Keystone XL

Oil Sands Pipeline from Canada Is in U.S. National Interest

State Department reverses Obama ruling and permits construction of Keystone Pipeline.



After dithering for most of his term, President Barack Obama declared on November 6, 2015 that the construction of the Keystone Pipeline was not in the national interest. His declaration was just three weeks before the convening of the Paris climate change conference at which the universal climate agreement was adopted. In his statement, President Obama said:

…if we're going to prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we're going to have to keep some fossil fuels in the ground rather than burn them and release more dangerous pollution into the sky.

To what extent would keeping crude from Canada's oilsands in the ground prevent man-made global warming? In 2012, climatologist Chip Knappenberger who works with the libertarian Cato Institute calculated that doing so would reduce the annual increase in global temperatures due to carbon emissions by "0.0001°C/yr, that is, one ten thousandths of a degree Celsius of temperature rise from the Canadian tar sands oil delivered by the Keystone XL pipeline each year."

The pipeline would transport 800,000 barrels per day from Canada's oilsands production fields to refineries on the U.S. Gulf Coast. Canada had llittle interest in keeping that oil in the ground, so Prime Minister Justin Trudeau approved last year the construction of another pipeline would transport the crude to Canada's west coast for export abroad. (Actually, only persistent low prices would keep that oil in the ground.)

Just days after taking office, President Donald Trump ordered the State Department to review the application asking for approval of the Keystone Pipeline and decide if its construction is in the national interest. The State Department will reportedly issue today the finding that it is and the relevant permit to cross an international boundary will be forthcoming.

So will construction proceed? Maybe not. First, getting oil out of oilsands is a costly endeavor and oil prices have declined substantially since the pipeline was proposed. Secondly, the pipeline faces implacable opposition from activists and landowners in Nebraska who will seek court orders to stop or slow construction.

Bloomberg News reports:

Sara Shor, a campaign manager for the climate advocacy group, vowed to "raise hell at the national level" and recruit millions of people to fight the project, including by highlighting their concerns during lawmakers' town halls during a planned congressional recess next month.

"We're going to continue to make Keystone XL a political issue and push every elected official to come out against this project if they care about communities, local rights, eminent domain, air, water and climate," Shor said by phone. "It just touches so many issues."

In other news, the Trump administration-approved Dakota Access Pipeline is supposed to begin transporting oil this weekend; that is, if it's not sabotaged.

Disclosure: Back in 2011, I took a junket to report on the Canadian oilsands that was sponsored by the American Petroleum Institute. My travel expenses to visit Alberta's oil sands were covered by the API. The API did not ask for nor did it have any editorial control over my reporting of that trip. For more background see my articles, The Man-Made Miracle of Oil from Sand and Conflict Oil or Canadian Oil?

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  1. I love how environmentalists are now sabotaging the pipelines and poking holes in them, hoping for a Reichstag fire. Let’s spill some oil so we can stop the pipelines from being built because they could spill oil! For fuck’s sake, I hate these people so much.

    1. It’s almost like they don’t actually give a shit about their states causes or something.

      1. “stated”

    2. You hate people whose only motivation is to prevent the destruction of the biosphere of planet earth.

      But you don’t hate oil companies that run trains full of oil that routinely crash and ignite and burn for days.

      1. That is why people advocate for pipelines Copernicus.

      2. That is why I support the pipeline. Who is destroying the planet and in what way?

      3. How is poking holes in a pipeline saving the biosphere?

      4. I hate people who claim to want to prevent the destruction of the biosphere but do it by sabotaging pipelines and creating oil spills that damage the biosphere. I loathe environmentalists that lead a blatantly anti-science Luddite fear-mongering campaign against nuclear energy, the only realistic solution to drastic CO2 emission cuts.

      5. only motivation

        As always, we are the naive children here, not Tony.

      6. But you don’t hate oil companies that run trains full of oil that routinely crash and ignite and burn for days.

        Trains ARE a riskier way to transport oil. Pipelines are vastly safer and more reliable. This is why pipelines are preferred. In the bolded portion you are absolutely full of shit. You DO realize that an event has to be common in order for it to be routine, right?

  2. How expensive would oil have to be for the pipeline to be profitable? Assume a steady price; volatile prices just raise the average, I suppose.

