The Proposed Keystone XL Pipeline Project Dilemma:

Climatic and Economic Concerns

Ayodeji Owowa

Dalhousie University

March 2014
The Proposed Keystone XL Pipeline Project Dilemma Ayodeji Owowa
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Table of Contents

Executive Summary.....................................................................................................................................3
1.0. An Overview of the Keystone XL Pipeline Project..........................................................................5
2.0. LITERATURE REVIEW.................................................................................................................7
2.1. The Oil sands...................................................................................................................................7
2.2. The Alberta Oil Sand Development Project.....................................................................................8
2.3. Crude Oil Transport and Safety.......................................................................................................9
2.4. Environmental Issues and Climate Change....................................................................................11
2.5. Energy Security..............................................................................................................................11
3.0. STAKEHOLDERS IN THE KEYSTONE XL PIPELINE.............................................................12
3.1. Proponents of the Keystone XL Project.........................................................................................12
3.1.1. Critic of Proponents View..........................................................................................................14
3.2. Opponents of the Keystone XL Project..........................................................................................17
3.2.1. Critic of Opponents Views.........................................................................................................18
4.0. OBJECTIVE ANALYSIS AND CRITIC.......................................................................................20
REFERENCES..........................................................................................................................................23

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Executive Summary

The controversial Keystone XL Pipeline is a 1,179-mile, 36-inch-diameter heavy oil (bitumen)

pipeline with a capacity of 830,000 barrels per day (bpd) beginning in Hardisty, Alberta, routing

southward to Steele City, Nebraska. The pipeline has be a subject of hot debate between different

interest groups principally governments, industries and environmentalists.

Supporters of the project are of the opinion that it will bring about considerable employments,

economic boost, safe crude oil transportation and energy security for the US. Opponents of the

project are of the view that the project will accelerate oil and developments and thereby

worsening the embattled environmental and climatic conditions.

This paper analyses the proponents and the opponents views in the light of existing facts and the

following submissions were made.

Approval or disapproval of the pipeline will not significantly affect the development of

more oil sand projects are there are ongoing plans to build other pipelines that would

outstrip the Keystone XL capacity in the long run.

Import from United States will decline with time as she moves towards energy

independence, which will force the developers of the oil sands to explore other markets

outside of US.
Disapproving the Keystone XL on the grounds of Greenhouse Gases emission will be

somewhat hypocritical as a fraction of US power plants currently produces 4 times the

CO2 equivalent associated with the proposed pipeline in a year.

A political underplay is suspected in the elongation of time to final decision on the

pipeline.

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With or without approval of the proposed pipeline, there will be need for stricter

guidelines and policies for oil sand development to ensure oil sand projects are as

environmentally benign as possible.

This paper does not delve into detailed environmental and climatic concerns associated with oil

sand development in Alberta; it does however consider general issues relating to oil sand

development in the light of the proposed pipeline. The personal views of the author were also

considered as well as the basis for his biases were included in the report.

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1.0. An Overview of the Keystone XL Pipeline Project

The Keystone XL Pipeline is an extension pipeline project proposed to expand the throughput of

existing Transcanada Keystone pipelines carrying heavy crude from oil sand projects in Western

Canadian Sedimentary Basin (WCSB) to United States. The proposed extension is a 1,179-mile,

36-inch-diameter heavy oil (bitumen) pipeline beginning in Hardisty, Alberta, routing southward

to Steele City, Nebraska (Transcanada, 2013) which is then connected to existing keystone

pipeline from Steele City to refineries in Gulf coast, Texas. The pipeline has a throughput

capacity of 830,000 barrels per day (bpd) of crude oil and will facilitate delivery of diluted

bitumen and synthetic crude oil from Alberta Tar sands and shale oil from North Dakotas

Bakken formation in the US to Steele City from where the crude is piped to refineries in the Gulf

Coast.The pipeline will transverse two provinces (Alberta and Saskatchewan) in Canada and 3

states (Montana, South Dakota, and Nebraska) in the United states as well as very vital natural

resources such as the Wetlands and the Ogallala aquifer (United States Department of States,

USDOS, 2014)

On September 19, 2008, Transcanada Corporation, the Canadian pipeline company in charge of

the proposed project filed an application to the United States Department of State for Presidential

Permit to facilitate the construction of the Keystone XL pipeline (USDOS, 2014). The proposed

project was in two phases a southern leg extending from Cushing Okhlahoma to the Gulf Coast

area and a northern leg from Morgan Montona to Steele City Nebraska in the United States. The

northern leg also consists of the proposed pipeline running from Hardisty Alberta, Canada to the

Borderline between the US and Canada at Morgan Montana.

After a prolonged delay in granting a Presidential Permit on the project, Transcanada submitted

separate applications for the construction of the southern leg and the northern leg in Febraury

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2012 and May 2012 respectively. Since the southern leg did not cross international borders, it

was approved by the US government and was recently completed and commissioned in January

2014 (USDOS, 2014). The northern half however dangles in limbo till date as the US President

turned down approval recently on the grounds that ample time was not given to the Department

of States by the US legislators to conduct a thorough environmental impact study and to

determine if the project was in US national interest (USDOS, 2014). There had been speculations

that the delay in approval of the project had many bends and twists from environmental and

political standpoints (The Globe and Mail, 2014).

While the Canadian Government had pledged full support for the proposed extension despite

outcry from environmentalists and other interest groups, the US government had withheld

approval for the construction of the 875-mile segment of the pipeline intended to start from

Morgan, Montana to Steele City, Nebraska (USDO, 2014).

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2.0. LITERATURE REVIEW

The proposed Keystone XL pipeline project has been a subject of unending bitter controversies;

perhaps no other energy policy related issue has attracted so much debate and media attention in

recent times as the Keystone XL pipeline project.

The United States President directed the Department of State to determine if the proposed

pipeline project was in the best interest of the nation, before a presidential permit will be granted

for its construction (USDOS, 2014). At the end of the exercise, a comprehensive report The

Keystone XL Final Supplementary Environmental Impact Statement (FSEIS Kyestone XL)

was produced and made public. Amongst the several issues dissected by the State department,

the following have been identified to have raised questions: (1) Environmental concerns (2)

Climate change (3) Energy security (4) Crude oil transportation Safety and (5) Economic impact

of the project.

In an attempt to examine the identified issues listed, it will be pertinent to do a brief overview of

some fundamentals relating to the pipeline project itself which include oil sands, oil sand

development and its impact on the economy, environment and the climate, employment, crude

oil transportation, energy security and a number of related concerns. This will set the context for

which the polarized views on the proposed pipeline will be discussed.

2.1. The Oil sands

Oil sand also known as tar sand is an aggregate of sand, bitumen, clay and water. It is a naturally

occurring fossil material found in a number of countries with significant deposits in Russia,

Venezuela, Nigeria, the United States and Canada. Of all the countries listed, Canada has the

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largest deposit in the world and the only country where large-scale industrial development of the

tar sands is taking place. This paper will consider the Alberta oil sand development, in Canada.

The target component of the oil sands, bitumen, is a heavy and highly viscous oil at ambient

temperatures, and usually will require further processing before it becomes a useful product.

Two approaches exist for the extraction of bitumen from the tar sands; surface mining and in-situ

operations. Surface mining entails removing the overburden material in order to access oil sand

deposits up to 70 meters from surface (Canadian Association of Petroleum Producers, CAPP,

Facts on Oils Sands, 2013). At depths more than 70 meters, the in-situ method of bitumen

extraction is employed. Both processes are energy intensive and subsequent processing is

required to add value to the extracted bitumen before it is marketed.

2.2. The Alberta Oil Sand Development Project

Sitting on a 140,200 square kilometer is the worlds largest oil sand deposit also known as tar

sands with a proven reserve of 167.9 billion barrels of heavy oil (Government of Alberta, Fact

Sheet, 2013). In 2012, oil production stood from these deposits accounts stood at 1.9 million

barrels per day which represents 55% of Canadas total crude oil production. Forecast revealed

that production could climb to 3.8million barrels per day by year 2022 (Fact Sheet, 2013).

Following the trend of increase in Canadas energy demand as well as the global energy demand,

oil sands development, has a potential of contributing significantly to the Canadian economy,

thanks to the massive investments currently ongoing into the oil sands project. According to

Statistics Canada, in 1990, only $19 billion or 13 % of the nations energy resource was

attributed to heavy oil production, by the year 2009, that number had risen to $441 billion, a 23-

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fold leap that made heavy crude the single most important commodity in the energy sector of the

Canada (Statistics Canada, 2011).

A forecast by the Canadian Energy Research Institute (CERI) in 2005, for a period between 2000

and 2020, estimated an increase in GDP to the tune of $789 billion for Canada and $96 billion

for other countries predominantly for the United States, if the current rate of development and

production of heavy crude is sustained (CERI, 2005). A similar study by CERI in 2010 for a 25-

year period (2010 2035) shows that even with the current level of infrastructure for crude

transport, a total $2.197 trillion in revenues as well as direct and indirect investments will be

generated. The Canadian GDP will see an increase of about $2.283 trillion over the next 25-

years, up to $650 billion will be paid in salaries for existing employees and an estimated

additional 100,000 direct, indirect and induced jobs will be created for the period 2010 to 2020.

(CERI, 2011)

The study further revealed if the Keystone pipeline is built, an additional $624 billion in revenue

and investments, $633 billion in GDP and 200,000 jobs will be created for the period under

review. US employee compensation will exceed $171 billion and US employment will rise to

179,000 new jobs (CERI, 2011).

2.3. Crude Oil Transport and Safety

Several methods exists for crude transportation depending on a number of factors such as the

product to be transported, distance transverse and location of receiver, volume of product to be

moved, terrain and product demand just to list a few. The most popular of these modes of

transportation are the rails (oil tankers), floating vessels and pipelines especially when large

quantities are being involved.

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It is important to mention that currently, the United States is the primary target market for about

most of the oil produced from the WCSB (CAPP, 2013).

Oil produced in Canada are transported primarily via any of these three modes depending of

some of the factors already listed. As of Novemebr 2013, it is estimated that about 180,000

barrels of crude oil per day are being moved by rail from WCSB into the US (USDOS, 2014).

The existing rail loading infrastructures in the WCSB are tipped to have about 700,000 bpd in

capacity with a projection of an expansion in excess of 1.1million bpd at the end of 2014

(USDOS, 2014)

Several incidences in recent years have however cast a shadow on the safety of oil-rail transport.

The Lac-Mgantic in Quebec and Plaster Rock in New Brunswick rail derailment incidences in

July 2013 and January 2014 respectively resulting in 49-deaths (in the case of Lac-Mgantic) has

dimmed the light on using rail as a safe means of transportation for crude oil. (The Globe and

Mail, 2013)

Seaborne transport using floating vessels have not received so much attention as a means of

transporting oil to the US. While some of the conventional oil produced in Canada is seaborne

through the British Columbia ports to access other marginal markets, no attempt is currently

being made to explore this option for heavy crude transportation to the US. Canada has pulled a

clean sheet in safety since year 2000 of having no incidence for seaborne crude. This may

suggest a plausible alternative to transporting crude oil to US Gulf coast refineries as well as

other emerging markets. However, the pipeline infrastructures needed to move bitumen to British

Columbia Ports are lacking (Angevine and Oviedo, 2012).

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The transportation of crude oil by pipeline system is the dominant method of oil delivery within

Canada. While an array of pipeline networks exist in order to transport produced oil not meant

for consumption within the Alberta province to other parts of Canada for refining, very few such

pipelines exist for delivering the produced heavy crude directly to the US market. The Enbridge

Mainline and Southern Access pipelines are the two major pipelines linking the WCSB to the US

market (CAPP, 2013).

2.4. Environmental Issues and Climate Change

The increased rate of oil sand activities in Alberta has raised more dusts than any other energy

related project in recent times because of the attendant health and environmental concerns.

Prominent amongst these issues are; ecosystem disturbance, greenhouse gas emissions, toxic

wastes releases into surrounding water bodies which is claimed to have decimated marine life

and heightened cases of cancer incidences in Fort Chipewyan, an aboriginal community in close

proximity to the oil sand development sites (Gosselin, Hrudey, Naeth, Plourde, Therrien, Kraak,

& Zu, 2010).

