The TransCanada Keystone XL Pipeline

Nicholas Gray
November 9, 2015

Submitted as coursework for PH240, Stanford University, Fall 2015


Fig. 1: Operational and proposed route of the Keystone Pipeline System. (Source: Wikimedia Commons)

With a world-leading daily consumption of more than 19.0 million standard barrels of petroleum products per day (STB/day) in 2014, the United States relies heavily on crude oil. [1] Oil accounts for thirty-six percent of the U.S. energy budget and, despite an overall decrease of eight percent since 2004, oil consumption has been on the rise since 2009. [1] Furthermore, oil is the dominant source of energy in the transportation sector, in which petroleum fuels provide ninety-two percent of vehicle power. [2] Although America became the world's leading oil producer in 2014, it will continue to depend on imported foreign oil for the foreseeable future as it only generates 11.6 million STB/day. [1] Given this and the current turmoil in the Middle East, it is in America's national security interests to greater energy independence by unlocking access to crude oil on the North American continent. One proposed project that would have helped achieve this is the Keystone XL Pipeline. Facing opposition from environmental groups, the project became a controversial issue in American politics in 2008 and, even after seven years of debate, failed to obtain approval from the United States government.

Project Overview

The Keystone XL Pipeline was a proposed extension to the Keystone Pipeline, which is owned by TransCanada Corporation and has been in commission since 2010. The existing infrastructure is comprised of over two thousand miles of pipeline that transports oil from the Western Canadian Sedimentary Basin in Alberta, Canada to refineries in Illinois and Texas, as well as oil tank farms and a distribution center in Cushing, Oklahoma. Three segments of the pipeline are in operation and a fourth, currently under construction, is scheduled to go online in 2016. In its present form, the Keystone Pipeline has a pumping capacity of 591,000 STB/day. [3]

Originally proposed in 2008, the Keystone XL extension would have provided shorter and less expensive transport from Hardisty, Alberta's oil tar sands to Steele City, Nebraska, from which it could have been carried to key refineries in Cushing, Oklahoma and the Houston, Texas area. Initial specifications included 1,179 miles of 36-inch diameter pipeline with a rated pumping capacity of 830,000 STB/day at a cost of $7 billion. [3] Because the extension would have crossed the international border between the United States and Canada, the project required a president permit through the U.S. Department of State and approval from the National Energy Board (NEB) of Canada. After TransCanada submitted its application in 2008, the project gained approval from the Canadian NEB in March 2010, beginning a lengthy permit process at the U.S. federal level. [3,4] Due in large part to the lobbying power of energy and environmental interest groups, the pipeline was supported by an overwhelming number of Republicans and the vast majority of Democrats.

Amid opposition to the extension's initial route through the Nebraska Sand Hills and the Ogallala Aquifer, discussed later, in November 2011 the U.S. Department of State postponed its decision indefinitely to seek additional information regarding potential alternative routes. Dissatisfied with this delay in reviewing TransCanada's application, the U.S. Congress passed bipartisan legislation mandating that Democratic President Barack Obama issue his decision on the extension within sixty days. [5] Once confronted with this deadline, Obama promptly rejected the Keystone XL application in January 2011 on the grounds that Congress had prevented a full assessment of the pipeline's impact. [6]

In response, TransCanada re-applied for the approval of the Keystone XL Pipeline in May 2012 after working with the state of Nebraska to devise a new route with a smaller environmental impact. This compromise modified the proposed pipeline's route to extend only 875 miles, avoid the Nebraska Sand Hills region entirely, and travel a limited distance through the Northern High Plains Aquifer System, which includes the Ogallala Aquifer. The alternative plan passed the state legislature unanimously and earned the signature of the Republican governor, Dave Heineman. [7]

After three more years of continued deliberation by the U.S. Department of State, a Republican-controlled Congress attempted to take matters into its own hands. In early 2015, it passed a bill approving the extension's construction with votes of 270-152 in the House of Representatives and 62-36 in the Senate. [8] However, President Obama vetoed the bill, arguing that the Executive branch has the sole authority to approve or reject the project's application. Congress was unable to form a two-thirds majority in the Senate to override the veto. [9] Finally, on November 6, 2015, President Obama rejected the Keystone XL Pipeline's application citing that the project would not produce long-term economic growth, reduce the cost of gas, or strengthen national energy security. [10]

