What You Need To Know About The Keystone XL Oil Pipeline

Nov 17, 2014
Originally published on November 18, 2014 7:36 pm

Update at 7:35 p.m. ET: The Senate voted against completing the Keystone pipeline.

The remaining portion of the Keystone pipeline project, if completed, will be fewer than 1,200 miles long — just a fraction of the existing 2.6 million miles of oil and gas pipelines running beneath our feet in the United States.

But the pipeline, which would stretch from Alberta, Canada, to the Gulf of Mexico, is at the center of a years-long, contentious debate among politicians, energy companies and environmentalists.

A Senate vote approving completion of the pipeline is scheduled for Tuesday — less than one week after the House approved the same legislation. That means President Obama may soon have a chance to sign off on the pipeline — or to veto it.

Before Tuesday's vote, here are a few things to help you make sense of the Keystone XL debate:

How much of the pipeline is completed, and what will it do?

About 40 percent of the total project has been built so far, in two segments: a 298-mile stretch from Steele City, Neb., to Cushing, Okla., and a 485-mile segment between Cushing and Nederland, Texas. Oil is flowing through these pipelines from the increased production currently happening in the middle of the U.S.

The remaining segment, if approved, would run between Alberta and Steele City. If fully completed, the Keystone XL pipeline would be able to move up to 830,000 barrels a day of crude from Canada's oil sands south to the U.S. Gulf Coast. There, refineries would process it into gasoline and other fuels.

Opponents argue that some of that crude would be exported, but TransCanada, the company building the pipeline, says that wouldn't make financial sense. Alberta estimates it has the third-largest proven oil reserves in the world after Saudi Arabia and Venezuela. But that oil is valuable only if producers can get it to a market where it can be sold. A pipeline is the least expensive way for the industry to do that.

What are the environmental concerns?

Producing crude from oil sands emits an estimated 17 percent more greenhouse gases than traditional oil drilling in the U.S. In part, that's because it has to be heated to separate the crude from the sand.

Earlier this year, the State Department released an environmental review that concluded the Keystone XL very likely wouldn't have a significant effect on greenhouse gas emissions because the oil will ultimately be produced, even if the pipeline is not built. But environmental groups object to that conclusion and want the oil left in the ground.

How many jobs would the pipeline create, and where?

The State Department estimates the construction phase would create about 42,000 direct and indirect jobs and generate about $2 billion in earnings in the U.S. Opponents dispute some of those numbers. One thing is clear: Once construction is finished in about two years, the pipeline would create only about 50 new permanent jobs.

Where does President Obama stand on the pipeline?

The president has unusual leverage over this pipeline. Because it crosses the U.S. border with Canada, Keystone XL requires a "presidential permit." Obama has guarded that power jealously. Three years ago, when Congress tried to force him to make a decision by issuing a 60-day deadline, he simply rejected the permit application.

The political challenge for Obama is that Democrats are genuinely divided on the issue, with construction unions favoring the project and some environmental activists opposing it. No matter what he decides, some constituents will be unhappy — so the president has basically stalled.

If the legislation passes the Senate Tuesday and becomes law, the pipeline would get an immediate green light.

Why was there a State Department review of the project, and what is its status?

The State Department was required to conduct an environmental assessment of the final, proposed leg of the pipeline because it will cross the U.S.-Canada border.

The State Department is waiting for the outcome of a Nebraska Supreme Court case that could affect the pipeline's route, but the department's basic environmental review was completed in January.

It concluded that the pipeline would have "little impact" on the price consumers pay for gasoline in the U.S. It also concluded that blocking the pipeline would reduce income for tar sands developers, "but not enough to curtail most oil sands growth plans or to shut-in existing production." Reviewers cautioned that blocking the pipeline could have a bigger effect on tar sands development if oil prices drop into the $65- to $75-per-barrel range. Oil prices have fallen recently to around $75 per barrel.