2.5. Energy Security

The International Energy Agency (IEA) defined energy security as the uninterrupted

availability of energy sources at an affordable price. IEA also submits that energy security is

enhanced by broad-ranged, efficient and flexible energy sources. (IEA, 2013). The backers of

the Keystone XL pipeline are of the opinion the project will bring about energy security for the

US for several decades.

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3.0. STAKEHOLDERS IN THE KEYSTONE XL PIPELINE

Several interest groups and organizations hold divergent views on the worthiness of the oil sand

developments and the proposed pipeline project.

Identified as major stakeholders in the pipeline project are operating companies (oil producers

and pipeline companies, chiefly Transcanada), governments (US, Canadian and Alberta

governments), environmentalists (e.g. US, Environmental Protection Agency, Greenpeace and

other interest groups), regulatory bodies (e.g. Canadian Environmental Assessment Agency,

CEAA, National Energy Board, and Transport Safety Board) and the First Nations (Gosselin et

al, 2010)

3.1. Proponents of the Keystone XL Project

The major advocates for this project are the Canadian Federal and Alberta Provincial

Governments, the pipeline company, Transcanada and the Canadian Energy Pipeline Association

(CEPA) (Government of Alberta, Transcanada, CEPA, 2012).

Several benefits have been highlighted by the supporters. Prominent amongst these are job

creation, economy boost, safety and energy security (Transcanada 2014). In the US alone, over

40,000 direct, indirect and induced jobs will be generated during the construction of the pipeline

while 50 permanent positions will be created after commissioning the project (USDOS, 2014).

According to the United States Department of State, about $3.4 billion will be contributed to the

US gross domestic product (GDP) due to the pipeline project. Property taxes for 27 hosting

counties over the 50-year lifespan of the pipeline are yet additional blessings to the benefiting

states Canada will however benefit more both in job and GDP input.

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The Canadian Energy Research Institute (CERI) Pacific Access Report in a 25-year (2011-2035)

forecast estimated an additional $Cdn617.4billion in GDP, 3497 thousand person-years in

employment and $Cdn131 billion in taxes to Canada only if the Keystone XL pipeline is built

(CERI 2011). These figures averages to about $Cdn24.7 billion in GDP, 140 thousand persons-

years and $Cdn5.24 billion in taxes per year. If statistics are anything to go by, these figures are

too tempting not to want to embark on a project as the Keystone XL and thus could have been a

major motivation for the project

Another strong point held by the backers of the Keystone XL project is energy security

(Transcanada, 2014). According to the International Energy Agency (IEA) definition, energy

security is the uninterrupted availability of energy sources at an affordable price enhanced

by broad-ranged, efficient and flexible energy sources [IEA website]. With over 168 billion

barrels in crude oil reserves, the Canadian oil sand deposit seems to fit a description of a secure

energy source for several decades. The Keystone XL is to play a crucial role in making the oil

produced from these oil sands accessible to markets in the US and the other external markets

notably China which currently is the worlds second highest energy consumer and could be the

largest net oil importer in 2014 (EIA, 2014). Advocates of this project are of the opinion that the

construction of the pipeline will directly make the US depend less on unstable oil supply from

OPEC countries such as Saudi Arabia and Venezuela (Transcanada, 2014)

Canada currently is the highest exporter of oil to the US and being a friendly neigbhour, the

availability of products at very affordable price can be guaranteed over the next several decades

(CAPP, 2013)

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Safety was another issue cited by the supporters of the Keystone project (TransCanada, 2014)

Large volumes of crude oil can be transported in various ways which include; rail, tankers,

floating vessels and pipeline. It has been argued that of all these means of transportation, pipeline

transport is the safest and most convenient. The incidence of Exxon Valdez in 1989 which spilled

11million gallons of crude oil in offshore Alaska readily comes to mind (EPA, 1991). The

aftermath of that incidence still scratches memory till date. Not only did the incidence led to

colossal loss of aquatic life, but also it was a huge economic loss to the vessel owner and the

operating company Exxon Corporation who paid about $1 billion in fines and damages (EPA,

1991).