Potential Energy Security and Economic Benefits

Proponents of the Keystone XL Pipeline argued that the project would have bolstered U.S. national energy security by ensuring access to a sufficient supply of crude oil. Although increases in domestic oil production have decreased oil imports over the last decade, the U.S. will still need to import five to eight million barrels of oil per day until 2040. More than 60% of America's current oil imports derive from nations outside of North America and their safe transport is jeopardized by seemingly endless geopolitical tensions, especially in the Middle East. The pipeline would have enabled the U.S. to obtain a greater portion of its foreign oil from a more reliable source in Canada, a stable country that has been historically supportive of American interests. [11]

While it is difficult to assess the exact impact that the Keystone XL Pipeline would have delivered to the American economy, it was widely expected to have been substantial given the size and scope of the project. Transcanada has said that project would have employed 9,000 construction workers during construction and indirectly created thousands of additional jobs by expanding the energy industry. In a 2009 report commissioned by the American Petroleum Institute, the Canadian Energy Research Institute (CERI) estimates that the pipeline would have created 343,000 U.S. jobs throughout the entire oil sands industry during construction and added more than $40 billion annually to the U.S. GDP once completed. [12] Likewise, a 2010 study by the Energy Policy Research Foundation concluded that, in addition to increasing employment, the project would have saved American business $100-$600 million annually in the transportation and processing of crude oil. [13] Opponents to the pipeline downplayed the economic impact of the pipeline by claiming that the jobs created would have been only temporary and that the oil transported would have been exported instead of lowering energy costs in America.

Safety and Environmental Concerns

Despite its potential benefits, the Keystone XL Pipeline faced fierce criticism from those that believed it posed a public safety risk and would have harmed the environment. One concern was pipe leakage, which was especially significant given that the pipeline would have crossed through the Ogallala Aquifer, part of the Northern High Plains Aquifer System. This groundwater supports the Great Plains' critical agriculture industry, as well as provides drinking water for millions of Americans. Hence, there is no doubt that an oil spill would have posed a serious danger to the local economy and public health. Regardless of how the pipeline would have been designed and constructed, there were sure to be some spills over the project's lifetime, but their frequency and severity were widely debated. A 2011 joint report from the National Resources Defense Council and National Wildlife Federation, among other environmental groups, argued that the acidity, sulfur content, and volatility of the diluted bitumen in tar sands increases the risk that the pipeline would have corroded and ruptured relative to those that currently carry crude oil. [14] Other organizations questioned these findings, however. [15] The U.S. Department of State's 2014 Final Environmental Impact Statement (FEIS) predicted that 79% of the pipeline's spills would have released fewer than 2,100 gallons of oil, 17% would have released between 2,100 and 42,000 gallons, and only 4% would have released more than 42,000 gallons. Only this final category of larger spills would have yielded a significant environmental impact, which could have been mitigated if the proper prevention, detection, and response protocols were established. [16]

In addition to potential pipe leakage, some opponents to the pipeline argued that it would have further tied America to dependence on fossils fuels and exacerbated continued climate change. Furthermore, they contended that the silty composition of tar sands makes extraction and refining much more energy intensive processes relative to those of conventional crude oil. The U.S. Department of State's 2014 FEIS concluded that, while it is true that the extraction, refining, and combustion of the oil transported by the pipeline would have produced greenhouse gases (GHG), those GHG emissions would have been generated regardless of whether the project was approved or not. [16] Advocates used this finding to support their claim that rejection of TransCanada's application would simply mean that Alberta's oil tar sands power Canada's economy or that of another foreign nation. As a result, arguments against the pipeline based on its alleged contribution to climate change were never as compelling as those concentrated on the potential public safety hazards and environmental damage that would have resulted from pipe leakage.

