Keystone XL Pipeline Analysis and Timeline

by Riley Cohen

Abstract:

For my final project, I have decided to take up the issue of oil pipelines. My interest in pipelines has developed from first semester freshman year, when I took a class on economics. As part of the class, we looked at the economic affects of oil and oil pipelines. Although I found the economic analysis of pipelines very interesting, I couldn’t help but think that there was something more to oil than just dollars. This is what convinced me to analyze the tar sands for my midterm project.

I decided to take a look at relevant pipeline debates, and I was both happy and sad to see that the Keystone XL pipeline was back in the news. Happy because I get to write my final project on a relevant topic, but sad because this issue still hasn’t ben resolved.

I also feel a personal connection to the Keystone XL pipeline. I am a Canadian student studying abroad in the US. I don’t always feel a connection to US politics, but since the pipeline, like myself, is coming down from the north, in this situation I feel a little responsible.

In order to include some creative aspect into this project, I have decided to take all of the information that I will learn throughout the course of this project and use it to make predictions about two possible futures: one where a pipeline is constructed and one where it is not. This will be in the form of a timeline.

Introduction:

The debate around the construction of the Keystone XL pipeline has been recently brought to the forefront of the media’s attention once again. This is because President Trump has signed executive orders that are supposed to expedite the construction of two major pipelines, namely the Dakota Access Pipeline and the Keystone XL pipeline. Many economic, environmental, and social consequences will occur if these pipelines are constructed. Therefore, it is worth the effort of examining these facets of the issue, providing us with enough information to make an informed decision as to whether this pipeline is truly in our national interest.

Throughout this paper, I will focus on the Keystone XL pipeline, for reasons stated in the abstract. Firstly, I will examine the history of this pipeline, then its economic impacts, environmental concerns, and effects on native rights. All of this information will be consolidated into a short timeline of events, and I will do my best to predict the outcomes of two possible futures: one where the pipeline is constructed and the other without the pipeline.

History of the Pipeline and Its Current State

Overview of Canadian Oil Sands:

It is estimated that the Albertan tar sands hold about 166 billion barrels of crude oil. This makes the tar sands the third largest proven reserve of oil in the world.[i] However, the tar sands are unique in the sense that all of its oil is infused in a tar-like substance called bitumen. This makes it extremely difficult, environmentally impactful, and costly to extract. Unsurprisingly, these facts have not prevented humans from attempting to squeeze every last drop out of the tar sands.

Currently, about 700,000 barrels of oil a day are extracted from the oil sands. However, many companies have demonstrated interest in increasing their production to match the worlds growing demand for oil. After consolidating many major companies’ plans, it is estimated that production could reach 5,000,000 barrels over the next twenty years.[ii] Although Trudeau’s government has raised concerns over growing over-dependent on oil and introduced at least interest in phasing-out the tar sands, provincial autonomy and special interest groups raise serious doubts on whether this is actually possible.[iii] In fact, some of Trudeau’s policies seem to contradict his goal of phasing out Canadian oil dependence. Specifically, Trudeau’s willingness to revive the Keystone XL pipeline reveals his desire to further exploit Canada’s oil reservoirs.[iv]

 

Introduction to the Keystone XL Pipeline:

Currently, the existing Keystone pipeline connects Alberta to Illinois and Texas, delivering about 550,000 barrels of oil a day. The proposed extension, which has been called Keystone XL, takes a more direct root to Texas and has the capability to deliver about 830,000 barrels of oil a day, seriously increasing the flow of oil from Canada into the US.[v]

The Keystone XL pipeline extension was first proposed in 2008 and has ever since has become a contentious topic. Many have claimed that the pipeline would reduce North America’s dependency on Middle Eastern oil, increase the Gross Domestic Product (GDP) of Canada and the US, and generate around 28,000 new construction jobs.[vi] However, despite these supposed economic benefits, which will be discussed below, in 2015 President Barrack Obama refused, mostly on the basis of its environmental impacts, to grant the pipeline the permit it needed to proceed with construction. In 2017, President Trump announced his ambition to reverse Obama’s refusal, and the debate surrounding the Keystone XL pipeline was revived.[vii]

