On February 9, 2005, TransCanada (now TC Energy) announced plans to construct a pipeline to move 400,000 barrels per day of Canadian heavy crude oil from Hardisty, Alberta, to Illinois. Sixteen years later, three phases of the Keystone project are complete. The fourth phase, dubbed “XL” for “export limited” and meant to carry an additional 700,000 barrels per day, is unfinished. In the see-saw battle over permitting, the Obama administration withheld permission for the pipeline to cross the US border, only to be reversed by the Trump White House. Today, newly inaugurated President Joseph Biden will revoke the Trump authorization.
The merits and detriments of the proposed XL portion of the Keystone pipeline were debated vigorously ten years ago. Environmentalists were vehemently opposed then, as they are now, for excellent reasons. They correctly noted that the pipeline’s completion would allow Canada to produce greater volumes of its extremely heavy, sour crude, oil that would contribute roughly three times as much carbon dioxide to the atmosphere as a barrel of oil from Saudi Arabia.
In 2011, I was teaching at the University of Calgary. Alberta then was a staunch advocate for the pipeline. Because I was already planning to leave the University and return to Colorado, I took a close look at the issue. After examining it, I concluded that the pipeline threatened the U.S. economy and environment. In a 2011 op-ed published in the Minneapolis Star Tribune, I asserted that the Keystone XL (KXL) line would increase what Americans paid for gasoline and diesel fuel by $5 billion per year. As I explained,
Most of the increase would come in the 14-state refining and marketing region that includes Minnesota.
The Canadians intend to exact this tribute by bypassing refineries in Chicago and the Midwest until the prices paid by these facilities return to their historically high levels.
In the past, Midwestern refiners paid more for oil than their counterparts in Texas and Louisiana because oil had to be shipped north.
Recently, though, these refiners have gotten a break as Canadian output has increased. Oil now flows south, not north. Midwestern refiners can save significant sums, savings that ultimately get passed on to consumers.
Executives at Canadian oil companies want to end this discount. They propose building the Keystone line to go around Midwest refineries.
They correctly argue that the line is needed to move additional crude volumes to the Gulf. However, hidden in their presentations to Canadian National Energy Board officials is their declared intent to use the pipeline to raise prices to Americans.
Canadian oil officials pushing the pipeline have been supported by energy security experts who argue the project will reduce dependence on imported oil and moderate the impact of supply disruptions. They may be correct.
However, their arguments in favor of the pipeline neglect one point: The United States has already paid billions to create a 700-million-barrel strategic reserve designed to provide the same protection.
These experts apparently think Americans should pay an additional $5 billion per year to further reduce the risk of market interruptions. The nation’s consumers cannot afford this and have no need to do so.
Our existing insurance policy is more than adequate.
The 2011 commentary focused on economics and energy security, not the environment. At the time, those pushing the KXL argued that the pipeline would strengthen U.S. energy security and tried to cover up Canada’s attempt to use its market power to raise petroleum product prices in the United States. Today, both economic arguments are irrelevant.
Fracking’s success has made the energy security argument moot. In 2012, the United States produced 6.5 million barrels per day. In 2020, production will likely average around 12 million barrels per day. The US has achieved energy security through the drill bit.
The rise in US output combined with the consumption drop also eliminates the KXL’s ability to boost Midwest product prices by diverting crude to the Gulf of Mexico. Surplus U.S. crude is looking for markets. Production from North Dakota, which has doubled since early 2013, and from Colorado and other states would quickly fill any gaps created by a Canadian diversion. Thus, my 2011 case against the pipeline is immaterial.
However, the ecological objection to constructing the KXL is stronger than ever. The environmental cost of producing the heavy Canadian crude carried by KXL is a slam dunk for stopping the project. Here, data the state of California uses to administer its low-carbon fuels program provide devastating evidence.
To reduce harmful emissions of global warming gases, California established a low-carbon fuels program. The program rates each crude type’s carbon content and other inputs and products. Each crude oil is measured using grams of CO2 emitted per megajoule (gCO2e/MJ). The estimates include the carbon emitted to produce the crude and transport it to California and when consumed. Early calculations published in the “look-up tables” by the California Air Resources Board revealed that the carbon intensity of Canadian synthetic crude produced from tar sands was around 22 gCO2e/MJ, while the carbon intensity of Saudi crudes was around seven gCO2e/MJ. (The current look-up tables could not be accessed in preparing this commentary. However, their values will not have changed much.)
The lower values assigned to Saudi crudes can be explained easily. Middle East crudes are produced under a “natural drive” where the reservoir pressure boosts the oil out of the ground without any assistance. Thus, no energy is expended in production. In contrast, Canadian synthetic crudes are manufactured by burning significant hydrocarbons through retorting or injection.
The high carbon content in Canadian crudes means their contribution to global warming is triple that of Middle Eastern crudes. Thus, from an environmental perspective, Canada’s hydrocarbon resources should be the first stranded out of all the world’s oil reserves should stranding start to be implemented.
The case for completing the KXL is dead. Most if not all projections of hydrocarbon use by 2050 see a substantial part of current known reserves left in the ground. The Canadian oil should be the last produced. Indeed, it should be shut in now.
Recently, though, in a last-ditch effort to save the pipeline, TC Energy pledged to make the pipeline a net-zero emitter by 2023. However, the commitment only applies to the emissions from the pumps used to push oil through the line. These emissions account for a tiny fraction of the emissions associated with the crude moving through the line. The KXL would not be economically viable if TC Energy committed to offsetting all the emissions related to operating the pipeline and producing the oil moving through it.
The Keystone XL pipeline was never a good idea. Given the threat of global warming, it looks worse today than ever.
Photo credit: Josh Lopez, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons