Keystone XL Oil Pipeline: Today's Most Explosive Environmental Debate

By Jordan Weissmann

Canada wants to build a pipeline that would send oil to the U.S. Here's why environmentalists the world over are dead-set on stopping it. 

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Reuters

Even if you don't pay a whole lot of attention to the fine points of U.S. energy policy, there's a good chance you've heard about the Keystone XL pipeline by now. The proposed 1,661-mile pipeline would transport crude oil from the tar sands of Alberta Canada down to Texas' Gulf Coast refineries. And stopping its construction has become the cause célèbre of the global environmental movement from the Dalai Lama to Robert Redford. This weekend, a group of environmentalists will attempt to form a human ring around the White House in hopes of swaying President Obama, who has said he will make the final call on whether to greenlight construction.

The world consumes 90 million barrels of oil a day. Keystone XL would add 560,000. That's not much.

This controversy is another chapter in that centuries-long tug-of-war between creating energy jobs and preserving the environment. Here's The Atlantic's guide to the basic issues.

Who's building Keystone XL, and why?

Canada is already America's top supplier of oil. But the province of Alberta has just begun to emerge as a major force in the world energy market thanks to its abundance of petroleum-rich tar sands. Canada has known about the stuff for centuries, but the difficult and expensive process of refining it into fuel made mining the material economically unfeasible.

But crude prices have surged in the past decade, and the world's largest energy corporations are thirsty for more oil. Alberta has access to 170 billion proven barrels of the stuff, making it the world's third largest source, behind Saudi Arabia and Venezuela. Top international energy companies, including Exxon and Royal Dutch Shell, want a piece of the action.

But as mining ramps up, the oil companies need an efficient way to transport and refine their new stock of heavy crude. Enter TransCanada, which builds and operates pipelines across North America. TransCanada already runs a major pipeline, known simply as Keystone, that delivers oil to the Midwest and Oklahoma. But the company has its sites on Texas. The Gulf region is the U.S. capital of heavy crude refining, meaning its plants have both the special technology and capacity to handle what's being dug up in Alberta, as well as a distribution network that can deliver the end product to the East Coast and Midwest for sale. The Gulf is also an export hub, too, which would open up an even broader market.

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Is it bad for the environment? 

Because the pipeline crosses international borders, approval falls to the State Department. Initially, it looked like a sure bet. Hillary Clinton told an interviewer she was "inclined" to approve it, even before an official analysis of the environmental impact was complete. But resistance by green groups has swelled into an worldwide movement. The fiercest opposition is in Nebraska.

There are two big issues at play here. Global warming and Nebraska. First global warming: Because of the intense amount of energy required to refine oil from tar sands, it's considered a particularly dirty source of fuel. According to some estimates, it produces 15% more greenhouse gases than your average barrel of oil once production is taken into account. Al Gore may have severely stretched the truth when he claimed that "gasoline made from the tar sands gives a Toyota Prius the same impact on climate as a Hummer using gasoline made from oil." But he captured the sentiment shared by environmentalists who would prefer that the tar sands never be developed.

Then there are those Cornhuskers. The Keystone XL pipeline would cross through six states (see The Perryman Group's map above), but it has run into a wall protest in Nebraska, where some legislators are attempting to block the project entirely. Oil pipelines caused billions of dollars in property damage due to leaks, fires and explosions during the past decade. A single spill in 2010 dumped as much as a million gallons of oil into the Kalamazoo River. That track record has Nebraskans nervous, since the pipeline's route runs through the massive Ogallala Aquifer, and many are concerned about the potential impact of an oil spill on the region's drinking water. TransCanada has tried to ease local fears, but a professor at the University of Nebraska has cast doubt on the company's safety predictions.

Will it create jobs? 

Despite the environmental concerns, there's a powerful and familiar force working in TransCanada's favor: America needs jobs. The company commissioned an oft-quoted economic analysis from The Perryman Group, which concluded that construction of the new pipeline would create roughly 119,000 jobs. The extra pipeline capacity would also lower domestic fuel prices, creating an additional 250,000 to 550,000 permanent jobs.

Both of these figures have been the subject of withering attacks. A report by the Cornell University Global Labor Institute found that the Perryman group inflated the amount TransCanada planned to spend building the pipeline in the U.S. and wildly overestimated the number of jobs that money would realistically create. Meanwhile, Michael Levi of the Council on Foreign Relations offered up an analysis of why the extra oil wouldn't have that dramatic an effect on the U.S. economy. His most compelling argument: The world consumes 90 million barrels of oil a day. The Keystone XL pipeline will, realistically, only add about 560,000 barrels of capacity. In the scheme of things, that's just not much.

But jobs are jobs. No matter what the final figure is, building the pipeline will result in at least some new hiring. And some large* unions have lined up behind the pipeline project. That means two important Democratic constituencies are now going head to head.

So, what's next?

The State Department officially has until the end of the year to render its decision. But it's not clear if that deadline will hold up, particularly since Obama has claimed the issue. The president recently told an Omaha television station that the country needed to pursue jobs and energy independence while also making sure that "folks in Nebraska" were safe.

And as for Canada? Unsurprisingly, officials there are talking about a Plan B. It's a pipeline West across the Pacific Ocean to feed an equally thirsty market in China.

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*An earlier version of this article incorrectly stated that the entire AFL-CIO had backed the pipeline. Only the Building and Construction Trades Department of the AFL-CIO has backed it. 

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This article available online at:

http://www.theatlantic.com/business/archive/2011/11/keystone-xl-oil-pipeline-todays-most-explosive-environmental-debate/247954/