There is a lot of work left, including figuring out how President Trump can reverse the Obama administration’s decision and renegotiating terms with private companies, before actual implementation can begin. However, there is a real possibility that this pipeline can be constructed sometime in the near future. Even the majority of the American population, according ABC news poll, supports constructing the Keystone XL.[viii]

Economic Impact:

 

Impact on Canadian Economy:

The Keystone XL Pipeline will essentially allow Canada to expand its production and exportation of oil to meet the production predictions outlined above (5,000,000 barrels/day). This will directly increase Canada’s GDP, increasing Canada’s wealth. Remarkably, if the pipeline were to be constructed, 538 billion dollars will be generated for Alberta over the next 25 years, allowing oil companies to significantly increase the amount of workers they employ.[ix]

The reason why oil companies have a vested interest in the constructing the pipeline is because the alternative, namely shipping the oil to Texas via railroad, is about eight dollars per barrel more expensive.[x] Oil prices currently are low, and the high extraction and production cost of oil mined from the tar sands makes it difficult for Canada to compete with other countries that have relatively lower costs. Any decrease in price per barrel will make Canada more competitive on the global scale. Also, having direct access to the largest oil consumer in the world will undoubtedly increase Canada’s exportation of oil.[xi]

Although most of the direct economic benefits will be focused on the province of Alberta, the pipeline also provides economic benefits to other province, specifically those that have strong manufacturing industries. For example, over twenty-five years, Ontario employees alone are expected to receive eleven billion dollars directly from the construction of pipeline and its upkeep.

Impact on American Economy:

Like Canada, America is bound to benefit economically, at least in the short term, from the production of the Keystone XL pipeline. The first direct impact on the US economy would be the creation of jobs. Although this figured is heavily debated, the Financial Post estimates that a total of forty-two thousand jobs will be added to the US economy during the pipeline’s construction. This undoubtedly would be beneficial to Americans. It is important to note, for many reasons, that the pipeline crosses many small rural towns. These towns will see a temporary economic boost, as workers from these towns will be hired and works in general will need places to eat, sleep, and be entertained.[xii]

Furthermore, the United States steel industry will benefit immensely from the construction of the pipeline. President Trump claims that one of the requirements of the construction will be to only use US steel. It is estimated that eight billion dollars will be generated for this industry as a result of the Keystone XL pipeline.[xiii] It is important to note that the American steel industry has been running into trouble recently. Cheep foreign steel has flooded the American market, leaving domestic producers in the dust. Providing American steel makers with such an immense project, especially at a time like this, has the potential of saving the industry, or in the very least, it will thrive in the near future.[xiv]

America also serves to benefit from the flow of oil into the country. In fact, it is estimated that the pipeline could add 3.4 billion dollars to US economic output. The increase of cash should benefit the nation as a whole. Also, a total of 120 million dollars worth of tax at the municipal and state level should be collected.[xv]

One of the major reasons many US politicians claim to support the Keystone XL pipeline is to increase US energy security. Although Canada is responsible for exporting the most oil to the US, much of US oil is still taken from the Middle East.[xvi] There exists a sentiment in America that relationships with some Middle Eastern countries can, at times, be unstable. On the other hand, American and Canadian relations have been strong, and for the most part, Canadian and American interest is aligned. Increasing the amount of oil imports from Canada will decrease the amount of oil imported from countries with uncertain relationships.

 

Economic Detriments:

Although much of the analysis provided above is sound, many economists and environmentalists question whether the net economic impact of the Keystone XL pipeline will be positive. To begin, it is quizzical to prop up the fossil fuel industry when, while the industry has been expanding over the past years, it has been cutting jobs. Between 2005 and 2010, the fossil fuel industry generated profits of 546 billion dollars. However, at the same time, ExxonMobil, Chevron, Shell, and BP cut their American workforce by eleven thousand. There is no guarantee, even with a major increase in profits from the pipeline, that this industry will somehow change its interest in cutting costs, and by extension employees.[xvii]

Another interesting point people raise when discussing the Keystone XL pipeline is that, although the pipeline will increase both Canada and America’s GDP, it will lower their Green GDP. A country’s green GDP doesn’t only include the quantity, in dollars, of its economy. It takes into account how that country treats its environment, thus providing a more comprehensive of a country’s output and effect on the environment it uses to create those outputs. Although it currently difficult to estimate a country’s green GDP, below we will highlight the environmental impacts of the pipeline, which may outweigh the economic benefits outlined above.

