Keystone XL Pipelines Biggest Opponent is its Misguided Public Perception

In one of its more modest sessions, IHS CERA Senior Director, Jackie Forrest, moderated a panel on the Canadian Oil Sands – Growth Prospects and Risks to Growth. Speakers included executives from TransCanada, Laricina Energy and the American Petroleum Institute. Forrest moderated the session, focusing primarily on the public’s misconceptions of the project. The Keystone XL pipeline project, which was submitted in 2008, is a proposed 1,700-mile pipeline that would transport 830,000 barrels connecting one of the largest oil reserves in the world in Alberta to the world’s largest refining center in the Gulf Coast. After the President stalled any decision on the project until after the 2012 elections, Congressional members, in an effort to push a decision, tied the approval to the payroll tax extension.

Keystone XL demonstration, White House,8-23-20...

While the decision was ultimately rejected in January, it was not based on the merits of the project. Instead the State Department called for an assessment of alternate pipeline routes to avoid the Sand Hills in Nebraska. “TransCanada will reapply, focusing on the very modest reroute of less than 100 miles around those Sand Hills,” said Alex Pourbaix, TransCanada’s President of Energy and Oil Pipelines. The company expects to announce its reroute of the pipeline when they apply for a new permit in the fall.

In the meantime, TransCanda is focused on starting construction on the portion of the pipeline that goes from Cushing, Oklahoma to the Gulf Coast refining center in an effort to relieve the bottleneck in take away capacity. Once construction starts TransCanada estimates that this section will take one construction season to complete.

Frustrating to those more intimately involved with the project is the misconceptions held by an emotionally charged and somewhat misguided public, much of which can be attributed to the environmental arguments being drawn from extremists and misinformed media. “Some people believe that if the Keystone XL is stopped that production in the oil sands stops, and that’s the furthest from the truth,” said Pourbaix, “Once people understand that it’s not a choice between oil sands oil and solar, but that it’s about where they get their oil from, the conversation changes.”

Since the early 2000s, the United States has been receiving the bulk of their oil from Saudi Arabia, Canada, Mexico, Venezuela and Nigeria. As demand has increased in China, Venezuela, in exchange for loan funding has diverted its oil resources to the Communist nation. This diversion along with declining production and rising demand in Mexico has led to decreased imports for the United States. With current imports at around 50%, America is just as dependent on foreign oil as ever. The question now is, where should we get that oil?

The initial delay sparked outrage across Canada with Prime Minister Stephen Harper saying he was, “profoundly disappointed” but hoped that the President would reconsider the project and its economic benefit for both Canada and the U.S. It’s not just the economic benefit that can be attributed to the deal, it is also an issue of National Security. “In an independent nationwide poll, people believe that most of their oil comes from the Middle East,” said Martin Durbin, Executive Vice President of the American Petroleum Institute, “What they fail to realize is most of our oil comes from Canada.”

Barack Obama, President of the United States o...

Currently, that same oil we are importing from Canada is being imported by truck and rail, expending carbon emissions, the exact thing environmentalists are arguing against the oil sands. In terms of worldwide carbon emissions, Canada’s output currently ranks at five percent of the world's total carbon output. Of that only .02 percent is from the production of the oil sands. Even water use in the in-situ extraction process is low with almost all of the water used coming from deep underground wells that is non-potable and eventually recycled.

The debate surrounding water arises again as one of the prime concerns for opponents who believe the current path of the Keystone XL pipeline compromises the Ogallala aquifer whose water table, which spans from West Texas to South Dakota, already has thousands of pipelines running concurrently across it. TransCanada’s issues, unfortunately, are based on bad timing, as prior pipeline operators have not had to face similar setbacks. “With more time, however, it has allowed the API to delve deeper into the benefits this project brings. Soon it will be harder for those who are trying to stop development to bring the public around with them,” said Durbin.

The Keystone XL has become a cause for celeb with notable figures such as Julia Louis-Dryfus and Darryl Hannah issuing statements and becoming martyrs at protests in an effort to stop development. And while opponents like this will couch their argument in absolute elimination of the infrastructure with no prospect of hearing the other side, groups who are legitimately concerned with the project have been more than willing to listen to both sides and understand the so-called risks.

In a broad state-by-state poll conducted by the American Petroleum Institute, 56 percent of people strongly favored the construction of the Keystone XL pipeline. Once that same polling group was given more details about the project, almost 80 percent said that they not only were in support of the pipeline but expressed the need for a better understanding of our domestic oil policy and Canada. The polling group spanned all political parties with 49.33 percent of Democrats favoring the construction.

“The economic incentive for solution driven markets is no different than those in the U.S. Maintaining prices and having access to markets is extremely important as far as oil is concerned in Canada, similar to that of natural gas in the U.S.,” said Glen Schmidt, President and CEO of Canadian-based Laricina Energy. Economics also play a big role when considering transportation and production. The last thing Canadians want is to build multi-billion dollar upgraders facilities in Alberta when the capacity is already in the Gulf Coast. “Their upgraders are already well-suited for Canadian crude,” said Pourbaix, “the type of oil we would transport in long-term contracts is similar to the oil imported from Nigeria and Venezuela.”

With oil imports at roughly half of domestic consumption and a continued rise in demand, even with biomass and other renewables, analysts predict 57% of our energy still coming from oil and natural gas by 2035. “It’s not a matter of if we’ll need it, it’s just about where we’ll get it. We need to increase the amount of oil we receive from Canada instead of other nations. That will be the benefit,” said Durbin. Now it’s just a matter of educating the public.