions of the pipeline will also cross an active seismic zone that had a 4.3 magnitude earthquake as recently as 2002. Opponents claim that TransCanada applied to the U.S. government to use thinner steel and pump at higher pressures than normal. In October 2011, The New York Times questioned the impartiality of the environmental analysis of the pipeline done by Cardno Entrix, an environmental contractor based in Houston. The study found that the pipeline would have`limited adverse environmental impacts, but was authored by a firm that had "previously worked on projects with TransCanada and describes the pipeline company as a 'major client' in its marketing materials." According to The New York Times, legal experts questioned whether the US government was "flouting the intent" of the Federal National Environmental Policy Act which "[was] meant to ensure an impartial environmental analysis of major projects." The report prompted 14 senators and congressmen to ask the State Department inspector general on October 26, 2011 "to investigate whether conflicts of interest tainted the process" for reviewing environmental impact.

TransCanada CEO Russ Girling has described the Keystone Pipeline as "routine," noting that TransCanada has been building similar pipelines in North America for half a century and that there are 200,000 miles (320,000 km) of similar oil pipelines in the United States today. He also stated that the Keystone Pipeline will include 57 improvements above standard requirements demanded by U.S. regulators so far, making it "the safest pipeline ever built." Rep. Ed Whitfield, a member of the House Committee on Energy and Commerce concurred, saying "this is the most technologically advanced and safest pipeline ever proposed." However, while TransCanada had asserted that a set of 57 conditions will ensure Keystone XL's safe operation, some investigative journalists asserted that all but a few of these conditions simply restate current minimum standards.

Some environmental groups, such as the Natural Resources Defense Council (NRDC), oppose the project due to usage of crude from oil sands and emissions of greenhouse gases. In December, 2010, No Tar Sands Oil campaign, sponsored by action groups including Corporate Ethics International, NRDC, Sierra Club, National Wildlife Federation, Friends of the Earth, Greenpeace, and Rainforest Action Network, was launched. These arguments were questioned by the National Post columnist Diane Francis who argues that opposition to the pipeline "makes no sense because emissions from the oil sands are a fraction of the emissions from coal and equivalent to California heavy crude oils or ethanol" and questioned why "None of these has been getting the same attention as the oil sands and this pipeline." In a speech to the Canadian Club in Toronto on September 23, 2011, Joe Oliver, Canada's Minister of Natural Resources, sharply criticized opponents of oil sands development and the pipeline, arguing that:

• The total area that has been affected by surface mining represents only 0.1% of Canada's boreal forest.
• The oil sands account for about 0.1% of global greenhouse-gas emissions.
• Electricity plants powered by coal in the U.S. generate almost 40 times more greenhouse-gas emissions than Canada's oil sands (the coal-fired electricity plants in the State of Wisconsin alone produce the equivalent of the entire GHG emissions of the oil sands).
• California bitumen is more GHG-intensive than the oil sands.

Oliver criticized opponents of the pipeline, stating that all of the above facts are ignored by "celebrity protestors."

Political issues

In February 2011, environmental journalist David Sassoon of Inside Climate News reported that Koch Industries were poised to be "big winners" from the pipeline. In May 2011, Congressmen Waxman and Rush wrote a letter to the Energy and Commerce Committee which cited the Reuters story, and which urged the Committee to request documents from Koch Industries which relate to the Keystone XL pipeline.

Landowners in the path of the pipeline have complained about threats by TransCanada to confiscate private land and lawsuits to allow the "pipeline on their property even though the controversial project has yet to receive federal approval." As of 17 October 2011, TransCanada had "34 eminent domain actions against landowners in Texas" and "22 in South Dakota." Some of those landowners gave testimony for a House Energy and Commerce Committee hearing in May 2011.

Commentator Bill Mann has linked the Keystone postponement to the Michigan Senate's rejection of Canadian funding for the proposed Detroit River International Crossing and to other recent instances of "U.S. government actions (and inactions) that show little concern about Canadian concerns". Mann drew attention to a Macleans' article sub-titled "we used to be friends" about U.S./Canada relations after President Obama had "insulted Canada (yet again)" over the pipeline.

