The Keystone XL Pipeline

A Rational Discussion Of The Facts

President Obama’s decision to veto the bill passed authorizing the Keystone XL Pipeline has generated a tremendous amount of controversy regarding the project. The following information is designed to provide detailed information regarding the pipeline, the politics associated with it, and the potential risks of disaster associated with the Keystone XL Pipeline.

President Obama’s statement

on the Keystone XL Pipeline

January 18th, 2012.

http://www.whitehouse.gov/the-press-office/2012/01/18/statement-president-keystone-xl-pipeline

"Earlier today, I received the Secretary of State’s recommendation on the pending application for the construction of the Keystone XL Pipeline. As the State Department made clear last month, the rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment. As a result, the Secretary of State has recommended that the application be denied. And after reviewing the State Department’s report, I agree.

"This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people. I’m disappointed that Republicans in Congress forced this decision, but it does not change my Administration’s commitment to American-made energy that creates jobs and reduces our dependence on oil."

The Politics and Background of the Keystone XL Pipeline:

From Wikipedia and many additional resources

The Keystone Pipeline System is a pipeline system to transport synthetic crude oil and diluted bitumen ("dilbit") from the Athabasca Oil Sands in northeastern Alberta, Canada to multiple destinations in the United States, which include refineries in Illinois, Cushing oil distribution hub in Oklahoma, and proposed connections to refineries and export terminals along the Gulf Coast of Texas. It consists of the operational "Keystone Pipeline" (Phase 1) and "Keystone-Cushing Extension" (Phase 2), and two proposed Keystone XL pipeline expansion segments. After the Keystone XL pipeline segments are completed, American crude oil would enter the XL pipelines at Baker, Montana and Cushing, Oklahoma.[1]

The Keystone XL has faced lawsuits from oil refineries and criticism from environmentalists and some members of the United States Congress. The U.S. Department of State in 2010 extended the deadline for federal agencies to decide if the pipeline is in the national interest, and in November, 2011, President Obama postponed the decision until 2013. On November 30, Senate Republicans introduced legislation aimed at forcing the Obama administration to approve the Keystone XL pipeline within 60 days, unless the president declares the project is not in the national interest.[4]

According to documented stories (citations below):

“The State Department decided on Nov. 10 to delay the project until 2013, after the presidential election, to allow the project's developer to figure out a way around Nebraska's Sandhills, an ecologically sensitive region that supplies water to eight nearby states.”

Environmental Impact Background Invormation

Diluted bitumen (dilbit) is oil from tar sands and is substantially different from conventional crude oil. Dilbit is a relatively new oil product and currently only represents a very small portion of the oil being piped in pipelines in the US (100,000 barrels per day beginning in 2002).

During the time that the Deepwater Horizon / Gulf Oil Spill was occurring, the United States also experienced what is documented to be the largest oil spill in the Midwest in history – the Kalamazoo River Pipeline Spill where 1,200,000 gallons of dilbit tar oil was released into the Kalamazoo River.

It turned out that neither the EPS nor the company that managed the pipeline had a plan for being able to clean up dilbit oil and it turns out that dilbit oil is substantially different from conventional oil (http://video-embed.mlive.com/services/player/bcpid619299303001?bctid=1074540895001&bckey=AQ~~,AAAAPmbRJXk~,z77SjzCGAfJQV6mfwNsA-2u1_2e1FcGu).

Dilbit oil is much heavier than traditional oil and in order to be transported in a pipeline it has to be diluted with chemicals that keep it fluid so that it will flow through the pipeline. While dilbit oil is exposed to air, as in the case of an oil-spill, these highly caustic and dangerous chemicals evaporate and the oil returns to its heavy state, which does not float on the top of water.

Originally the EPA and the oil pipeline company estimated that the Kalamazoo River spill would take approximately 30 days to clean up, but the clean-up has proven to be substantially more problematic and after more than 22 months with as many as 4,400 people working on the clean-up the spill has still not been remediated. Additionally, it turns out that the costs encountered so far have been more than 10 times as costly than the typical costs associated with a conventional oil spill. The current costs of the Kalamazoo River dilbit oil spill are over $775,000,000 and rising. The clean-up efforts are expected to continue well into 2012, if not longer. According to news reports, 60% of the local populations were affected by and required treatment for miles around the spill with nauea, dizziness, headaches, coughing and fatigue. Thirty five miles of the river have had to be closed to humans (the actual spill affected 25 miles of the river).

