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The State Department review shows Keystone XL tar sands pipeline is not in our national interest

Susan Casey-Lefkowitz

Posted March 11, 2013 in Curbing Pollution, Moving Beyond Oil, Saving Wildlife and Wild Places, Solving Global Warming

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A deeper dive into the State Department draft environmental review shows that the Keystone XL tar sands pipeline is not needed. The energy security argument for the pipeline, always dubious, has evaporated to the point where even the State Department cannot find a reason to build it. The draft also confirms that the Keystone XL is not an economic recovery plan, since it will create only 35 permanent jobs and 3,900 construction jobs. It won’t help consumers since far from bringing new oil to the US, it is meant to relieve a glut and raise oil prices. Instead the State Department found that the project will benefit oil companies by giving them access to the higher oil prices in overseas markets, making new tar sands projects more worth their while. Yet, it is Americans who carry the risks of tar sands oil spills in our rivers and aquifers and worsening climate change. What the State Department got dead wrong is their mistaken assumption that Keystone XL would not drive tar sands expansion. The review used this assumption to get out of any meaningful consideration of the climate pollution from tar sands expansion, and in this time of worsening climate change that is not acceptable. Rejection of Keystone XL is an easy and necessary choice for America. As European Climate Commissioner Connie Hedegaard said, rejection of Keystone XL would send a strong message internationally that the US is serious about fighting climate change.

Let’s take a closer look at the draft environmental review:

Keystone XL’s 35 permanent jobs and 3,900 construction jobs are not an economic recovery plan

The State Department review once again shows how TransCanada, the American Petroleum Institute and other proponents of the pipeline have vastly overstated the number of jobs that will be created by Keystone XL. The State Department, based on TransCanada’s own numbers, shows that at the most 3,900 construction jobs will be created in building the pipeline with only 10% of the total workforce hired locally. Only 35 permanent jobs will be created by the pipeline. What is more, the State Department ignores the potentially negative impacts of pipeline spills, spills into freshwater supplies or increases in climate and other pollution on employment and the economy. Farming, ranching, and tourism are major sources of employment along the Keystone XL pipeline's proposed route - approximately 571,000 workers are directly employed in the agricultural sector in the states along the Keystone XL corridor. Water contamination resulting from a Keystone XL spill, or the cumulative impact of spills over the lifetime of the pipeline, would have significant economic costs.

We can do better. As a result of our clean energy industry’s rapid growth and effective state and federal policies, clean energy projects and programs currently in progress are creating thousands of jobs in communities across the country without the risk.  And many more shovel ready projects could be brought online if our policymakers are willing to send clear market signals and level the playing field for clean energy options to move forward.  

Keystone XL’s path to export means less economic and energy security for the US, not more

The draft environmental review concedes that Keystone XL tar sands is mostly destined for export, confirming what we already know: that this is not a pipeline for US economic or energy security, but a project to spur tar sands expansion, raise oil prices and help the oil industry. The review acknowledges the trend of increasing exports from the Gulf Coast refineries. The State Department found that Gulf Coast refineries now export more than they supply to domestic markets and that the “increased volume of refined products is being exported by refiners as they respond to lower domestic gasoline demand and continued higher demand and prices in overseas markets.” This coincides with earlier documentation of the export goals of the tar sands industry for Keystone XL: that this pipeline is a way for the oil industry to access higher oil prices in overseas markets. And it also coincides with industry commentators, including a recent forecast that unrefined Canadian crudes may be exported from the US Gulf Coast soon.

Why this rush to export tar sands? It is commonly acknowledged by the oil industry and financial analysts that tar sands expansion is currently stalled due to the low prices for this very expensive to extract fuel. Without avenues for overseas export, the tar sands market is primarily the US Midwest and Rockies and Canada where there is currently a glut that has depressed oil prices. The draft environmental review acknowledges the glut and the impact that it has in lowering oil prices. What the oil industry wants is higher oil prices for its expensive to extract tar sands. Hardly a recipe for US economic security.

The draft review misses the mark on how Keystone XL will drive tar sands expansion

Contrary to the draft review findings, evidence shows that the Keystone XL pipeline will drive expansion of the tar sands. Industry analysts have repeatedly pointed this out, with most recently a statement from tar sands pipeline company Enbridge CEO that “if we can’t attract world prices, then we will ultimately curb energy development” in the tar sands.  Pipelines to bring tar sands to deepwater ports are stalled. So, the State Department focused on rail as an alternative with a number of erroneous assumptions detailed in this blog by my colleague Anthony Swift. Once you accept that the Keystone XL pipeline will drive tar sands expansion, it means that the environmental and health impacts of that expansion need to be taken into account. This is a critical missing piece in the draft environmental review that the State Department needs to go back and correct.