Environmental Impact of the Pipeline:

Increase in Tar Sand Oil Production:

The tar sands provide some of the dirtiest oil found on the planet. In fact, GreenPeace estimates that oil procured from Alberta is on average three to four times dirtier than regular crude oil. The Keystone XL pipeline will significantly increase the production of oil in Alberta, which will in turn significantly increase Canada’s contribution to climate change and global warming. In fact, the increase in tar sands production as a result of the Keystone pipeline will be the equivalent of adding 5.6 million more cars to the US.[xviii]

The tar sands also waste an enormous amount of clean water throughout the refining process. To extract one barrel of oil from the bitumen, three barrels of clean water must be contaminated, which has an enormous impact on the environment surrounding production facilities. Furthermore, much of the oil in the tar sands lies beneath immense Boreal forests. These ecosystems have been, and continue to be, destroyed by oil companies. This will only increase as a result of the increase in oil production.[xix]

Lastly, throughout the refining process of bitumen, many by-products are creating that have an immense impact on global warming. These by-products, unfortunately, are not usually included in companies report on their contribution to global warming. However, if we do take these by-products into account, we get a darker picture of the tar sands effect on the planet. For example, the tar sands produce 10 million metric tons of pet coke. Pet coke releases twenty percent more green house gases than oil.[xx]

Impact of Pipeline Construction:

An important economic impact of the Keystone XL pipeline is that, during its construction, it will provide an abundance of temporary jobs for US workers. It is important to consider, however, the effects of the construction of the pipeline on the environment. To begin, the construction of the pipeline itself will force us to consume a great deal fossil fuel, increasing the American carbon footprint. The exact scale of this footprint is hard to measure, but the major increase in production of steel, transportation of materials in general, and landscaping involved speaks for itself.

The also exists an abundance of wildlife throughout the area of the pipeline. This wildlife will undoubtedly be affected by the massive steel structure imposed on their habitat. In fact, it is estimated that roughly 15,550 acres of land will be directly disturbed by the presence of the pipeline, not to mention the hundreds of new roads that would need to be constructed to facilitate its construction. Furthermore, 378 miles of power lines would have to be constructed. This will affect local imperiled birds and bats; specifically, these power lines have the potential of causing the extinction of the whooping crane.[xxi]

 

Effect of Potential Oil Spills:

Even after construction is finished, the pipeline still poses a potential harm to the surrounding environment. This comes in the form of oil spills. The State Department in a conservative estimate predicts that, during the course of its lifetime, the Keystone XL Pipeline will spill up to a hundred times. Since these spills will happen rather frequently, it is worth investigating how they will impact the local environment.[xxii]

We can extrapolate what the effects of the oil spills of the Keystone XL Pipeline would be by taking a look at how the current Keystone has affected its environment. Firstly, it is important to understand how difficult it is for companies to monitor spills. In 2016, Transcanada reported a spill of 187 gallons that actually turned out to be 17,000 gallons. In fact, the spill wasn’t even initially reported by the pipeline’s spill detection system. A passerby happened to see it.[xxiii] Furthermore, oil spills cost companies and the American government massive amounts of money. In 2013, North Dakota had an oil spill of over 175,000 gallons of oil. Luckily, there wasn’t a major impact on animals in the surrounding area. However, the cost of removing the oil and repairing the land that was basically destroyed due to this spill tallied up to 60 million dollars, and the grounds are still being cleaned.[xxiv]

These spills have an almost irreversible effect on the surrounding environment. Also, one of the areas that this pipeline crosses is the Nebraska Ogallala Aquifer, which provides drinking water for millions and supplies thirty percent of America’s irrigation water. If a spill were to happen here, the effects on America, at large, would be devastating. This could outweigh all of the economic benefits of the Keystone XL pipeline, specifically because there is no known method for cleaning tar sand spills in water.[xxv]

Although oil spills are extremely dangerous and impactful, it is important to note that the alternative, namely transporting this oil via trains would have an even greater impact. This is because on top of trains having the ability to spill oil, trains also have the added danger of exploding and derailing. One of the worst cases of derailment and explosion occurred in Quebec. Forty-seven people were reported dead. An increase in the use of pipelines would decrease the amount of oil transported by train, thus resulting in a safer transportation of oil.[xxvi] Of course, there may be solutions, such as cutting back our oil consumption in general, that could reduce both the use of pipelines and the use of trains.

