NRRI 14-04-Keystone-XL-Primer

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Keystone XL is the last piece of TransCanada’s Keystone pipeline system. The project, originally announced in 2005, connects Canada’s oil sands to American refineries on the Gulf Coast and in Illinois. Other pipelines in the project have connected Hardisty, Alberta to Patoka and Wood River, Illinois and Nederland and Houston, Texas. Because the Keystone XL Pipeline crosses an international border, construction requires a Presidential Permit. Keystone XL has been under consideration by the U.S. Department of State since 2008, and the State Department’s review process has taken place amidst significant controversy between supporters and opponents of the pipeline.
The Keystone XL Pipeline has gone through extensive review by multiple interest groups and government agencies. The major events in the project’s history can be seen in Table 1 on the next page. The State Department must determine that the pipeline serves the “national interest” before a Presidential Permit is granted. During the determination process, the route of Keystone XL has been changed multiple times, and the environmental and economic impacts of the pipeline have come under scrutiny. Keystone XL’s national interest determination has been delayed indefinitely due to a recent ruling by Nebraska’s Third Circuit court.
Keystone XL would travel through the states of Montana, North Dakota, South Dakota, and Nebraska. The pipeline would carry 830,000 barrels per day of crude oil from the Western Canadian Sedimentary Basin. This oil is extracted from Canada’s oil sands, a resource with estimated oil reserves of 167.9 billion barrels. Oil producers in Canada are seeking an efficient path to market for their products.
The controversy surrounding the pipeline centers on environmental and economic issues. The project has significant environmental impacts, with oil spills, greenhouse gas emissions, and further development of fossil fuels among the primary concerns. However, the pipeline would also offer economic benefits through increased employment, energy security, and infrastructure development. Large political coalitions have formed around both sides, with little option for compromise.
The State Department’s attempt to balance these issues must account for each of these topics. A Presidential Permit may be granted even when a project has adverse environmental impacts, and that determination comes down to the nebulous concept of “national interest.” This paper details the arguments made for and against the pipeline, and attempts to supply context for the factors that the State Department has considered during the application process.