According to the EPA and the pipeline operator they had no knowledge of how to respond to a dilbit tar sands oil spill and they are literally “writing the book” as they are going along.

Information and Resources

Regarding The Keystone XL Pipeline

Tar Sand will not Reduce Dependence on Foreign Oil

· Keystone XL is an export pipeline. According to presentations to investors, Gulf Coast refiners plan to refine the cheap Canadian crude supplied by the pipeline into diesel and other products for export to Europe and Latin America. Proceeds from these exports are earned tax-free. Much of the fuel refined from the pipeline’s heavy crude oil will never reach U.S. drivers’ tanks.

Keystone XL will increase gas prices for Americans—Especially Farmers

By draining Midwestern refineries of cheap Canadian crude into export-oriented refineries in the Gulf Coast, Keystone XL will increase the cost of gas for Americans.
TransCanada’s 2008 Permit Application states “Existing markets for Canadian heavy crude, principally PADD II [U.S. Midwest], are currently oversupplied, resulting in price discounting for Canadian heavy crude oil. Access to the USGC [U.S. Gulf Coast] via the Keystone XL Pipeline is expected to strengthen Canadian crude oil pricing in [the Midwest] by removing this oversupply. This is expected to increase the price of heavy crude to the equivalent cost of imported crude. The resultant increase in the price of heavy crude is estimated to provide an increase in annual revenue to the Canadian producing industry in 2013 of US $2 billion to US $3.9 billion.”
Independent analysis of these figures found this would increase per-gallon prices by 20 cents/gallon in the Midwest.
According to an independent analysis U.S. farmers, who spent $12.4 billion on fuel in 2009 could see expenses rise to $15 billion or higher in 2012 or 2013 if the pipeline goes through. At least $500 million of the added expense would come from the Canadian market manipulation.

For additional information an analysis on why the prices will increase as a result of the Keystone XL Pipeline, see the story at the bottom of this page by Phillip Verleger, an oil economist, published in the Minneapolis Star Tribune.

TransCanada’s jobs projections are vastly inflated.

· In 2008, TransCanada’s Presidential Permit application for Keystone XL to the State Department indicated “a peak workforce of approximately 3,500 to 4,200 construction personnel” to build the pipeline.

· Jobs estimates above those listed in its application draw from a 2011 report commissioned by TransCanada that estimates 20,000 “person-years” of employment based on a non-public forecast model using undisclosed inputs provided by TransCanada.

A rupture in the Keystone XL pipeline could cause a BP style oil spill in America’s heartland, over the source of fresh drinking water for 2 million people. NASA’s top climate scientist says that fully developing the tar sands in Canada would mean “essentially game over” for the climate.

The U.S. Pipeline Safety Administration has not yet conducted an in depth analysis of the safety of diluted bitumen (raw tar sands) pipeline, despite unique safety concerns posed by its more corrosive properties.
TransCanada predicted that the Keystone I pipeline would see one spill in 7 years. In fact, there have been 12 spills in 1 year. The company was ordered to dig up 10 sections of pipe after government-ordered tests indicated that defective steel may have been used. KeystoneXL will use steel from the same Indian manufacturer.
Keystone XL will cross through America’s agricultural heartland, the Missouri and Niobrara Rivers, the Ogallala aquifer, sage grouse habitat, walleye fisheries and more.
The agency was not adequately accounting for threats to wildlife, increased pollution in distressed communities where the crude may be refined, or increases in carbon emissions that would exacerbate climate change, and a variety of other issues.

From the study - Analysis of Frequency, Magnitude and Consequence of Worst-Case Spills Fron the Proposed Keyston XL Pipeline - Jon Stansbury, Ph.D., P.E. – Associate Professor, Civil Engineering, The University of Nebraska – Lincoln

The expected frequency of spills from the Keystone XL pipeline reported by TransCanada (DNV, 2006) was evaluated. According to TransCanada, significant spills (i.e., greater than 50 barrels (Bbls)) are expected to be very rare (0.00013 spills per year per mile, which would equate to 11 significant spills for the pipeline over a 50 year design life). However, TransCanada made several assumptions that are highly questionable in the calculation of these frequencies. The primary questionable assumptions are: (1) TransCanada ignored historical data that represents 23 percent of historical pipeline spills, and (2) TransCanada assumed that its pipeline would be constructed so well that it would have only half as many spills as the other pipelines in service (on top of the 23 percent missing data), even though they will operate the pipeline at higher temperatures and pressures and the crude oil that will be transported through the Keystone XL pipeline will be more corrosive than the conventional crude oil transported in existing pipelines. All of these factors tend to increase spill frequency; therefore, a more realistic assessment of expected frequency of significant spills is 0.00109 spills per year per mile (from the historical data (PHMSA, 2009)) resulting in 91 major spills over a 50 year design life of the pipeline.