Crude oil train accidents in recent times have heightened concerns about the safety of this means

of transportation. In 2013 in a spate of 5 months, 13 accidents related to crude oil transport in

Canada alone were recorded (CTV News 2013). The statistics seems to be rising with recent

crude oil train accidents in Canada and the US (Reuters 2014). In 2014, from January to

February, 3 crude oil train derailments have occurred (Huffington Post, 2014) leading to loss of

lives and properties. These incidences have raised concerns about finding alternative yet safer

means of transportation, for which the proponents of Keystone XL project are persuaded the

proposed pipeline will rescue the situation.

3.1.1. Critic of Proponents View

A number of questions come to mind on the reasons put forth by the backers of the Keystone

On the issue of job creation, granted that 40,000 jobs could be created in the US, these jobs are

temporary and thus the euphoria of employment and its attendant paychecks could only be short-

lived. According to the Department of States report only about 50 jobs will be created after the

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project is completed (USDOS, 2014). This other side of the story is often not being told by the

proponents of the project.

Also there is really no guarantee that a good portion of the jobs will not be outsourced. So rather

than the locals being directly involved in the jobs, skilled workers from neighboring states and

Canada may be brought in to do these work. These expatriates most will most likely move back

to base and as such earnings from the project may not significantly benefit the local businesses.

Similarly, the lauded economy boost attributed to the construction of the pipeline will only result

in 0.02% of US GDP over the two-year period of the project (USDOS, 2014). This figure does

not seems so much for the US economy and thus could not be term significant for the economy,

however, it could be significant in the long term in royalties and taxes paid over the 50-year life

span of the pipeline.

Energy security for the US is also considered as one of the merits of this project. While there is a

possibility that a significant portion of oil from the pipeline refined at the Gulf Coast will stay

back in the United States, there is no way to guarantee that the refined oil will not be exported.

Transcanada is only a pipeline company and does not have jurisdiction on where or to whom the

refined oil is sold.

Also, one becomes wary about the choice of the destination of the pipe and who the major buyers

of the heavy crude are. According to US Energy Information Administration as at 2013, the US

has 139 operating refineries and of these only 16 are in Texas Gulf Coast area (EIA, 2013). Why

is the proposed Keystone XL pipeline terminating in this area and not other parts of the US? A

likely answer is that Valero which has recently retrofitted its refinery for heavy crude like the

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Athabasca bitumen signed a 20-year contract on the receiving 20% of Keystone XL capacity

(Transcanada, 2013). According to Valero energy report for first quarter 2013,

Valero's capital expenditures are focusing on key areas to add long-term shareholder

value - logistics, processing cost-advantaged crude oil, and distillates-focused

hydrocracking," Klesse said. "Given the significant growth of crude oil production in the

U.S. and Canada, we are investing in more logistics projects to get cost-advantaged

crude oil into our refineries and to increase our ability to export refined products.

(Valero, 2013).

It is clear that one of the objectives of the owners of Valero refineries is to increase export and

this is where one begins to smell some level of untruthfulness when Transcanada CEO Russ

Garling stated not a drop of the refined crude will be exported (Transcanada, 2014).

Similarly, why is Transcanada interested in ensuring US cut down imports from Venezuela and

Saudi Arabia (TransCanada, 2014)? Is this out of a sincere interest in US energy security or a

leeway to sell more crude oil through her pipeline?

Pipeline in recent times has become the major route for transporting crude oil. Granted that it is

perhaps the safest means of moving crude oil, there are good chances that leaks and spills can

occur. Several incidences of pipeline spillages have been recorded in recent times. Statistics from

the National Energy Board (NEB) obtained by Canada Broadcasting Corporation (CBC) revealed

that 1,047 incidents which include spills, leaks, fire, explosions and injuries to workers had been

reported over the past decade (CBC News, Oct. 2013).

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The recent Exxon Mobils Pegasus pipeline spill in Arkansas US is a reminder of the safety

concerns still associated with pipeline transport (Reuter, 2013)

However, with a genuine commitment from TransCanada, the pipeline can maintained at

minimum risk to the environment.