Effect on Native Americans

Sovereignty:

Since the inception of this country, the United States government and Native American tribes have always a shaky relationship. This relationship begun when people from Europe first began to settle in North America and has, over time, developed into something that is very complicated. On one hand, since 1871 Native American Tribes have been recognized as independent nations within the nation of the United States, on the other, the United States’ government, at times, clearly violates those nations’ sense of sovereignty.[xxvii] It is very difficult to characterize this relationship in such a limited project; however, below I will provide a bit of history of the legal sovereignty of Aboriginal Tribes in North America.

In 1871 the United States government passed an Act that officially recognized Aboriginal Tribes as independent nations. This granted them the ability to govern themselves in manners that don’t necessarily match the manner in which American’s govern themselves. In other words, Tribes had recognized sovereignty over many internal affairs. This, however, still left room for ambiguity, and much of the technical aspects of the US-Native American relationships had to develop over time and court rulings. For example, in 1886, the supreme court ruled that US federal crimes still apply in Aboriginal lands.[xxviii] However, not all steps were made towards progress, and in 1887 the United States government passed the Dawes act, which essentially took Aboriginal land and allowed the purchasing of said land by White people.[xxix]

Cases like this continue up until today, but it is important to recognize a few notable points that emerge from these cases. Tribes do have some authority over their justice system; however, they have severe limitations.[xxx] As well, although it is assumed that Tribe’s have full authority over their lands, Congress can, at will, pass a bill to commandeer that authority. This means that, at the end of the day, Tribal sovereignty does not exist in the same way that, say, America’s sovereignty exists.[xxxi]

The status of North American Tribes is important to understand, in at least some degree, when discussing the validity of the Keystone XL pipeline. This is because the Lakota people alone have the potential of loosing thousands of holy sites by inevitable contamination. The Lakota, and Native Americans at large, are also concerned about the pipelines contribution to global warming.[xxxii] They believe that our relationship to nature is a fundamental aspect of the human condition and that our conquering of nature is unhealthy.

Although Native Americans may disagree with the construction of the pipeline, by the legal history given above, we know that there is little they can do in the justice system to fight it. This is why many have taken to protest to ensure that their voices are heard.

Construction on Sacred Ground:

The Keystone XL pipeline would cross indigenous lands in the United States and in Canada. This is why, since the inception of the plans to construct a pipeline, Native Americans have been so opposed to the project. However, before we dive deep into how this exactly affects the lives of Native Americans, let’s first discuss the moral principles.

Even according to the law, both in the US and Canada, we recognize that Native Americans have sovereignty over their own affairs, which includes autonomy over their lands and how they choose to use it. They have the right to either grant the pipeline’s construction to private companies or to refuse it. However, for issues these rights have limitations, namely whenever these rights interfere with the rest of the country’s will, they can be removed. Building the Keystone XL Pipeline would undoubtedly set a precedent for governments’ relationships with Native Americans.

This relationship is being put to the test with other pipelines in North America. For example, the Dakota Access Pipeline is challenging Native American rights over their own territory. Not only does the pipeline’s risk of spilling threaten their way of life, but also the pipeline itself crosses many holy sites and as a result, will de-sanctify them. Despite all the protests and research that has proven the scale of the pipeline’s impingement on the native community, President Trump has signed an executive order that expedited the process of construction. See Carl Sack’s #NoDAPL map footnoted here.[xxxiii]

Conclusion

As we’ve seen throughout the length of this paper, the Keystone XL Pipeline poses a lot of potential dangers to the environment and native community. However, it is also important to recognize the complexity of this issue. The economic analysis provided at the beginning of this paper is still sound, and those who have rational arguments in support of the pipeline weigh those short-term economic benefits over environmental harms and abuse of Native American rights. They further their argument by claiming that no matter what, the demand for fossil fuels across the world will be met and out of all the terrible options we have to transport oil, the pipeline is the best.