Tar sands and tar sands pipelines are a threat to environment and health

The draft review takes a look at some of the impacts of tar sands and tar sands pipelines and inexplicably underestimates the very real damage from these impacts every time, while completely ignoring the damage in many situations. Here is a quick run-down:

  • The State Department acknowledges that the climate impacts of tar sands are higher than conventional oil, but does not take them into account: The draft environmental review acknowledges that tar sands oil has higher lifecycle greenhouse gas emissions than conventional oil. After reviewing existing literature, the State Department found up to a 19% increase in well to wheels greenhouse gas emissions from the weighted-average mix of tar sands crudes expected to be transported in Keystone XL relative to the reference crudes in the near term. Canadian think tank Pembina Institute estimates tar sands climate pollution even higher with full life cycle tar sands emissions reaching up to 37% higher than a conventional oil baseline. And these estimates do not even tell the whole story as they do not yet take into account emissions from burning the tar sands byproduct of petcoke or the land use change greenhouse gas emissions from tar sands extraction from under Boreal forests and peatlands. 
  • The State Department recognizes the unique risks of tar sands oil spills, but minimizes the impacts on US lands and waters: The draft environmental review does acknowledge the unique risks associated with diluted bitumen tar sands spills – as well as the fact that spill responders have yet to develop methods to address those risks. However, it does not adequately consider the demonstrated higher risk of pipeline failure due to external corrosion in high pressure tar sands pipelines or the safety problems that have plagued TransCanada’s earlier pipelines. Keystone XL would cross more than 1000 water bodies, including 50 perennial rivers or streams, and several aquifers, including the Ogallala.  It also comes within a mile of approximately 2500 water wells.
  • The State Department does not address the concerns of Nebraska landowners. The new, proposed route in Nebraska still crosses the Ogallala Aquifer, Niobrara River, Platte River and over 200 bodies of water in Nebraska as well as countless private family wells without adequate analysis of the kind of damage a tar sands oil spill would have on farms and waters. Nebraskans have let the State Department know their concerns.
  • The draft review fails to show proper consultation with Tribal Governments. The State Department has repeatedly failed to fulfill its federal trust responsibility for government-to-government consultation with Indian tribes on the natural and cultural resource impacts of the Keystone XL pipeline.
  • The draft review does not adequately consider environmental justice and refinery pollution issues. Low income and minority communities will be disproportionately impacted by Keystone XL and the draft environmental review failed to assess these impacts. The review concludes that tar sands oil will displace oil already being refined and therefore will not have increased pollution impacts in refinery communities. However, tar sands refining in the Gulf is likely to have additional and new impacts especially on public health. The State department has a duty to quantify air pollution from refining and analyze the health impacts on the low-income minority communities that are burdened by this significant health threat. In addition, the draft fails to address the oil spill impacts to low-income minority communities through which the proposed pipeline would run.
  • The State Department not only ignores the climate impacts of tar sands expansion, but also other environmental and health impacts in Canada. In erroneously concluding that Keystone XL will not have a major contribution to tar sands expansion, the State Department then neglects to consider the harm that tar sands extraction does to local community health and traditional way of life and to land, waters, wildlife and air. The draft review did include a summary of recent study finding toxic PAH loading in regional aquatic ecosystems. But it then failed to mention many other concerns including: the low-flow risks in the Athabasca River to due climate change and increased river water withdrawals for tar sands mines; the long-term toxicity risks from massive mining waste tailing ponds; the inadequate reclamation liability management; the risk that caribou will go extinct in the region as a result of rapid tar sands expansion; the inadequate environmental monitoring system; and the recent weakening in federal environmental laws and the permitting regime for pipelines and tar sands projects.

The draft review underestimates the climate and health impacts of tar sands byproduct petcoke

Another area where the State Department falls seriously short is in its assessment of a byproduct of tar sands refining – petcoke. Although the draft review discussed petcoke and referred to the new reports on petcoke climate pollution by Oil Change International and the Carnegie Endowment, it then neglected to take the additional carbon emissions from burning petcoke into account. The draft review got it wrong on several counts. It assumed that most of the petcoke was being stockpiled and not burnt when recent evidence shows that petcoke stockpiles are going down. The State Department argues that heavy oil refining capacity on the Gulf Coast, and the associated petcoke production, will not rise as a result of Keystone XL. This ignores that fact that massive expansions have already taken place (Total, Motiva) in anticipation of Keystone XL’s arrival. It also overlooks the fact that these refineries are exporting over half of their production and are therefore not constrained by shrinking US demand for petroleum products. Given that these refineries now primarily serve a growing world market, it cannot be ruled out that bringing additional heavy oil supplies to the area may send market signals for future heavy oil capacity expansions. The State Department’s analysis continues to assume that petcoke displaces coal ignoring the fact that the increasing supply of cheap petcoke, which sells for 25% less than coal, is making power generation cheaper and dirtier.

It also neglected to consider the health impacts of petcoke. Just recently, citizens raised concerns about black dust blowing off a mountain of petcoke on the Detroit riverbank near the Marathon tar sands refinery in a graphic illustration of a problem with processing tar sands in the US that went unaddressed by the State Department.