3.2. Opponents of the Keystone XL Project

The key opponents to the proposed projects are some regulatory agencies and environmentalist

groups such as the US Environmental Protection Agency (EPA), Natural Resources Defense

Council (NRDC), Greenpeace and other interest groups (EPA 2013, NRDC 2013, Greenpeace

2012).

Several public demonstrations especially in the US, against the proposed pipeline have been

captured on the media.

The biggest concerns of those opposed to the Keystone XL project is the impact the approval and

construction of the pipeline will have on the environment. Constructing the Keystone XL

pipeline is believed, will greatly accelerate the development of oil sand deposits as there will

now exist an infrastructure that ensures the products get to the market. They are concerned the

project will worsen Air, water and land quality, greenhouse gas emissions, aquatic life quality,

ecosystem disturbance, climate change and health of Aborigines in the neighborhood. (Gosselin

et al, 2010).

Another point on opposing the project is the fact that the pipeline will mean longer dependence

on carbon-intensive fuels instead of cutting down on such usage. This is also tied to the impact

such combustion of fuels will have on the climate. Opponents are of the view its high time

cleaner renewable energy were embraced.

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3.2.1. Critic of Opponents Views

As earlier stated, environmental concerns are the major issues raised against the construction of

the pipeline with major one being the massive release of greenhouse gases into the atmosphere

thereby worsening the already precarious situation of the climate.

According to the Department of State report, The total lifecycle emissions associated with

production, refining, and combustion of 830,000 bpd of oil sands crude oil transported through

the proposed Project is approximately 147 to 168 MMTCO 2e per year (USDOS, 2014). This

will translate to a range of 7.35 trillion metric tons CO 2 equivalents (TMTCO2e) 8.4 TMTCO2e

over the 50-year life of the pipeline.

A study by Environment America Research and Policy Center, on Americas power plants

showed that just 50 of the power plants produced 656 MMTCO 2e per year, that is at least 4 times

what is estimated will be released into the atmosphere if the Keystone pipeline is constructed.

(Sneider and Boggs, 2013).

The project may not be rejected on the grounds of the amount of GHGs released into the

atmosphere as there are currently sources that will continually emit GHGs quantities far in

excess of what the pipeline is capable of.

The conception that if the pipeline is not built, the oil sands will not be adequately developed

may not be completely accurate. While building the pipeline will definitely accelerate the rate of

development of the untouched deposits, not building it may only slow down that rate, but

development of such will most likely proceed without the pipeline provided the oil prices are

fairly stable. The oil sands project is projected to contribute over $2 trillion to the Canadian

economy over the next 25 years (CERI, 2011), all that amount will not be allowed to sit as

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undeveloped tar sands. Also, there exist alternative plans to target emerging markets such as the

Eastern Canada which currently imports half of its crude oil need as well as the Pacific Asian

markets (CAPP, 2013) apart from the US market where currently about 70% of the oil produced

in Canada are shipped. Accessibility of bitumen from the oil sand project to other parts of

Canada will be possible by constructing new pipelines where the need arise. Currently, new rail

lines are being built and 3 new pipeline projects are being proposed at making the oil produced

from the oil sands accessible to larger markets (CAPP, 2013). These pipeline projects will

definitely achieve the same if not more result as the Keystone XL pipeline.

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4.0. OBJECTIVE ANALYSIS AND CRITIC

The delay in the approval of the proposed northern leg of the Keystone XL pipeline by the US

government has many interesting twists and bends. The southern leg of the same pipeline was

approved by the US government in 2012 and the project has since been completed and

commissioned (US Executive summary). The US government holds the view that the northern

leg will only be approved if it serves national interest in addition to the fact that the project will

not significantly impact the environment. On the proposed route of the northern leg are important

natural resources such as the wetlands and the Ogallala Aquifer. A number of questions comes to

fore. Why was the southern leg approved? Was it because the pipeline does not pose any threat to

natural resources or was it because the oil glut in Cushing Oklahoma must find its way to the

Gulf coast refineries?(Reuters, 2013). How about the 531 water crossings including the Carrizo-

Wilcox Aquifer that supplies drinking water to at least 10 million Texans? (HPJC, 2011).

