Former Vice President and current Democratic Party presidential candidate Joseph Biden has committed to rescinding President Trump’s permit allowing the Keystone XL oil pipeline to cross the Canadian border into the United States if elected. In 2008, TransCanada filed paperwork for a Keystone XL pipeline, extending from Canada through Montana, South Dakota, and Nebraska, and connecting with the existing Keystone pipeline that would move 830,000 barrels per day of oil to refineries along the Texas Gulf Coast. Because Keystone XL would cross the U.S. border, the State Department determines whether the project is in the national interest. After numerous delays and court actions, President Obama denied the permit in 2015, saying that it was not in the national interest because the United States was a global leader in fighting climate change. President Trump overturned that decision in 2017.
After other delays due to state issues, work commenced in April 2020 at the border crossing in northern Montana with a 1.2-mile section completed. Plans are to have the 1,200-mile pipeline operational in 2023. However, a May 15 ruling from a federal judge in Montana cancelled a national permit from the U.S. Army Corps of Engineers that is needed to build across streams, wetlands, and other water bodies. The judge ruled that the U.S. Army Corps of Engineers failed to adequately consider effects on endangered species.
President Trump approved the Keystone XL pipeline because it will provide the United States with access to safe, reliable, and affordable energy supplies from Canada, and reduce our need to import heavy oil from less stable countries and regions of the world. Keystone XL connects a secure and growing supply of Canadian oil—developed from both traditional deposits and oil sands—with the largest refining centers in the United States and allows for U.S. domestic oil supplies from the Bakken fields in North Dakota and Montana and from sources in Oklahoma to be transported to Gulf Coast refineries. The project improves the nation’s energy security, providing manufacturing and construction jobs that would be particularly helpful as the U.S. economy recovers from the coronavirus pandemic.
According to TC Energy, formerly TransCanada, construction of Keystone XL will create 10,400 U.S. jobs and local contracting opportunities for welders, surveyors, engineers, and environmental specialists. Overall, construction will support 42,000 U.S. direct, indirect and induced employment opportunities that will be created by supplying goods and services to the project and the project’s workforce.
Biden’s Decision Would Enrage Our Northern Neighbor
Canadian political officials have invested in the Keystone XL pipeline. The Alberta government is investing $1.1 billion (C$1.5 billion) in the project, which will cover construction costs through 2020. Alberta’s government also is giving the company a $4.2 billion (C$6 billion) loan guarantee in 2021. In Canada, the project will create over 1,400 direct and 5,400 indirect jobs during construction and generate an estimated $30 billion in tax and royalty revenues. According to government projections, the project will provide a net return of over $30 billion to the Alberta taxpayer through royalties and higher prices for Alberta oil in the next 20 years. Alberta oil has traditionally fetched much lower than market prices because of transportation bottlenecks the Keystone XL pipeline is designed to reduce.
Currently, Canadian oil is either trucked or placed on railcars at higher expense to producers and consumers, with increased environmental, health and safety hazards due to surface transportation. This form of shipment limits Alberta’s oil export capacity. Without the ability to export more oil, there is little incentive for producers to invest in more oil production in Alberta. Completion of the Keystone XL pipeline would reverse that. According to a Canadian official, the Alberta province “would use every legal means at our disposal to protect our fiscal and economic interests,” which could include lodging trade complaints against the United States if Biden’s threat would to be instituted.
Pipelines are Safe and Less Expensive than Rail
The U.S. State Department concluded that Keystone XL would have a negligible impact on carbon emissions, also noting that the pipeline would not impact the surrounding water, vegetation, wildlife or air quality. The Keystone XL pipeline would also help the environment because moving oil by pipeline produces 42 percent fewer emissions than transporting oil by rail, which is how the oil is being transported in lieu of Keystone XL. Since 2008, the use of rail to ship oil had increased by a factor of 50, adding $5 to $10 per barrel in additional cost and greater environmental and safety risks. TC Energy plans to build Keystone XL according to rigorous safety standards, including 59 safety rules federal regulators added to its proposal.
Conclusion
It appears Biden has given little thought about our northern neighbor and ally in his announcement of the intention to rescind the permit for Keystone XL. The Alberta government is backing the project to expand its oil industry and to ensure safe, reliable, and affordable energy to U.S. refineries that need heavy oil, which will reduce U.S. dependence on OPEC supplies. TC Energy has spent 12 years trying to obtain approval for the pipeline and has begun construction, expecting a 2023 operational date, despite the recent snag from a Montana federal judge.
