Roosevelt Institute | Cornell University

Source to Sink: The Inevitable Extraction of the Alberta Tar Sands and Its Political Ramifications

By Ben KrapelsPublished November 6, 2014

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The famously divisive Keystone XL pipeline has caused fits for Congress, the Obama administration, numerous private sector energy firms, and environmental activists. But some resourceful Canadians may take the Keystone question out of American hands altogether.
By Ben Krapels, 11/6/14

The Keystone XL pipeline has been one of the biggest energy policy questions for the Obama administration. The 1,179-mile pipeline would take oil from Alberta's tar sands in northern Canada and send it to U.S refineries on the Gulf Coast. The original Keystone Pipeline reaches from Hardisty, Alberta, Canada to Pakota, Illinois, and became operational in June 2010. The proposed extension would run from Pakota or would build a separate pipeline from Hardisty to refineries in Houston and Port Arthur, Texas. What has followed in the last four years has been a bitter debate between Congress and President Obama. The main conflicts are the economic benefits of building the pipeline to create jobs and find a cheap way to transport U.S crude to refineries, versus the environmental costs of committing to long-term dependence on U.S and Canadian fossil fuels and possible leaks in the pipeline over aquifers or other environmental hazards. In the wake of four years of indecision and large geopolitical shifts in the global supply of crude oil and natural gas, Canada's options have changed, and the United States may not be able to make a decision on Keystone XL at all.

 The landscape of American fossil fuel production has fundamentally changed. Hydraulic fracturing, or fracking, across much of the Midwest has led to drastic increases in U.S production of natural gas and light condensate crude oil. With new EPA regulations forcing much of U.S industry into using natural gas and renewables the United States is far less dependent of foreign oil, and because U.S refineries cannot refine light condensate crude, much of it is being exported to Canada, and not the other way around. While the Middle East is still producing to a degree in the wake of political unrest, the unease in Europe over Ukraine and the growing Asian markets in China and India could use Canadian crude. That's why a number of Canadian firms have begun to plan pipelines going to Vancouver or St. John, New Brunswick to serve the Asian or European markets. The eastern pipeline, known as Energy East would carry 1.1 million barrels of crude a day nearly 3,000 miles to New Brunswick and would be ready by 2018. With the United States meeting its own demands, oil sands that may produce up to 4.3 million barrels a day by 2025 need to seek alternative markets.

There are numerous debates as to the costs and benefits of fracking. Costs to states and towns through which the pipeline may pass versus the job creation of building and maintaining the pipeline frame the economic debate. The large public protests over the environmental consequences as well as criticisms coming from many Democratic Congressmen and the Obama administration has also hindered Keystone's development. Those concerns are well founded, and it is to President Obama's credit that he has opposed Keystone XL, but the inability to make a final decision is the greater problem. If EPA and the firms and investors building Keystone XL can mitigate all environmental concerns through due diligence, then the pipeline should be built. If there are concerns about the pipeline's safety, such as one claim that it is being built over a seismic zone, then it should not be built. Instead, Congress and the Obama administration have been unable to make any decision either for or against Keystone XL. The United States has a long tradition of leading the world in outstanding infrastructure, while also making necessary climate legislation, as evidenced by the new EPA regulations introduced in June. Instead of doing either of these things, inefficacy and ineptitude has led to the United States being cut out of either great economic and energy security benefits, or a landmark stance on climate, instead, the United States has nothing from Keystone XL but hostile rhetoric and another missed opportunity.