Interestingly the same government raised concerns about the threat posed to Ogallala Aquifer

which is en route the northern leg of the pipeline. Why was the same concern not extended to the

Carrizo-Wilcox Aquifer? No doubt, the northern leg seemed to gather more opposition than her

sister pipeline and has since being in public glare. Is the approval of the pipeline by the present

US government, going to jeopardize some upcoming political plays especially the US congress

midterm elections for the democrats? If the total GHGs attributed to the northern leg of the

pipeline is one-fourth what 50 of US, coal power plants emit in a year and the Carrizo-Wilcox

Aquifer was not spared, on what environmental grounds is the Keystone XL approval withheld?

Is the delay is a placebo to Environmentalists? The questions are infinite.

The author is not advocating for or against the pipeline, sincerity is what would be desired to see

in making decisions that impact lives.

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United States, the primary buyer of Canadian crude is on the path of becoming energy sufficient

due to the boom in Shale oil and gas developments (IEA, 2013). IEA predicts that the US will

surpass Saudi Arabia in 2017 as the Worlds top oil producer (IEA, 2012). This is implies that oil

import from Canada into the US will dramatically drop to minimum, thereby making it difficult

for bitumen producers to compete favorably with lighter and cheaper crude oil produced within

the US. The only reasonable way to keep the oil sand business booming is to seek alternative

markets. And this buttresses why one would be tempted to think the proposed Keystone XL is an

export pipeline to access other markets especially the Pacific-Asia whose demand for energy

outstrips any other region (US EIA, 2014). In the event that Keystone XL is not approved, these

alternative markets will still be reached, although not without costing more than it would have

cost if Keystone XL was in place. There are proposals to develop pipeline infrastructures that

will link the oil sands in Alberta to British Columbia from where upgraded bitumen is refined

and seaborne as synthetic crude oil to these emerging markets (Angevine and Oviedo, 2012).

This suggests that the oil sand business will move on with or without the Keystone XL.

Global energy demands will continually surge in the years to come. According to IEA report in

2012, energy demand should rise by 35% from 2010 to 2035 (IEA 2012). This implies there must

be steady multiple sources of energy to ensure energy security for the world. The Alberta oil sand

no doubt is a major potential fossil energy bank at least for North America for several decades.

However, with increasing emphasis for switching to cleaner, renewable energy sources due to the

impact fossil fuels have on the climate, the development of the oil sands may suffer some

setbacks in the long run. Asking for an outright stoppage of oil sand projects is not realistic; a

complete transition to greener energy sources however, will take some time, therefore the oil

sand developments will continue for a fairly longer period.

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The approval or disapproval of the Keystone XL pipeline will not make much difference until

stricter guidelines and policies are in place and enforced for oil sand developments. There must

be a sincere commitment from oil sand developers to keep the level of pollution to the barest

minimum.

My position on the proposed Keystone XL approval or disapproval is somewhat of indifference.

Considering the facts and realities presented thus far in this paper, it is clear oil sand production

will continue for several decades as it is a key driver for the Canadian economy. Asking for an

outright stoppage of the project is unrealistic and thus it is pertinent to look at ways of mitigating

the situation so as to operate within acceptable environmental and climatic limits. Similarly, a

complete replacement of fossil energy by renewable energy will not happen overnight, so a

careful planning and transition is required.

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The Proposed Keystone XL Pipeline Project Dilemma Ayodeji Owowa
(B00635141)

REFERENCES

US Energy Information Administration, Topics: Energy Security. Retrieved from

<http://www.iea.org/topics/energysecurity/> as of March 12, 2014

US Energy Information Administration, Countries: China. Retrieved from

<http://www.eia.gov/countries/analysisbriefs/China/china.pdf> as of March 11, 2014

US Environmental Protection Agency, Exxon Valdez Oil Spills, Press Releases and Reports, Retrieved
from <http://www2.epa.gov/aboutepa/exxon-pay-record-one-billion-dollars-criminal-fines-and-
civil-damages-connection-alaskan> as of March 15, 2014

US Environmental Protection Agency, Exxon Valdez Oil Spills, Press Releases and Reports, Retrieved
from <http://www2.epa.gov/emergency-response/exxon-valdez-spill-profile> as of March 15, 2014

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