Keystone XL Pipeline Likely Attached to U.S. Highway Jobs Plan


Washington D.C.   – Debate over the Keystone XL Pipeline is expected to surface again this week in Washington D.C. as Republicans push to attach the passage of the pipeline to a U.S. Highway Jobs Plan that Congress will introduce on Thursday with House Speaker John Boehner (R-Ohio). 

“If (Keystone) is not enacted before we take up the American Energy and Infrastructure Jobs Act, it will be part of it,” Boehner told Jake Tapper on ABC’s “This Week” news program.

The 1,661 mile proposed Keystone XL Pipeline which stretches from the Athabascan region outside of Hardisty, Alberta to oil refineries in Houston and Port Arthur, Texas is causing a stir from environmentalists, labor unions, the American Petroleum Institute, and big oil companies.

Oil companies have invested large sums of money in Albereta’s oil sands and are hoping to cash in once the oil begins to flow in large quantities to the U.S. and China.

The underground pipeline is designed to increase Canadian oil exports to the United States by 700,000 barrels a day, or roughly 4 percent of current United States oil demand. Canada has the second largest proven oil reserves in the world behind Saudi Arabia.

On January 18th President Obama rejected a permit for the pipeline from TransCanada who operates the oil sands production. The Obama administration cited the need to conduct a longer environmental impact review.  The president said his hand was forced by Republicans in Congress, who inserted a provision in the temporary payroll tax cut bill passed in December to expedite the passage of the pipeline. In November 2011, President Obama postponed the pipeline decision until 2013.

After rejecting the permit, President Obama invited TransCanada to re-apply for the permit. A spokesman from TransCanada said that they would re-apply.

One of the rejected pipeline routes runs through the Sands Hill region in Nebraska, an area that contains the Ogallala Aquifer which spans 8 states and is estimated to hold 1/3 of ground water to irrigate U.S. crops.  

In the summer of 2010, a million gallons of tar sands oil dumped into the Kalamazoo River in Michigan from a pipeline run by another Canadian company, Enbridge. The oil spill exposed residents to toxic chemicals, coated wildlife and and damaged the regional ecosystem.

Although the Keystone Pipeline is considered to be “state of the art” and safe to operate, TransCanada’s Keystone I pipeline has already spilled a dozen times in a year of operation, spurring action from the Department of Transportation and protest from environmental groups.

Extracting oil sands from Alberta’s oil fields requires vast amounts of energy and water to extract small amounts of deep integrated bitumen from rocks. Approximately 90% of the polluted water used during the extraction process is dumped into human made ponds, known as tailing ponds (see photos on left). It is estimated that 10 x the amount of greenhouse gasses are produced from the Athabascan oil sands compared to conventional oil. Due to their synthetic oil production, Canada has lost its membership in the Kyoto Protocol and faced criticism from environmental groups and First Nation Tribes in Canada.

Athabascan tailing ponds

Although the 1,661 proposed pipeline is long, it won’t be the longest if it is approved. The 1,700 Rockies Express Pipeline carries natural gas 1,7000 miles from Colorado to Ohio. The Lakehead System Pipeline stretches 1,900 miles from North Dakota to Michigan.

 Keystone XL Pipeline and U.S. Jobs

Republican House Speaker John Boehner claimed that the Keystone XL Pipeline will result in 20,000 new U.S. jobs and 100,000 indirect long term jobs, a highly questionable figure. However, the State Department estimates the job creation from the pipeline will be closer to 5,000 to 6,000.

The Global Labor Institute from Cornell University completed an independent review and concluded in their research that only 500 to 1,400 U.S. jobs will be created from the pipeline. Their independent review determined that much of the new hiring for the construction of the Keystone XL Pipeline will come from outside the United States.

Global Labor Institute released a summary of their jobs review in a paper, Pipeline Deams?, which refutes many of the exaggerated figures that TransCanada used to convince Republicans that the Keystone XL Pipeline will result in a jobs boom. Here are some of key findings from their research.

* The industry’s US jobs claims are linked to a $7 billion KXL project budget. However, the budget for KXL that will have a bearing on US jobs figures is dramatically lower—only around $3 to $4 billion. A lower project budget means fewer jobs.

* The project will create no more than 2,500-4,650 temporary direct construction jobs for two years, according to TransCanada’s own data supplied to the State Department.

* The company’s claim that KXL will create 20,000 direct construction and manufacturing jobs in the U.S is not substantiated.

* There is strong evidence to suggest that a large portion of the primary material input for KXL—steel pipe—will not even be produced in the United States.  A substantial amount of pipe has already been manufactured in advance of pipeline permit issuance.

* The industry’s claim that KXL will create 119,000 total jobs (direct, indirect, and induced) is based on a flawed and poorly documented study commissioned by TransCanada (The Perryman Group study).

Athabascan tailing ponds from space

America’s Energy Demands and Clean Energy

During last Tuesday’s State of the Union address, President Obama spoke about the need to develop clean energy. He discussed natural gas as a clean energy alternative and mentioned that the U.S. has large natural gas supplies. This winter due to the warm weather throughout the U.S., natural gas supplies are at peak levels and natural gas companies such as Chesapeake Energy are cutting production.
U.S. Energy Policy
President Obama will likely continue to push to develop natural gas as an alternative to crude oil. However, his plans to develop clean energy will need to gain traction at a grass roots level across the U.S. and also receive bi-partisan support to advance his forward looking clean energy plans. It is not clear if President Obama will receive this support in an election season.
A balanced U.S. energy policy will develop clean energy resources like natural gas while also continuing to explore the development of safe offshore drilling and crude oil. Natural gas and crude oil can co-exist together and supply the energy needs of America while also lowering the dependence on Middle Eastern oil. It does not have to be an either or argument, with a zero sum outcome. 
Rising oil prices due to rising tension in the Middle East have crippled the U.S. economy, causing financial stress for Americans and U.S. businesses. Spiking oil prices have been one of the catalysts that led oil companies to search and develop oil fields in Canada’s Athabascan region for oil consumption. 
While the Obama Administration continues to wait to grant a permit to TransCanada for the Keystone XL Pipeline and Republicans seek to pass the Keystone XL Pipeline through a new Jobs Bill,  competing interests will attempt to sway our government to adopt the right kind of policy that supplies America’s energy demands and also keeps the environment safe.









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