What is the legal challenge in Nebraska and how could it affect the pipeline?

The court battle is over where the pipeline will be located. An early proposed route through the environmentally sensitive Sand Hills region was widely criticized. But after the pipeline company TransCanada changed the route, Republican Gov. Dave Heineman approved it.

Pipeline opponents have argued before the state Supreme Court that the governor did not have the authority to approve the new route. They say that under Nebraska law, only the state Public Service Commission can approve it. Justices are expected to announce their ruling in coming months.

What are the alternatives to the pipeline?

There are other pipelines that can move oil sands crude (including a controversial plan by the company Enbridge), but there's not enough capacity for all the oil being produced in Alberta. Producers in Canada are pursuing transporting oil sands by rail cars, even though it's more expensive than moving it by pipeline.

That becomes even less attractive as world oil prices fall, however. Crude from oil sands is some of the most expensive oil to produce in the world. When the extra cost of moving it by rail is added on, some producers will find it difficult to make money.

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MELISSA BLOCK, HOST:

If you took all the oil and gas pipelines in the U.S. and wrapped them around the earth, they'd circle the equator more than 100 times. But a relatively small pipeline, less than 900 miles long and not yet built, has become a huge symbol - the Keystone XL pipeline.

(SOUNDBITE OF ARCHIVED RECORDING)

SENATOR MARY LANDRIEU: It's a symbol that represents American energy power.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT BARACK OBAMA: We should judge this pipeline based on whether or not it accelerates climate change.

(SOUNDBITE OF ARCHIVED RECORDING)

RUSS GIRLING: As I said, the need for this pipeline continues to grow and...

(SOUNDBITE OF ARCHIVED RECORDING)

BILL MCKIBBEN: Above all - above all, stop the Keystone pipeline.

ROBERT SIEGEL, HOST:

That was environmentalist Bill McKibben, and before him - Russ Girling, the CEO of Transcanada which owns the pipeline, President Obama and Democratic Senator Mary Landrieu of Louisiana. Landrieu, who's fighting for her political life these days, has pushed for a vote to approve Keystone. And tomorrow in the Senate, that vote is scheduled. The House passed the same legislation last week, so after years of debate over this pipeline, the president could soon have a chance to sign off on it or to veto it. Two of our correspondents who have been following this story are with us now - White House correspondent Scott Horsley and energy correspondent Jeff Brady. Hi to both of you.

SCOTT HORSLEY, BYLINE: Good afternoon.

JEFF BRADY, BYLINE: Hello.

SIEGEL: And Jeff, let's begin by stepping back. Would you remind us what the Keystone XL pipeline is and what it's intended to carry that's so important to so many people?

BRADY: Well, it would move oil from Alberta up in Canada all the way down to the Gulf Coast. There are a lot of refineries there that can handle that oil. It would haul about 830,000 barrels a day, and of course, oil is very important for our economy. And this is oil that if it weren't coming from Canada, would likely come from someplace like Venezuela or the Middle East - places that are not quite as friendly to United States.

SIEGEL: This would be an international pipeline, so the State Department was called in to assess it. Scott Horsley, what does the State Department say about it?

HORSLEY: Well, the State Department finished their environmental review last January, and they left enough wiggle room, really, for the administration to go either way. But the basic conclusions were this pipeline would not make much difference to the price that consumers pay for gas at the pump. And it would not make much difference in whether those Canadian tar sands are developed and contribute to climate change.

SIEGEL: So as you say, the State Department came up with a report that would justify the president going either way on this. Where does the president stand on this?

HORSLEY: Well he's been really torn. He has unusual power here. In fact, the permit that Keystone needs is called a presidential permit. And the president has guarded that power fairly carefully. Back in late 2011 - early 2012, Congress tried to force his hand by giving him a 60-day deadline to make a decision. And the president said, in effect, don't rush me - if it's got to be 60 days, the answer is no.

