The Keystone Pipeline and Canadian Oil

The Keystone Pipeline and Canadian Oil

As the national debate concerning the debt and America’s credit worthiness continues to escalate, another debate is raging in the Midwest over the future energy security of our nation. The issue at hand being the approval of the Keystone Gulf Coast Expansion Project; known more commonly as the Keystone XL pipeline. Construction of this 1,661 mile pipeline – which is planned to extend from the Alberta oil sands in Canada through Montana, South Dakota and Nebraska and terminate in Texas – has been the victim of much misinformation and partisan politics as usual.

In light of these attacks, the economic benefits of Keystone XL for one are worth iterating and simply cannot be overstated. This is especially true for the state of Nebraska, where most of the uproar over Keystone XL can be found. For example, TransCanada – the company operating the pipeline – is directly investing roughly $1.3 billion in the state for construction and development. Given that Nebraska’s biennium – the Cornhusker State covers two fiscal years at a time – for 2012-2013 is currently forecasted to face a gap of $986 million, these monies are much needed. When it comes to tax revenue, too, the Keystone project will generate approximately $152 million in property taxes for local governments. And with regard to spurring economic activity, Keystone XL will lead to increased business activity in Nebraska of an estimated $390.4 million in gross output.

Secondly, the safety standards and practices that will be implemented throughout the Keystone XL pipeline as it stretches 257 miles through Nebraska are the industry’s best. These include: extensive hydrostatic testing of the pipeline’s material; high-resolution in-line inspection tools (known as “smart pigs”); and aerial patrols that will be conducted 26 times per year. This does not even include the Supervisory Control and Data Acquisition system that TransCanada will use, a technologically-superior system that reads pipeline data in real-time and reports it back to the pipeline’s control center. This will happen every five seconds, 24 hours a day, 365 days a year.

Unfortunately, zealous environmentalists, along with a few jaded politicians, have ignored these realities and have taken to populist sound bites. For instance, Frances Beinecke, president of the National Resources Defense Council, wrote on her blog last month that “the Keystone XL pipeline would dig us deeper into the oil dependency hole that undermines our economy, our national security and our future”.

I don’t know about her, but I’ve worked in the oil business in places like China and Venezuela. If she thinks that importing oil from our friends up North, instead of relying on unstable and at times unfriendly regimes overseas, undermines our national security, then I believe a refresher course in geo-politics is in order. And for all the activist concern over potential hazards to Nebraska’s Ogallala aquifer – which supplies 80 percent of the state’s drinking and irrigation water – a simple reminder: there are already numerous pipelines running across the aquifer.

In a recent opinion piece in Nebraska’s Journal Star, John Atkeison wrote that, when it comes to developing the abundant Canadian oil sands and the construction of Keystone XL, “…it is our duty to say, ‘leave it in the ground!'” Mr. Atkeison’s clear disregard for America’s economic and energy needs is painful. And leaving Alberta’s vast energy resources in the ground in the name of misinformed environmental rhetoric will only leave our nation in the dust as the global energy race intensifies. More to the point, the last place these oil sands will stay is in the ground. Nations in Asia, for example – where energy demand is expected to nearly double by 2035 – are clamoring for a stake in this vast resource to feed their growing energy appetite. So as the pipeline’s operator has affirmed, the Keystone system will “play an important role in linking a secure and growing supply of Canadian crude oil with the largest refining markets in the United States, significantly improving North American security supply”.

I believe most citizens agree, and I hope that the Congress and State Department come to terms quickly and approve this much-needed infrastructure project, which was already slated to commence construction during the first quarter of this year. Thankfully as The Hill, a Washington-based political publication, reported recently, the State Department is planning to issue a final review of the pipeline – an environmental impact statement (EIS) – this month. If this EIS does not approve Keystone XL’s construction, then our nation’s oldest cabinet department is responsible for sidelining one of the most important and beneficial infrastructure projects ever planned in North America.

While the national debt debate may be of extremely serious consequence, abandoning the Keystone XL pipeline now will not only further impair our economic recovery, but also plunge America’s future energy security – our very way of life – into grave jeopardy. That’s not something that Fitch or Moody’s can downgrade, nor can Congress raise. And that’s surely not a risk worth taking.

© 2013 Energy Tribune

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