Taking this position, however, is quite confusing. The long-term affects of climate change will cost the US billions of dollars, completely outweighing all of the short term economic benefits provided by extracting the oil. Furthermore, the effects of climate change in the near future, even on the population of America, will be devastating and will cost the country billions of dollars worth of damages.[xxxiv]

Although regardless of whether this pipeline is constructed American oil consumption will remain absurdly high, going ahead with Keystone XL will only ease the process of our access to oil. Thus, it would allow for more consumption based on the lowering of oil prices due to increased supply. Stopping the construction of this pipeline would not only help save the environment and respect the rights of tribes we share this land with, but it would also be a step in the right direction of we should consider environmental issues in the future. Once we set this precedent, it will be easier to make environmental decisions moving forward.

 

Timeline

2008:

• Plans for the pipeline are submitted and public debate surrounding the issue begins.

November 2016

• President Barack Obama refuses the plans to construct the Keystone XL pipeline based on environmental concerns and impact on Native Americans.

January 2017:

• President Trump, fulfilling promises made on the campaign trail, signs an executive order expediting the process of the construction of the Keystone XL pipeline and the Dakota Access Pipeline.

January 2019: ·      The construction of the pipeline is finished and now oil is being shipped with ease down from Alberta to Texas. Close to 700,000 barrels a day are making their way down the country. 2020: ·      Since the construction of the pipeline, there hasn’t been any major oil spills. However, tar sands production is reaching an all time high and companies are very close to reaching their goal of producing 5,000,000 barrels of oil a day by 2021. 2021 ·      Oil profits continue to soar, resulting in more pipelines being constructed across America. Now, Canada is turning into one of the largest exporters of oil in the world, and it uses the United States as a way to sell oil to the world.   2025: ·      Global temperatures are reaching an all time high and natural disasters have disproportionality left the disenfranchised by the wayside. To make matters worse, a pipeline burst near the Ogallala Aquifer, which has left millions without clean water.

January 2019: ·      Since the Keystone XL pipeline was never constructed, oil companies, in pursuit of larger profits, continue to search for ways to ship the tar sands from Canada to the US. This leads to a considerable increase of the use of oil tankers and railways. 2020 ·      As a result of the increase in use of tankers and trains, there have been quite a few painful spills and crashes that have cost the US millions and have had a considerable environmental impact. However, by virtue of the fact that the public perception of oil has changed from the spills, these companies are under much scrutiny. 2021 ·      Oil companies have fell considerably short of their goal of producing 5,000,000 barrels a day. As a result, the US recognizes that fossil fuels might not be so available in the future.   2025 ·      Global temperatures have been increasing, but surprisingly there is much optimism surrounding the state of our planet. There is much more work to be done, but people believe it is possible.

Endnotes

[i] Phil McKenna. “With Some Tar Sands Oil Selling at a Loss, Why Is Production Still Rising?” Insideclimatenews.org. Feb. 23, 2016. Web. 2 May 2017.

[ii] Wikipedia Contributors. “Athabasca oil sands.” Wikipedia, the Free Encyclopedia. Wikimedia Foundation, 2 May 2017. Web. 3 May 2017.

[iii]Kyle Muzyka. “Trudeau’s ‘phase out’ oilsands comments spark outrage in Alberta .” CBC News. 13 Jan. 2017. Web. 3 May 2017.

[iv] Ian Austen And Clifford Krauss. “For Justin Trudeau, Canada’s Leader, Revival of Keystone XL Upsets a Balancing Act.” Nytimes.com. 25 Jan. 2017. Web. 3 May 2017.

[v] BBC News. “Keystone XL pipeline: Why is it so disputed? – BBC News.” BBC News. Jan. 24, 2017. Web. 3 May 2017

[vi] Art Hovey. “DownstreamToday.com – News and Information for the Downstream Oil and Gas Industry.” Downstreamtoday.com. June 12, 2008. Web. 3 May 2017.