Public Opinion

The Keystone XL Pipeline drew support from a strong majority of the American public. Among national polls conducted between March 2014 and January 2015, the Washington Post/ABC News, CNN/ORC, and Fox News all found support for the project in the range of 57% to 65% with opposition at no more than 28%. [17-19] Still, most Americans favored stricter environmental protection laws, with a 2014 Pew Research Center poll determining a 56% to 39% split on the matter. [20] The seeming contradiction between American public opinion with regard to the project and with regard to environmental protection may indicate a less than comprehensive understanding of the issue on the part of those polled.


The Keystone XL Pipeline remains a contentious issue in American politics and, despite being rejected twice now, TransCanada could submit a third application depending on the outcome of the 2016 Presidential election. While the safety concerns and potential environmental impact of the project ought to be taken seriously, they did not appear to be more dangerous than those of the other seventy-odd pipelines currently in operation throughout the United States. In addition, the pipeline's benefits to America's national energy security and economy, whether they would have fully satisfied supporters' projections or not, would still have been substantial enough to warrant the pipeline's construction. It's fair to say that Keystone XL grew to represent more than just a pipeline infrastructure project to the environmental movement, leaving President Obama with little choice but to oppose it in order to make a symbolic statement on his commitment to combatting climate change.

© Nicholas Gray. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] "BP Statistical Review of World Energy 2015," British Petroleum, 2015.

[2] "October 2015 Monthly Energy Review," U.S. Energy Information Administration, DOE/EIA-0035(2015/10), October 2015.

[3] J. Lagasca, "TransCanada Keystone XL Pipeline", Physics 240, Stanford University, Fall 2012.

[4] K. L. Delkus and J. P. White, "Application of Transcanada Keystone Pipeline, L.P. for a Presidental Permit Authorizing the Construction, Connection, Operation, and Maintenance of Pipeline fvacilities for the Importation of Crude Oil to be Located at the United States-Canada Border, TransCanada Corporation, 4 May 12.

[5] "Public Law 112-78: Temporary Payroll Tax Cut Continuation Act of 2011," United States Congress, 23 Dec 11.

[6] J. Tapper, K. Radia, and J. Parkinson, "President Obama Rejects Keystone XL Pipeline," ABC News, 18 Jun 12.

[7] J. Kemp, "Keystone Modifications Call Obama's Bluff," Reuters, 6 Sep 12.

[8] C. Davenport, "House Passes Keystone Bill Despite Obama's Opposition," New York Times, 11 Feb 15.

[9] C. Davenport, "Senate Fails to Override Obama's Keystone Pipeline Veto," New York Times, 4 Mar 15.

[10] C. Davenport, "Citing Climate Change, Obama Rejects Construction of Keystone XL Oil Pipeline," New York Times, 6 Nov 15.

[11] "Annual Energy Outlook 2015," U.S. Energy Information Administration, DOE/EIA-0383(2015), April 2015.

[12] "The Impacts of Canadian Oil Sands Development on the United States Economy", Canadian Energy Research Institute, October 2009.

[13] "The Value of the Canadian Oil Sands ( the United States)," Energy Policy Research Foundation, Inc., November 2009.

[14] A. Swift et al., "Tar Sands Pipelines Safety Risks," Natural Resources Defense Council, February 2011.

[15] "ERCB Addresses Statements in Natural Resources Defense Council Safety Report", Energy Resources Conservation Board, NR2011-04, 16 Feb 11.

[16] "Final Supplemental Environmental Impact for the Keystone XL Project: Executive Summary," U.S. Department of State, January 2014.

[17] Keystone XL Poll," CNN/ORC International, December 2014.

[18] "Two-Thirds Back Keystone Pipeline; More See Jobs Than Environmental Risk," ABC News/Washington Post Poll, 7 Mar 14.

[19] D. Blanton, Fox News Poll: Voters want Obama to Sign Bill Approving Keystone Pipeline," Fox News Poll, 14 Jan 15.

[20] M. Dimock et al., "Beyond Red vs Blue: The Political Typology," Pew Research Center, June 2014.