There is still time and opportunity to get it right

The draft environmental review is just a first step in a process of assessing the environmental impacts of Keystone XL and whether the project is in the national interest. We now have a public comment period starting and the Administration will be hearing from a concerned public about this project. With so many errors and omissions, the State Department needs to go back to the drawing board and get this analysis right. The US public deserves an honest assessment of the Keystone XL tar sands pipeline.

You can take action and let President Obama know that this review needs to go back to the drawing board at www.stoptar.org.

And for those who want to take a deeper look themselves, here is where to find some of the information referred to above in the Draft Supplemental Environmental Impact Statement (DSEIS):

 

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Comments

Environmental EngineerMar 11 2013 11:22 AM

I'm sorry, but your horsemeat is showing.
See Section 2.1.11.1 of the State Department draft environmental review. Your figure of 35 permanent jobs is not correct. It is quite true that the number is small (50) but have you actually read the report, or just relied upon other's mis-information?

With respect to only 10 percent of the jobs being hired locally, there really aren't many pipe welders and stringers located in the upper midwest so that's understandable. But those workers will be contribute to the national economy, and specifically to the locat economy where they will be consumers of local goods and services while they are there.

"It is meant to relieve a glut and raise oil prices." Really? Currently there is more capacity to move oil into the Oklahoma oil distribution hubs than to move oil out. Thus the glut to which you refer. Adding the cross-border section of the XL pipeline will add even more capacity to move oil into the oil hubs. So that section of the pipeline will increase the glut, not relieve it. Currently approved projects by various companies will help to relieve the glut, but those are not subject to State Department approval. (Thank goodness!)

A bit of economic theory: Efficient distribution does not raise prices on a wide scale. It can (and does) eliminate price differentials where one region (or source of supply) has an oversupply and very low price for a commodity and another region has a lowerer supply and higher price. That balancing is a good thing. Adding Canadian tar sands oil to the overall supply will lower the overall price. Moving it by the most efficient method (pipeline) will lower the cost of distribution.

As I have stated previously on this blog site, I'm not a proponent of the development of the Canadian tar sands projects. I think there is a better way to provide the secure and reliable energy sources we need at the lowest possible economic and environmental cost. Unfortunately, NRDC seems opposed to fracking, so tar sands projects remain an economically viable option.

Energy & Environment StudentMar 11 2013 01:53 PM

Dear Environmental Engineer,

Regarding permanent jobs, section 4.10.3.2 of the report states that "there would be an estimated 50 total employees during the operational phase of the proposed Project. Of these, 35 would be permanent employees and 15 would be temporary contractors." I believe that this is the figure cited in the original post. Section 2.1.11.1 states "The permanent operational pipeline workforce would comprise about 50 employees... 35 Keystone employees plus 15 contractual workers." It appears that there is somewhat of a discrepancy in the report itself regarding the "permanent" workforce, although neither 35 nor 50 are earth-shattering figures.

Regarding economic impacts, you are right to say that these workers will contribute to the economy. However, the overall impact is relatively minimal. The report estimates that "total earnings impacts triggered by the proposed Project would amount to about 0.02% of national earnings in 2010." While this is not completely insignificant, one must weigh these relatively modest and short-term benefits (TransCanada estimates a 1-2 year construction period) against the long-term potential environmental costs.

Regarding economic theory, the price of oil is determined by global supply and demand, which is, in turn, affected not only by production totals, but also consumption demand and geopolitical factors. While higher production in Canada may increase supply, the huge projected growth in demand in emerging economies (in addition to potential instability in some oil-producing regions) will also influences prices. According to the International Energy Agency's 2012 World Energy Outlook (which takes into account increased production from Canadian oil sands), the price of a barrel of oil is actually projected to rise by 2035.

Just my 3 cents.

Environmental EngineerMar 11 2013 03:21 PM

E & E Student:
Your thoughts are worth more than 3 cents, and I appreciate them...

The economics projections you cite for energy demand growth seem reasonable. So how do we keep from using the really damaging and risky methods of energy production? By making other options, like natural gas and on-shore oil, more accessible and abundant, thus keeping the cost below that which makes oil sands, deep off-shore oil, artic ocean oil, etc. economically viable.

Bill BrockhouseMar 11 2013 03:26 PM

The EPA estimated 82% more in GHG emissions well-to-tank in its July 2010 report on Keystone. Why is it different from both the State Dept.'s new assessment and Pembina Institutes'?

maria, cepedaMar 11 2013 04:34 PM

this is very helpful.

Bill BrockhouseMar 12 2013 10:27 AM

The EPA estimated 82% more in GHG emissions well-to-tank in its July 2010 report on Keystone. Why is it different from both the State Dept.'s new assessment and Pembina Institutes'?

Phyllis HermanMar 14 2013 03:33 PM

The benefits from the keystone project are outweighed by far bu the dangers of leakage and contamination also any oil obtained does not directly benefit the US but goes on the world market. Risk to the US environment too great to approve.

Leslie GoldMar 14 2013 09:48 PM

We must not destroy our precious Earth that we are passing on to our children. The toxicity of the Keystone Project is beyond repair, and we must not allow this poison to be our gift to our families, and all who live on this planet.

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