Unless you have been under a rock for the past year, you’ll know that the Keystone XL Pipeline has sparked a seemingly endless, bitter political fight between environmentalists and oil stakeholders.
The main point of contention surrounds the XL part of the pipeline that’s planned to run from Hardisty, Alberta to Steele City, Nebraska. All the other parts of the pipeline are actually already built!
So why all the fighting?
After all, the energy industry came to the realization a while ago that this project may never be completed.
Even President Obama urged people to move on in his State of the Union speech, saying: “Let’s set our sights higher than a single oil pipeline.”
And yet this single infrastructure project seems to have become a proxy for the overall discussion about energy and economic growth and its effect on the environment.
Fueling the Fire
It all starts with Canada.
Our northern neighbors have increased their exports to the United States by 63% over the past five years using two methods: rail shipments and other pipelines bringing Canadian crude to the Gulf Coast. Today, more than three million barrels a day of Canadian crude come into the United States daily.
If built, the proposed $8-billion, 1,179-mile pipeline will transport 830,000 barrels of heavy crude from oil sands in Canada’s Alberta province to Nebraska, and then on to the Gulf Coast.
But environmentalists say that obtaining heavy oil from oil sands produces a greater amount of greenhouse gases than other oil production methods.
The climate campaign group, 350.org, and its Founder, Bill McKibben, started focusing on the Pipeline in 2011. James Hansen, a NASA climate scientist, and other experts added their voices to the cause, warning that burning the oil in Canada’s gigantic oil sands deposits would mean “game over” for the planet’s climate.
Thus a big target was painted over the Keystone project since it would support and drive production in Alberta’s bitumen deposits.
Misguided Tree Huggers
McKibben’s organization and other environmentalists believe that stopping the Keystone XL would mean, in this new era of cheap oil, the end of further oil sands development.
They do have a valid point in that respect.
If oil keeps dropping, the transportation cost of shipping oil by rail will become a significant factor when oil sands companies consider whether a project is economically viable. Those costs could adversely affect overall shipments of Canadian crude into the United States in a low oil price environment.
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But many Keystone opponents are missing what’s right in front of their eyes – the other pipelines already built or close to being completed. You see, the oil industry has already made plans to get around the Keystone XL Pipeline political bottleneck.
In fact, the recently completed Seaway Pipeline will nearly double the amount of heavy Canadian crude going to the Gulf Coast to almost 400,000 barrels a day.
And in terms of mileage, in the time that the Keystone debate has gone on, there have been the equivalent to eight Keystone pipelines built across the country!
So where will the debate go from here?
The Game Plan
The House, which has voted for the pipeline many times in the past, and the new Republican majority Senate are certain to push a bill through.
Then the question is whether President Obama will veto it. He said most recently he would reject a Keystone XL bill, unless it was a part of a much broader infrastructure effort – an unlikely occurrence.
The ball would then bounce back to the Senate… where Republicans will try scrounge up enough votes to override the President’s veto.
During that sure-to-be fractious debate, environmentalists and Democrat allies will try to paint Republicans as “out of touch” and “climate change deniers.”
However, many Republicans are likely to admit that climate change is real, but also say the pipeline would actually be a plus for the environment. Their argument being that the oil will be produced no matter what and simply shipped via other means.
If the veto is overridden, the environmentalists will switch up their tactic. They may push hard for very stringent regulations of rail shipments of oil across the country. Or even try to block other pipeline projects.
Whether the Keystone XL pipeline is approved or not, one thing is certain – production from Canada’s oil sands industry will rise, even if oil prices stay low.
And the chase continues,