[vii] Steven Mufson. “Trump seeks to revive Dakota Access, Keystone XL oil pipelines.” Washington Post. 24 Jan. 2017. Web. 3 May 2017. vv

[viii] Ibid

 

[ix] Snyder, Jesse. “What the building of Keystone XL pipeline will mean for Canada and the Canadian energy industry.” Financial Post. 24 Mar. 2017. Web. 3 May 2017.

[x] Ibid

[xi] British Petroleum. “BP Statistical Review of World Energy” Bp.com. June 2016. Web. 3 May 2017.

[xii] Irina Ivanova. “Who benefits from revived Keystone XL and Dakota Access pipelines?.” Cbsnews.com. Jan. 24 2017. Web. 3 May 2017.

[xiii] Snyder, Jesse. “What the building of Keystone XL pipeline will mean for Canada and the Canadian energy industry.” Financial Post. 24 Mar. 2017. Web. 3 May 2017.

[xiv] Thomas J. Gibson And Chuck Schmitt. “Opinion: The crisis facing U.S. steel industry.” CNN. 23 Mar. 2016. Web. 3 May 2017.

[xv] Brittany De Lea. “Debate renewed over economic benefits of Keystone pipeline.” Fox Business. 24 Mar. 2017. Web. 3 May 2017.

[xvi] N.a. “U.S. Crude Oil Imports.” Eia.gov. 28 Apr. 2017. Web. 3 May 2017.

[xvii] Brendan Smith. “5 Reasons Why the Keystone Pipeline is Bad for the Economy | Labor Network for Sustainability.” Labor4sustainability.org. n.d. Web. 3 May 2017.

[xviii] Greenpeace Canada. “The tar sands and climate change.” Greenpeace Canada. n.d. Web. 3 May 2017.

[xix] Friends of the Earth. “Keystone XL pipeline.” Friends of the Earth. n.d. Web. 3 May 2017.

[xx] Biello, David. “How Much Will Tar Sands Oil Add to Global Warming?” Scientific American 23 Jan. 2013: Web. 1 Mar. 2017.

[xxi] N.a. “In Harm’s Way.” Biologicaldiversity.org. 15 Feb. 2017. Web. 3 May 2017.

 

[xxii] Ibid

[xxiii] Alan Neuhauser. “Keystone Leak Worse Than Thought.” US News & World Report. n.d. Web. 3 May 2017.

[xxiv] The Associated Press. “Massive 2013 oil spill in North Dakota still not cleaned up.” NBC News. 18 Dec. 2016. Web. 3 May 2017.

 

[xxv] Melissa Denchak. “What Is the Keystone Pipeline?.” NRDC. 7 Apr. 2017. Web. 3 May 2017.

[xxvi] Fulton, Deirdre. “Two Years After Oil Train Disaster, Profound Scars Remain in Lac-Mégantic.” Common Dreams. 6 Jul. 2015. Web. 3 May 2017.

[xxvii] “Indian Treaties – United States Constitution.” Law.onecle.com. 9 June 2014. Web. 4 May 2017.

[xxviii] Justia Law. “United States v. Kagama 118 U.S. 375 (1886).” Justia Law. n.d. Web. 4 May 2017.

[xxix] Oklahoma State University Library. “INDIAN AFFAIRS: LAWS AND TREATIES. Vol. 1, Laws.” Digital.library.okstate.edu. 29 Mar. 2005. Web. 4 May 2017.

[xxx] Robert J. McCarthy, Civil Rights in Tribal Courts; The Indian Bill of Rights at 30 Years, 34 IDAHO LAW REVIEW 465 (1998).

[xxxi] Robert J. McCarthy, Civil Rights in Tribal Courts; The Indian Bill of Rights at 30 Years, 34 IDAHO LAW REVIEW 465 (1998).

[xxxii] Indigenous Environmental Network. ” First Nations and American Indian Leaders Arrested In Front Of White House To Protest Keystone XL Pipeline. Prnewswire.com. 2 Sept. 2011. Web. 4 May 2017.

[xxxiii] Carl Sack. “The Dakota Access Pipeline Map Everyone Should See.” The Huffington Post. 2 Nov. 2016. Web. 4 May 2017.

[xxxiv] Brendan Smith. “5 Reasons Why the Keystone Pipeline is Bad for the Economy | Labor Network for Sustainability.” Labor4sustainability.org. n.d. Web. 4 May 2017.