Frankly, Obama knows that someone is going to be angry no matter what he does here. So he has basically stalled, and he's grabbed every opportunity to stretch this process out. The latest stretching device has been a court case in Nebraska, and he talked about that last week.

(SOUNDBITE OF ARCHIVED RECORDING)

OBAMA: Right now you've got a case pending in Nebraska where the pipeline would run through in which a state court judge has questioned the plan. And until we know what the root is, it's very hard to finish that evaluation. And I don't think we should short-circuit that process.

SIEGEL: Well, this raises the question of environmental concerns in Nebraska. And Jeff Brady, roughly, what are those concerns?

BRADY: It's all about where the pipeline is going to be located. Early on, the route that was proposed went through these environmentally sensitive sand hills, the Sandhills region. You may have heard of it in Nebraska. And that route was widely criticized so they went back to the drawing board, came up with a new route, and then Republican Governor Dave Heineman - he approved that route. Opponents came back and said well, now wait a minute - the governor's not supposed to be the one approving routes. That's supposed to be done by the Public Service Commission. So they challenged it in court - that's before the Supreme Court now, and we expect a decision probably later this year or early next year.

SIEGEL: To give some sense of the intensity of feeling here, here is Nebraska farmer Randy Thompson speaking in a video released by the National Resources Defense Council.

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RANDY THOMPSON: This pipeline would be a few hundred feet from one of my irrigation wells. And if it were to contaminate that well, it would virtually take out 80 acres of crops for us.

SIEGEL: Big concern there that the water supply might be damaged by the pipeline. Is that something you've heard often, Jeff?

BRADY: Of course. Environmental concerns are central to the whole issue here. It's not just about contaminating water in Nebraska and the other states along the pipeline route. This is also about what happens back in Alberta where the oil is processed from those oil sands. It emits an estimated 17 percent more greenhouse gases than traditional oil drilling in the U.S. So instead of just poking a hole in the ground and the oil coming out like we do in Oklahoma or Texas, this oil has to be mined from sand and then heated up. And heating it up emits more greenhouse gases.

SIEGEL: OK. Now, Democratic Senator Mary Landrieu last Wednesday spoke about this and raised the question of the jobs that the XL pipeline would create, she said.

(SOUNDBITE OF ARCHIVED RECORDING)

LANDRIEU: Not minimum wage jobs, but high-paying jobs for middle-class families. That's what we should be about here.

SIEGEL: Boy, are there different estimates of the jobs that would be created by the XL pipeline. Jeff, what have you heard?

BRADY: Yeah, there are different estimates. The State Department said 42,000 direct and indirect jobs. We're talking about the overall project there. But folks - especially people who opposed this pipeline - dispute a lot of that. And you can really move those numbers around in a lot of different ways to sort of make your point.

But the thing that you really can't dispute is that's just during the construction process which is probably about two years. After this pipeline is done, only about 50 people are going to be employed by it because that's why pipelines are so efficient. It takes few people to operate them.

SIEGEL: Jeff Brady, is it clear to you why this particular pipeline - in a country with so many pipelines running under it, why this one has taken on such significance?

BRADY: Well, you're right. There are a lot of pipelines, and this one is significant primarily because people have decided that it's going to be significant. This is the one that environmental groups said we're going to stop it right here. We want this - they call it dirty tar sands oil - to stay in the ground in Alberta. And so this is the one they've decided to oppose, and that's why we're all hearing about it.

HORSLEY: Frankly, Robert, when you're trying to tackle something as big and amorphous as climate change, it's easier to try to block a pipeline than to change people's driving habits or get them to buy fluorescent light bulbs or invest in green power. And so Keystone has become this larger-than-life political symbol, really out of proportion to its tangible impact on the climate.

SIEGEL: NPR's Scott Horsley and Jeff Brady, thanks to both of you for that update on the Keystone XL pipeline.

BRADY: Thank you.

HORSLEY: My pleasure. Transcript provided by NPR, Copyright NPR.