Canada/U.S. Pipeline Scrutinized

Ask the average U.S. citizen where the country gets its oil, and their likely response is the Middle East.

It’s common knowledge, and it’s wrong. The top suppliers of crude oil to the United States are Canada and Mexico.

In fact, the top five oil suppliers to the United States in May were, in descending order, Canada, Mexico, Venezuela, Saudi Arabia and Nigeria, according to the U.S. Energy Information Administration. They represented 59 percent of U.S. crude oil imports. Canada alone contributed 21 percent, almost double Mexico’s 12 percent.

Now, these numbers fluctuate monthly – and for the United States, every barrel of oil, whether imported or produced domestically, is important to ensuring available supply to meet consumer demand. But stable, predictable crude oil imports from Canada are vital to U.S. energy security.

It’s a fact that seems lost in the political wrangling over a proposed pipeline to bring more Canadian oil to this country.

In September 2008 pipeline operator TransCanada filed an application to construct the Keystone XL pipeline, an expansion of the company’s existing Keystone pipeline project, to bring crude oil from western Canada to Gulf coast refineries in Texas.

The roughly $7 billion project would involve construction of more than 1,700 miles of new pipeline in Canada and the United States. The 36-inch diameter pipeline would have capacity to transport 900,000 barrels of oil per day. And, according to an assessment funded by TransCanada and conducted by The Perryman Group, the project would deliver significant economic benefits, both from pipeline construction and subsequent operation.

Because the proposed pipeline crosses from Canada into the United States it requires a presidential permit issued by the U.S. Department of State.

As part of the permit process the State Department conducts an environmental review in accordance with the National Environmental Policy Act to assess the project’s environmental impacts and consider possible alternatives.

In April the State Department released a draft environmental impact statement (EIS), inviting designated federal agencies to provide feedback.

The U.S. Environmental Protection Agency (EPA) responded in a letter from Cynthia Giles, its assistant administrator for Enforcement and Compliance Assurance, criticizing the draft EIS’s narrow scope, saying it focused too narrowly on the pipeline to be permitted anddid not “provide the scope of detail of analysis necessary to fully inform decision makers and the public.”

EPA’s concern, among others, is that the crude oil to fill the Keystone XL pipeline is from Canada’s oil sands. And while the agency acknowledged the strategic importance of dealing with a reliable trading partner like Canada, it said, “the national security implications of expanding the nation’s long-term commitment to a relatively high carbon source of oil should also be considered.”

EPA also suggested the analysis of GHG emissions in the EIS should be broadened to include emissions generated by oil sands extraction “to fully disclose the reasonably foreseeable environmental impacts on the U.S. of the Keystone XL project.”

House Energy and Commerce Committee chair Henry Waxman (D-Calif.), in a letter to Secretary of State Hillary Clinton, expressed “concern that this project would have a major adverse impact on the carbon intensity of U.S. transportation fuel.” He also faulted the draft EIS for not considering the project’s global warming impacts.

Supporters of the Keystone XL project have not been silent.

In a June 28 op-ed in the Washington Examiner, Consumer Energy Alliance president David Holt reminded the State Department that “working to expand America’s access to secure, reliable and affordable energy supplies from friends in the hemisphere makes a lot [of] sense. And it just might make a lot of jobs as well …”

Jobs also were on the mind of Russ Breckenridge of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada, who said the construction industry “is currently facing on average 20 percent unemployment, and in some areas our members are facing 40 percent,” Breckenridge said. The pipeline “will begin to put our members back to work with high-quality jobs, with full benefits and worker protection.”

Ed Stelmach, Alberta’s premier, vigorously defended oil sands development in an op-ed in Politico saying, “[T]hese oil sands have been developed because there is continuing demand for petroleum. We can all agree that alternative energy sources are part of the supply equation to power our future. But until those alternatives are developed commercially – and at a price that consumers can afford – we still require oil and gas to power our lives.”

So where does all this leave the Keystone XL project?

The State Department is currently reviewing the input it received and is preparing a final EIS. Federal agencies will have 90 days after completion of the final EIS to review and provide additional input, before the department makes a final decision on the presidential permit application.

The Keystone XL pipeline, if approved, has to be built, operated and maintained in an environmentally responsible and safe manner. There is no question about that. But an equally obvious point that regulators and politicians must remember is that U.S. consumers need these oil supplies. And Canadian oil sands are a good source.

As Premier Stelmach observed:

“A good neighbor lends you a cup of sugar. A great neighbor supplies you with 1.4 million barrels of oil per day.”

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Washington Watch - David Curtiss

David Curtiss served as the Director of AAPG’s Geoscience and Energy Office in Washington, D.C. from 2008-11.

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Washington Watch - Creties Jenkins

Creties Jenkins is a past president of the EMD.

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Dan Smith is chair of the Governance Board.

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 Peter MacKenzie is vice chair of the Governance Board. 

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Policy Watch is a monthly column of the EXPLORER written by the director of AAPG's  Geoscience and Energy Office in Washington, D.C. *The first article appeared in February 2006 under the name "Washington Watch" and the column name was changed to "Policy Watch" in January 2013 to broaden the subject matter to a more global view.

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