Geopolitical issues

Proponents for the Keystone XL pipeline argue that it would allow the U.S. to increase its energy security and reduce its dependence on foreign oil. TransCanada CEO Russ Girling have argued that "the U.S. needs 10 million barrels a day of imported oil" and the debate over the proposed pipeline "is not a debate of oil versus alternative energy. This is a debate about whether you want to get your oil from Canada or Venezuela or Nigeria." Girling has also argued that if Canadian oil doesn't reach the Gulf through an environmentally friendly buried pipeline, that the alternative is oil that will be brought in by tanker, a mode of transportation that produces higher greenhouse-gas emissions and that puts the environment at greater risk. Diane Francis has argued that much of the opposition to the oil sands actually comes from foreign countries such as Nigeria, Venezuela, and Saudi Arabia, all of whom supply oil to the United States and who could be affected if the price of oil drops due to the new availability of oil from the pipeline. She cited as an example a recent effort by Saudi Arabia to stop television commercials by a pro-oil sands NGO called EthicalOil.org.

However, in 2011 it was reported that the U.S., for the first time since 1949, had become a net fuel exporter, and fuels (including gasoline, diesel, and jet fuel) were the top export. This leads many to question the validity of the energy security argument, since it seems that additional Alberta tar sands oil processed in the Gulf region is likely to be exported to foreign nations with ease through the Gulf of Mexico. As stated in a USA Today article, "...analysts say those [overseas fuel] sales are likely generating higher profits per gallon than they would have generated in the U.S. Otherwise, they wouldn't occur."

Economic issues

In response to negative publicity, president and CEO of TransCanada Russ Girling touted the positive impact of the project by "putting 20,000 US workers to work and spending $7 billion stimulating the US economy." This has been disputed by an independent study conducted by the Cornell ILR Global Labor Institute which found that while the Keystone XL would result in 2,500 to 4,650 temporary construction jobs, this impact will be reduced by higher oil prices in the Midwest which will likely reduce national employment.

Analysts believe that including the Alberta Clipper pipeline owned by TransCanada's competitor Enbridge, there is an extensive overcapacity of oil pipelines from Canada and after completion of the Keystone XL line oil pipelines to the U.S. will run nearly half-empty.

Due to an exemption the state gave TransCanada, the local authorities would lose $50 million public revenue from property taxes for a decade.

2011 protests and postponement

Demonstration against the Keystone XL extension, White House, August 2011.

Starting in spring, 2011, environmental and global warming activist Bill McKibben took the question of the pipeline to NASA scientist James Hansen, who told McKibben the pipeline would be "game over for the planet". McKibben and other activists moved toward a new oppositional approach which coalesced in August with over 1000 nonviolent arrests at the White House. They promised to continue to challenge President Obama to stand by his 2008 call to "be the generation that finally frees America from the tyranny of oil" as he entered the 2012 reelection campaign. A relatively broad coalition came together, including the Republican governor Dave Heineman and senators Ben Nelson (D) and Mike Johanns (R) from Nebraska, and some Democratic funders like Susie Tompkins Buell.

On November 7, 2011, several thousand environmentalist supporters, some shouldering a long black inflatable replica of a pipeline, formed a human chain around the White House to try to convince Barack Obama to block the controversial Keystone XL project. Organiser Bill McKibben said, "this has become not only the biggest environmental flash point in many, many years, but maybe the issue in recent times in the Obama administration when he's been most directly confronted by people in the street. In this case, people willing, hopeful, almost dying for him to be the Barack Obama of 2008."

On November 10, 2011 four days after twelve thousand people encircled the White House, the culmination of months of protests, President Obama announced "the decision on the pipeline permit would be delayed until at least 2013, pending further environmental review". TransCanada stated they have been in conversation with the U.S. Department of State (DOS) and fourteen different routes were being studied, including eight impacting Nebraska. They included one potential alternative route in Nebraska that would have avoided the entire Sandhills region and Ogallala aquifer and six alternatives that would have reduced pipeline mileage crossing the Sandhills or the aquifer.

External links

• Keystone Pipeline Project, TransCanada
• Keystone Pipeline System, TransCanada
• Keystone Pipeline Reports and Publications, TransCanada
• Detailed Keystone System Map (3MB PDF), TransCanada
• Keystone XL, DirtyOilSands.org
• Study on Impact of Social Media on Keystone XL By MediaBadger