Keystone XL debate rages throughout summer 2014

By Leonard Melman

Keystone XL Pipeline Protest at White House

Keystone XL Pipeline Protest at White House. Photo courtesy of tarsandaction/Flickr.

It is amazing how sometimes random events serve to highlight areas of public controversy, and in terms of fossil fuel production and distribution, the summer of 2014 has been particularly significant on two counts.  First, the Ukraine-Russia dispute has served to place new pressures on natural gas distribution, particularly within the huge European market.  Second, the sudden eruption of violence within oil-producing regions, such as Iran and Nigeria, has raised questions regarding the reliability of petroleum production and exports from those regions.

Both episodes serve to highlight the importance of generating reliable North American supplies. And, that consideration brings sharpness to the polarizing debates surrounding one of the most important projects now dominating North American media headlines, the proposed Keystone XL pipeline, which is designed to move Canadian petroleum through the central U.S. and eventually down to major refining facilities located on the American Gulf Coast.

The project could be of vital interest to the Canadian provinces of British Columbia, Alberta, Saskatchewan, and Manitoba, where intense exploration and development efforts relating to both ‘natural’ petroleum deposits and those associated with tar sands developments are ongoing.  In fact, those provincial governments regard petroleum production — both present and future — as important bases upon which to build future economic growth.

Alberta, of course, is already well known for conventional, as well as oil sands development and production, while the other three provinces look toward natural gas and petroleum extraction as major sources of present and future economic growth.

Keystone XL is actually only one part of the “Keystone Pipeline System”, with three phases carrying crude oil from Alberta already in operation (as of mid-2014), including Phase 1 from Hardisty, Alberta through Regina, Saskatchewan to Steele City, Nebraska and then on to refineries in Illinois; Phase 2 operates between Steele City and Cushing, Oklahoma; and Phase 3A continues on to Nederland, Texas.  Phase 3B, which extends the pipeline to Houston, is currently under construction.

The Keystone XL pipeline — Phase 4 of the total system — will be an entirely new pipeline from Hardisty directly to Steele City, located in southernmost Nebraska — and it is that location which lies at the heart of a major environmental controversy since the proposed route would carry the pipeline through areas considered important to Nebraska’s and neighbouring states’ fresh water supplies.

The fact that controversies surrounding Keystone XL are making well-publicized pro and con headlines on an almost daily basis can be attributed, at least in part, to the influence of great personal wealth on either side of the issue.

To a large extent, forces opposed to the construction of the Keystone XL are funded by billionaire Tom Steyer, founder and former chairman of Farallon Capital Management.  In a recent interview, Steyer declared that he was dedicating himself to tackling energy and climate issues, and in order to work toward those goals he founded — and funded — “NextGen Climate”, which identifies itself strongly with promoting climate change awareness, as well as supporting clean air and water issues.

Meanwhile, noted libertarian and free market activists Charles and David Koch — also themselves billionaires — are equally vigorous in support of Keystone XL.  The Koch Brothers, chairman and executive vice-president of giant Koch Industries, have consistently promoted Keystone XL on the basis of the huge potential economic and job-creation benefits which could accrue upon its construction and successful completion.

Political influence has played an important part in the overall debates regarding the project.  Generally, those on the political Left, and therefore carrying substantial influence within Democratic Party circles, right up to President Obama, are fervently opposed to the project on environmental grounds.  One of their arguments is that the completion of the Keystone XL would enable further expansion of tar sands petroleum recoveries in Northern Alberta, which they regard as environmentally harmful, while another is that approval of the Keystone XL could endanger the entire Ogallala Aquifer, one of the largest reserves of fresh water in the world, which spans eight states and provides drinking water for more than two million people.

On the opposite side, those favouring the project point toward two significant considerations.  First, there are the direct economic benefits which would include construction employment, permanent operational job creation, support of many retail establishments during construction and operation, further employment within the Canadian oil industry, and capital gains which would then be redistributed throughout the economy.

Most recently, they have also noted that the Ukraine-Russia and Iraq-Syria and Nigeria instabilities demonstrate the potential vulnerabilities associated with the importation of fossil fuels from distant — and possibly unreliable — sources.  Accordingly, they favour extensive development of North American alternatives.

There are other political issues as well.  Since the Keystone XL pipeline originates in Canada but passes through U.S. territory, relations between Canada and the USA are also involved.  It is a matter of record that American President Barak Obama has openly questioned the ultimate value of the project compared to the environmental damage that might ensue and has therefore used his powerful influence to delay final approval while Canada’s Prime Minister Stephen Harper has been vociferous in favour of quick approval of Keystone XL leading to early construction and production.

It is also worth noting that because both nations are involved, final American responsibility for approval lies with the state department, which is also subject to political pressures.

Whatever the eventual regulatory outcome, the release of important information from both sides of the Keystone XL debate have served to significantly raise the level of public knowledge regarding the entire subject of North American fossil fuels developments.

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