The CWA requires that TransCanada estimate the “worst-case spill” from the proposed pipeline (ERP, 2009). TransCanada’s calculation of the worst-case spill from the proposed Keystone XL pipeline was not available at the time of this assessment, so an assessment of the methods used by TransCanada for the existing Keystone pipeline and a comparison of the results of those methods with the methods recommended in this analysis were made. The worst-case spill volume at the Hardisty Pumping Station on the Keystone (the original pipeline will be referred to as simply the Keystone pipeline while the proposed pipeline is the Keystone Xl pipeline) pipeline predicted using methods recommended in this analysis was 87,964 barrels (Bbl), while the worst-case spill predicted using TransCanada’s methods was 41,504 Bbl (ERP, 2009). The difference is a factor of more than 2 times. The primary difference between the two methods was the expected time to shut down the pumps and valves on the pipeline.

TransCanada used 19 minutes (TransCanada states that it expects the time to be 11.5 minutes for the Keystone XL pipeline). Since a very similar pipeline recently experienced a spill (the Enbridge spill), and the time to finally shutdown the pipeline was approximately 12 hours, and during those 12 hours the pipeline pumps were operated for at least 2 hours, it is clear that the assumption of 19 minutes or 11.5 minutes is not appropriate for the shut-down time for the worst-case spill analysis. Therefore, worst-case spill volumes are likely to be significantly larger than those estimated by TransCanada. The worst-case spill volumes from the Keystone XL pipeline for the Missouri, Yellowstone, and Platte River crossings were estimated by this analysis to be 122,867 Bbl, 165,416 Bbl, and 140,950 Bbl, respectively. In addition, this analysis estimated the worst-case spill for a subsurface release to groundwater in the Sandhills region of Nebraska to be 189,000 Bbl (7.9 million gallons).

Among numerous toxic chemicals that would be released in a spill, the benzene (a human carcinogen) released from the worst-case spill into a major river (e.g., Missouri River) could contaminate enough water to form a plume that could extend more than 450 miles at concentrations exceeding the Safe Drinking Water Act Maximum Contaminant Level (MCL) (i.e., safe concentration for drinking water). Therefore, serious impacts to drinking water intakes along the river would occur. Contaminants from a release at the Missouri or Yellowstone River crossings would enter Lake Sakakawea in North Dakota where they would adversely affect drinking water intakes, aquatic wildlife, and recreation. Contaminants from a spill at the Platte River crossing would travel downstream unabated into the Missouri River for several hundred miles and affect drinking water intakes for hundreds of thousands of people in cities like Lincoln, NE; Omaha, NE; Nebraska City, NE; St. Joseph, MO; and Kansas City, MO, as well as aquatic habitats and recreational activities. In addition, other constituents from the spill would pose serious risks to aquatic species in the river. The Missouri, Yellowstone, and Platte Rivers all provide habitat for threatened and endangered species including the pallid sturgeon, the interior least tern, and the piping plover. A major spill in one of these rivers could pose a significant threat to these species.

The benzene released by the worst-case spill to groundwater in the Sandhills region of Nebraska would be sufficient to contaminate 4.9 billion gallons of water at concentrations exceeding the safe drinking water levels. This water could form a plume 40 ft thick by 500 ft wide by 15 miles long. This plume, and other contaminant plumes from the spill, would pose serious health risks to people using that groundwater for drinking water and irrigation.

If gas prices go up further, blame Canada

Philip K. Verleger – Commentary – Minneapolis Star Tribue

http://www.startribune.com/opinion/commentaries/117832183.html?source=error

Philip K. Verleger is president of PKVerleger LLC, a consulting firm in Carbondale, Colo., that specializes in research on oil market economics. He is also the David Mitchell EnCana Professor of Strategy and International Management at the Haskayne School of Business at the University of Calgary.

Commentary

In the second week of March, Minnesotans paid an average of 42 cents more for a gallon of gas than they did just two weeks ago.

The price spike stems from Mideast unrest and speculation about its future.

But foreign oil interests are planning a deliberate manipulation of the U.S. oil market that would raise gas prices for Midwest farmers and consumers even higher.

Who's behind the plan? Not OPEC.

