Keystone XL: Oil, Gas Industry Awaits Fate of the Pipeline's Final Phase

Keystone XL: Oil, Gas Industry Awaits Fate of the Pipeline's Final Phase
TransCanada, and the oil and gas industry, is hoping 2015 is the year that the Keystone XL pipeline project gets the go-ahead.

Few will be surprised if one of the first items taken up for vote by the 114st United States Congress next year is TransCanada Corp.’s Keystone XL pipeline, a divisive project with a long history of delays.

Having lost a narrow vote in November 2014 when the U.S. Senate was still controlled by Democrats, the project is expected to pass the Republican-controlled House and Senate in 2015 and end up on President Barack Obama’s desk, where it will either be approved or denied.

Alberta’s oil sands, which are also called tar sands, contains bitumen, which gives the oil sands the consistency of peanut butter and requires dilution to make the oil easier to transport. The extraction process for bitumen is more difficult and expensive than regular crude oil, and requires more energy to extract and refine.

TransCanada first proposed the idea of shipping crude oil and the diluted bitumen from Alberta’s oil sands to refineries in the United States in 2005, and much of the pipeline – the first three phases – has been built, including a smaller pipeline from Alberta to Illinois. A fourth phase, consisting of a larger, 36-inch pipeline 1,179 miles long that would move the oil sands from Hardisty, Canada to Steele City, Nebraska, would complete the pipeline, allowing product to be transported down to Texas refineries on the Gulf Coast, according to TransCanada. This fourth phase is Keystone XL.

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The pipeline was not always a politically divisive issue. When it was first proposed, it was a $5 billion pipeline project that would transport production from Canada to Nebraska. Up to 830,000 barrels of oil, most of it from Alberta’s oil sands and the rest from North Dakota’s Bakken shale formation, would be transported through the pipeline each day, according to Vox, an online news site. From Nebraska, product would move through the Cushing Extension, the part of the pipeline that connects Nebraska to Cushing, Oklahoma. From there, product would flow to Nederland, Texas on the Gulf Coast Pipeline, and to Houston, Texas on the Houston Lateral Project.

It was during the environmental impact studies for KXL that environmental organizations learned that the pipeline would be extracting the bitumen from a forested area of Canada that is about the size of Florida that the controversy – and the delays, which have added about $3 billion to the cost – began, according to Houston Media Radio, a Houston-area news program.

The most recent environmental impact statement by the State Department concludes that approval or denial of the Keystone XL “remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the United States.” In other words, denying the project would not stop production activities in the Alberta oil sands.


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