  3. From the government’s perspective it makes sense, they eminent domain the land and in return they collect fat taxes, but how do the former landowners benefit from having their land seized so somebody else can profit from the use of it? If you argue “public interest” and that the taxes the government collects go to benefit the general public including the former landowners, how is that different than some sort of nationalization of the pipeline? And couldn’t you make the same argument for the government fully nationalizing any industry? Wouldn’t a more free market approach be to be at least paying some sort of portage fees to the landowners?

    1. Seems to me the only justifiable use of eminent domain is for roads. Once a for profit company or even a government sponsored entity is involved, it becomes privatized profits and socialized(potential loses). Or in this case, socialized expenses for the purchase of the land.

      1. If you’re going to allow ED roads I don’t see why you’re not including any other means of transport like railroads, transmission wires, and pipelines.

        1. Because roads are truly for the public good and do not realize a profit. At least not now until they have to be privatized.There is also absolutely no other alternative until cars can fly. There are also alternative forms of transporting fossil fuels to at least have pricing competition. Admittedly nothing near as efficiently as pipelines.

          I am not saying that ED was ever truly justified for power line easements and pipelines but the majority are already there and competing forms of energy should be considered going forward.
          Point being that actual market forces could and should be employed when there are forms of mobile energy that could possibly baseload utilities. Mobile pipelines already exist with LNG and CNG for example. They are far more expensive than pipelines but in cases where land cannot be acquired, some market forces are at least at play. They are also heavily subsidized at the same time.

          1. What is a mobile pipeline?

            1. Industry jargon for trailering LNG or CNG to facilities to supplant power sources such as 6 oil or propane to power mills and in some case, small electrical utilities.

              1. Figured but was wondering if there was an actual pipeline which cojld be rconfigured on the fly.

          2. Roads don’t realize a profit? Tell that to the turnpike builders.

            1. Tell that to the turnpike builders.

              From the perspective of the road and its users, that would be a cost, not a profit.

    2. Except as has been pointed out current disclosure rules and environmental permitting puts the land acquirers at a significant disadvantage. Get rid of those and let everyone feely negotiate and we’ll talk.

      I also find it awfully convenient that many od those suddenly discovering the eminent domain issue (present company excluded) had/have zero concern over the much,much larger issue for so called renewables.

      1. No sh*t. At least fossil fuels are affordable, realize return on investment, are more efficient, and are not a debt creating drain on the already broken government subsidy mill.

    3. Because it’s in the general interest for our norms about real property to allow for the free passage of people, goods, & animals. You can argue the details about how to best arrange that, but not that it’s a bad idea generally.

  4. At some point someone’s going to have to acknowledge that the short-term profit interest of a multinational industry is not the same thing as human freedom.

    1. At some point someone is going to have to acknowledge that redistribution is not the same thing as human freedom.

      1. Don’t mistake Tony for someone who gives a shit about human freedom.

    2. Profit interests are the greatest thing that has ever happened to advance the cause of human freedom Karl. Its called capitalism.

    3. Sure, and at some point people are going to have to acknowledge that pipelines are the most efficient way to transport goods, opposing them is like opposing higher mileage standards because people might drive more (which is an interesting second order effect but doesn’t overwhelm things), and pipeline fights are utterly irrelevant to real action on climate change.

      The amount of heat and energy that the environmentalist camp puts into opposing pipelines, while turning up their nose at Washington’s I-732 carbon tax swap (because it didn’t put money in their pet projects, only redistributing money directly to the poor) does seem to demonstrate that very few people actually care enough about climate change to do something real.

  5. Just because energy is necessary for our economy, I think that oil companies, which historically do very well monetarily, should have to barter and negotiate private land acquisitions individually. I work for an energy company and we hold that principle high.

    If nothing else, the prospect of the necessity for pipelines right now will be a tough sell anyway since world demand is in the shitter and there is plenty of cheap oil everywhere else. The smart thing is to begin the process of negotiations with landowners now and to guarantee mineral rights or throughput royalties or something.

    The other side of it is of course that the environmentalists have no rational objections left since so many their findings on ACC have repeatedly been found to be either unproven or outright fraud.

    1. Let the market decide not the government. Less than 5 years ago the market was clamouring for more oil.

  6. Folks, I’m done. I’m spending more time refreshing the page than typing. Smell ya later.

    1. Looked at my kingdom,
      I was finally there!

  7. Ron isnt half of the red southern part already done and this just the hypotenuse portion

  8. After dithering for most of his term, President Barack Obama declared on November 6, 2015 that the construction of the Keystone Pipeline was not in the national interest.

    Stalling /= dithering.

  9. Score 1 for having elected Trump.

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