It's Canada.

The Canadian oil industry, with the strong backing of Prime Minister Stephen Harper's government, wants to build a pipeline to move crude oil from Alberta to the Gulf of Mexico.

The firms involved have asked the U.S. State Department to approve this project, even as they've told Canadian government officials how the pipeline can be used to add at least $4 billion to the U.S. fuel bill.

U.S. farmers, who spent $12.4 billion on fuel in 2009, according to the U.S. Department of Agriculture, could see expenses rise to $15 billion or higher in 2012 or 2013 if the pipeline goes through.

At least $500 million of the added expense would come from the Canadian market manipulation.

Of course, American consumers will pay the price of this highway robbery. Food prices will rise because they reflect farm operating costs.

In addition, millions of Americans will spend 10 to 20 cents more per gallon for gasoline and diesel fuel as tribute to our "friendly" neighbors to the north.

The Keystone XL pipeline will move production from Canadian oil sands to a deepwater port from where it can be exported.

Environmentalists have long opposed Keystone because tar sands production is "dirty" due to the high carbon emissions and the ecological damage caused by extracting and processing the oil.

They also point to elevated safety and health risks associated with piping and refining the heavy crude.

To date, however, these opponents have ignored public statements by the pipeline's backers regarding how they would use the facility to boost what Americans pay for oil by almost $5 billion per year.

Most of the increase would come in the 14-state refining and marketing region that includes Minnesota.

The Canadians intend to exact this tribute by bypassing refineries in Chicago and the Midwest until the prices paid by these facilities return to their historically high levels.

In the past, Midwestern refiners paid more for oil than their counterparts in Texas and Louisiana because oil had to be shipped north.

Recently, though, these refiners have gotten a break as Canadian output has increased. Oil now flows south, not north. Midwestern refiners can save significant sums, savings that ultimately get passed on to consumers.

Executives at Canadian oil companies want to end this discount. They propose building the Keystone line to go around Midwest refineries.

They correctly argue that the line is needed to move additional crude volumes to the Gulf. However, hidden in their presentations to Canadian National Energy Board officials is their declared intent to use the pipeline to raise prices to Americans.

Canadian oil officials pushing the pipeline have been supported by energy security experts who argue the project will reduce dependence on imported oil and moderate the impact of supply disruptions. They may be correct.

However, their arguments in favor of the pipeline neglect one point: The United States has already paid billions to create a 700-million-barrel strategic reserve designed to provide the same protection.

These experts apparently think Americans should pay an additional $5 billion per year to further reduce the risk of market interruptions. The nation's consumers cannot afford this and have no need to do so.

Our existing insurance policy is more than adequate.

Proposals to build the Keystone pipeline, in their present form, should be rejected. U.S. consumers should not have to pay a $5 billion duty to Canadian oil companies for an insurance policy of little value.

The entire project should be redesigned to address environmental concerns and to make sure Canadian oil companies cannot tax American consumers and farmers.

This information was developed from the following websites and Resources:

Tar Sands Action Website - http://www.tarsandsaction.org/spread-the-word/key-facts-keystone-xl/

Section 3 – The Keystone XL Pipeline Application - http://stopbigoilripoffs.com/documents/keystone-xl-pipeline-application-section-3-supply-and-markets/at_download/file

The Minneapolis Star Tribune - http://www.startribune.com/opinion/commentaries/117832183.html?source=error

Analysis of Frequency, Magnitude and Consequence of Worst-Case Spills Fron the Proposed Keyston XL Pipeline – John Stansbury, Ph.D,, P.E. - http://watercenter.unl.edu/downloads/2011-Worst-case-Keystone-spills-report.pdf

Two Years On, Tar Sands Spill Casts Long Shadow - Mother Jones News

http://motherjones.com/blue-marble/2012/03/fallout-kalamazoo-tar-sands-spill-keystone

The Spill from Hell: Duluted Bitumen

Poisoned air. Sunken gunk. A clean-up nightmare. What wr’re learning from the oil sands “DilBit” dump into the Kalamazoo River

Mitchell Anderson – March 5, 2012 – www.TheTyee.com

http://thetyee.ca/News/2012/03/05/Diluted-Bitumen/

The EPA’s Response to the Enbridge Oil Spill

http://www.epa.gov/enbridgespill/

The Keystone Pipeline – Wikipedia

http://en.wikipedia.org/wiki/Keystone_Pipeline

GOP bill would force action on Canada oil pipeline

The Desert News