Presumptive U.S. Democratic presidential nominee Joe Biden’s pledge to cancel permits for the Keystone XL pipeline if elected is not informed by the facts. The pipeline is one of the most studied in American history and has been deemed in the public interest. It will provide thousands of jobs when they are needed most, operate safely and transport responsibly produced crude oil.
Fact: Keystone XL has been deemed in the US national interest
The Keystone XL project has been going through the U.S. regulatory process since 2008, including multiple environmental reviews and periods of public comment.
In March 2017 the U.S. Department of State determined the pipeline to be in the US national interest, based on its “potential to bolster U.S. energy security by providing additional infrastructure for the dependable supply of crude oil, its role in supporting, directly and indirectly, a significant number of US jobs and provide increased revenues to local communities that will bolster the US economy, its ability to reinforce [the US] bilateral relationship with Canada, and its limited impact on other factors considered by the department” including overall greenhouse gas emissions and demand for heavy oil in the US Gulf Coast refining market.
Fact: U.S. Gulf Coast refiners want more Canadian heavy oil
Many refineries in the U.S. Gulf Coast refining market, which Keystone XL would connect to, are specifically designed to process heavy oil. Canada is the world’s largest heavy oil and oil sands producer. It’s an excellent match, but the supply and demand locations are more than 3,000 kilometres apart.
U.S. Gulf Coast refineries have historically been largely supplied with oil by countries like Venezuela and Mexico; regimes that Washington, D.C.-based Freedom House ranks as “Not Free” and “Partly Free,” respectively, compared to Canada, which is “Free.” U.S. government sanctions and unstable production have recently caused shortages, increasing demand for reliable heavy crude from Canada.
Absent pipeline connections, when market conditions allow, Canadian oil producers have been able to use crude by rail to access the U.S. Gulf Coast. Illustrating the region’s demand for Canadian heavy oil, before the COVID-19 crisis, January 2020 set new records for both Canadian oil exports to the U.S. Gulf Coast and for crude by rail traffic out of Western Canada, according to the Canada Energy Regulator.
Fact: Oil sands greenhouse gas intensity is in the range of the US average refined crude and is improving
In 2014, analysis by IHS Markit using 2012 data found the greenhouse gas emissions per barrel from oil sands production to already be within the range of other crude oils refined in North America. The trend has continued to improve. In 2018, IHS Markit found that average oil sands emissions intensity had dropped by approximately 14 per cent since its original study. Overall, researchers found that oil sands average emissions per barrel decreased by 21 per cent between 2009 and 2017.
“On average, upstream emissions [intensity is] one-fifth lower than a decade ago and could fall another approximately 20 per cent over the coming decade. On a full life-cycle basis, this would bring the industry closer to the US average. However, averages do not capture the entire picture, with some facilities already at or near the US average today,” IHS Markit said.
Researchers acknowledged the study did not include some potentially transformational technologies, even though many are advancing, which may indicate greater potential for GHG intensity reductions in the future.
Keystone XL itself will generate lower GHGs than alternate modes of crude oil transportation including rail, which is likely to continue to be used by Canadian producers to reach the U.S. Gulf Coast absent the construction of Keystone XL.
Fact: Keystone XL is supported by sound economics
The U.S. Gulf Coast is a bullseye target for Canada’s oil industry that producers have been working to reach for more than a decade, and the demand case has only improved over that period.
A group of “strong, credit-worthy counterparties” have signed 20-year shipping agreements representing approximately 70 per cent of the capacity on Keystone XL, owner TC Energy said this April. The shipper agreements are expected to generate approximately US$1.3 billion of earnings for the company on an annual basis.
The project also has financial backing from the Government of Alberta, based in part on rigorous vetting by outside industry experts to ensure the success of the project while minimizing risk to taxpayers. Alberta expects to sell its interest in the pipeline for a profit after construction is completed, after which it is expected to provide a net return of over $30 billion to Alberta taxpayers through royalties and higher prices for Alberta oil over the next 20 years.
Fact: Keystone XL will provide jobs and revenues for communities in Canada and the United States
Keystone XL will provide substantial economic opportunities for communities along its route, including jobs and property taxes, which help build roads and support schools and hospitals.
Since going into service in 2010, the Keystone pipeline has generated $81 million in property tax revenues in Canada and $419 million in the United States. In its first year of operation, Keystone XL is expected to generate additional property tax revenue of more than $7 million in Alberta and Saskatchewan and more than $55 million in Montana, South Dakota and Nebraska.
TC Energy expects that over approximately three years of construction, Keystone XL will generate 2,800 jobs and local contracting opportunities in Canada and 10,400 in the United States, including for Indigenous groups, in roles like welding, surveying, engineering and environmental services.
Keystone XL will also generate substantial “indirect” employment along its route for companies that provide goods and services to enable construction and support work crews. TC Energy expects Keystone XL will generate 14,200 of these indirect and induced jobs in Canada and 31,600 in the United States.
Overall, TC Energy expects that Keystone XL construction will generate 17,000 direct, indirect and induced jobs in Canada and 42,000 in the United States, for a total of 59,000 employment opportunities. Construction is also expected to contribute $3.4 billion to U.S. gross domestic product and $2.4 billion to GDP in Canada.
Fact: Keystone XL will be operated with world-class safety standards
Pipelines are the safest and most reliable way to deliver crude oil from where it is produced to locations that meet consumer demand. As the U.S. Chamber of Commerce notes, to move the same volume of Keystone XL oil into the U.S. market by rail would take a train that was 25 miles long each and every day.
Keystone XL will have world-class safety standards in place including 24/7 digital monitoring for leak detection. Approximately 16,000 sensors along the pipeline will send data to the project’s control centre every five seconds, which will be equipped with immediate automatic shut-off capability.
Regular safety inspections will include fly-overs and in-person checks, and the use of a sophisticated tool called a “smart PIG,” which stands for “pipeline inspection gauge.” TC Energy describes that its smart PIGs contain high resolution computers and sensors to record data as they are pushed along the inside of the pipeline. This is intended to identify the smallest cracks, flaws, or potential issues with coating or corrosion.
In order to operate, Keystone XL’s emergency response plans must be in compliance with regulations by both the Canada Energy Regulator and the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration.