The recent big drop in oil prices may relieve President Obama from a tough decision on the proposed northern leg of the Keystone XL pipeline project. At current levels, crude-oil prices are unprofitable for any new oil-sands programs. Rail capacity from the oil-sands region is also growing rapidly, and it will reach 700,000 barrels per day by 2016. The new $6 billion pipeline may not be needed.
If oil prices stay in the low $50 range, “the necessity for Keystone XL may disappear,” says Pete Howard, the president emeritus of the Canadian Energy Research Institute in Calgary, Alberta. “We’ve got rail right now as a safety valve, and if we build up rail capacity to carry three-quarters of a million barrels, that pretty much takes up all the projects that are under construction today.”
The new Republican Congress is poised to approve that northern segment of Keystone XL, challenging the president to veto. The Keystone southern segment from Cushing, Okla., to the Gulf of Mexico has been operating successfully for more than a year. Opposition to the northern segment and to the growing output of the Alberta oil (tar) sands is based on fears for the environment: Alberta’s boreal forest is alleged to be decimated and our atmosphere will be filled with more greenhouse gases.
Actually, the province of Alberta has 147,000 square miles of boreal forest. A total area of 1,850 square miles is set aside for oil-sands surface mining. About 400 square miles have so far been disturbed. Producers are required to restore disturbed land and make deposits to a fund guaranteeing restoration. That fund now totals more than $900 million.
Seventy-five percent of greenhouse-gas emissions from oil comes from the end-use burning of the end products, such as gasoline and diesel that are made from the crude. Those end-product emissions are the same for conventional and oil-sands oil. Therefore, the overall well-to-wheel difference between the oil sands and a conventional oil well is small. At present, all Canadian oil-sands production operations account for about one-tenth of 1 percent of world CO2 emissions.
Pipeline builder TransCanada notes that existing oil-sands pipelines operate safely. This includes the 1,000-mile Alberta Clipper pipeline, which brings oil-sands oil from Alberta across northern Minnesota to Superior, Wis.
A spur pipeline at Clearbrook, Minn., brings 300,000 barrels per day safely to our Pine Bend refinery in Rosemount, the source of most of Minnesota’s gasoline, diesel and aviation fuel.
The residents of Alberta love their lands and waters, and they are capable of preserving those assets without our interference.
Rolf E. Westgard, of St. Paul, is a geologist and a guest faculty member for University of Minnesota Lifelong Learning.