The Keystone XL Pipeline

Lobbyists are mobilizing to advance it. Environmentalists are mobilizing to stop it. The newly-elected Republican House has already voted to approve it. So has the newly elected Republican Senate. Obama has threatened a veto. The media are having a field day. What’s so important about Keystone XL?

Well nothing, really. Keystone XL is basically just another pipeline; a little longer and larger than most, but not unusually so, and it goes nowhere pipelines don’t already go. All it does is increase the capacity of the existing Keystone pipeline system, which has already transported over 550 million barrels of Canadian heavy crude from Alberta to the US. The crude Keystone XL delivers will make no difference to US crude imports; it will simply displace crude imports from elsewhere. And if Keystone XL doesn’t get built the crude it would have carried will go somewhere else, meaning that no CO2 emissions would be saved by not building it. (Although building it probably would save CO2 emissions because much of the Canadian crude that now moves south on trucks and rail tankers would pass through Keystone instead.)

So what’s all the fuss about?

What’s happened, of course, is that Keystone XL has been blown totally out of proportion, to the point where it’s become a cause célèbre. But how it got to this point is something for the psychologists, sociologists and political scientists to argue about. Here we will confine ourselves to the facts.

First, the purpose of Keystone XL. Its purpose is simply to supply more Canadian heavy crude to US Gulf Coast refineries that are facing potential feedstock shortages because of declining heavy crude production from Mexico and Venezuela, their main historic suppliers. This is a perfectly reasonable business proposition. Canada is motivated to sell, the refineries are motivated to buy and both will profit from the transaction. (Scotland has the same motivation in wishing to sell its surplus wind power to England. The difference is that Canada can deliver a product the client wants when the client wants it.)

Second, the Canada-US pipeline system. There’s a perception that Keystone XL will be the first pipeline to bring Canadian crude to the US, but as shown in Figure 1 a substantial network of oil pipelines linking the two countries already exists. (Keystone XL is the blue line running northwest of Steele City):

Figure 1:  Existing and planned pipelines serving the Alberta oil sands “boom”

The numbers in the box reveal that Canada already has ~1.7 million bpd of pipeline export capacity – 591,000bpd going to US refineries via Keystone I, and 800,000bpd in Alberta Clipper plus 300,000bpd in TransMountain going to ports from which the crude can be shipped overseas. And Canada plans to add 3.1 million bpd more. The total will decrease by 830,000 bpd if Keystone isn’t built, but 2.3 million bpd is still enough capacity to allow Canada to ship a lot of its crude to other countries if there isn’t enough pipeline capacity to ship it to the US. (Note also that Keystone XL isn’t exclusively for the use of Canadian oil. 100,000 bpd of its capacity is allocated to Bakken crude.)

And these aren’t the only pipelines linking Canada and US refineries. Figure 2 gives a more detailed picture:

Figure 2:  Canadian and US crude oil pipelines and refineries

The question, however, is whether these existing pipelines can accommodate all the Canadian crude going south, and the plot below of crude shipments by rail to the US from the WCSB (Western Canadian Sedimentary Basin) shows that they can’t. The rapid growth in rail shipments confirms that pipeline capacity is presently insufficient and growing more so all the time. (The graphic is from the US State Department Final Supplementary Environmental Impact Statement on Keystone XL of January 2014):

Figure 3:  Crude oil transported by rail from Western Canadian Sedimentary Basin

Clearly Keystone XL has a raison d’être. Building it would also eliminate not only the CO2 emissions generated by rail transport (and by truck, for which the State Department provides no data) but the environmental and safety hazards posed by shipping crude by road and rail as well.

Third, the impact of Keystone XL on on US crude oil imports. Figure 4 shows US crude imports from Canada and other countries since 1973 (data from EIA). US imports fluctuated over a range of 7 million bpd over this period, ten times as much as Keystone XL can ship from Canada at maximum capacity. Keystone clearly wouldn’t be a game-changer even if all the crude it brings in added to US imports.

Figure 4: US crude oil imports from Canada and others suppliers since 1973

But Keystone crude won’t add to US imports, which are determined by refinery demand. It will just replace imports from elsewhere. This is already happening with the recently-completed Seaway pipeline between Cushing and Freeport (Figure 1), which as reported in the Columbus Dispatchwill almost double the amount of heavy Canadian crude arriving at Gulf of Mexico terminals and plants to about 400,000 barrels a day in January …….. even without the Keystone XL pipeline“. Seaway has in fact already sparked a low-key price war between Canada and the Gulf Coast refineries’ traditional suppliers Mexico and Venezuela, who are losing market share to Canada faster than their production is declining.

Fourth, the impact of Keystone on Alberta oil sands development. It’s been argued that construction of Keystone XL would contribute to increased CO2 emissions by stimulating further development of “dirty” Alberta oil sands, which generate about 20% more CO2 than “conventional” oil. But doing the sums shows that the quantities involved are negligible (a million barrels/day of oil sands oil replacing conventional oil would generate only about 11 million extra tons of CO2 a year; global CO2 emissions are around 40 billion tons a year.) There’s also the question of how much additional development of Alberta oil sands will even take place if current oil prices persist.

Fifth, environmental impacts. Keystone XL has been re-routed to avoid the Nebraska Sand Hills and now passes through mostly farmland. It will add only 875 miles of oil pipeline to the ~150,000 miles of oil pipelines that already exist in the US, an increment of 0.6%.

In summary, Keystone XL is a worthwhile project that would have a minor but positive impact on the economies of US and Canada and a negligible impact on anything else. And the only remaining legislative obstacle to building it is the gentleman featured in the cartoon at the top.

RA note: Post modified January 20th at 0110 UK time to change “tar sands” to “oil sands” in response to a comment from CGH.

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46 Responses to The Keystone XL Pipeline

  1. Dave Rutledge says:

    Hi Roger,

    An excellent summary.

    “It’s been argued that construction of Keystone XL would contribute to increased CO2 emissions by stimulating further development of “dirty” Alberta tar sands, which generate about 20% more CO2 than “conventional” oil.”

    Isn’t the extra CO2 from natural gas consumed in the upgrading process? I have never liked this kind of marginal CO2 accounting, because the response in climate models is from the production in the long run. I haven’t seen any evidence that the natural gas wouldn’t have been burned in the long run in any event.


    • Hi Dave. I can’t find anything about upgrading consuming CO2, but I’m no expert. The fact that the Alberta has, or had, a $2 billion CCS fund to store captured CO2 in depleted oil reservoirs suggests that it doesn’t. (I shudder to think what the EroEI of that would be.)

      According to Wikipedia Alberta tar sands have an ERoEI of 5-6 and the natural gas consumed in extracting them represents 15-20% of the energy contained in the oil. I think most of this gas is now coming from US shale gas deposits.

      • Dave Rutledge says:

        Hi Roger,

        “upgrading consuming CO2”

        Upgrading uses hydrogen from natural gas. & Docs/Web Upgrading Tutorial.pdf

        “I think most of this gas is now coming from US shale gas deposits.”

        Alberta produces most of Canada’s natural gas, and a lot of it is consumed locally for the bitumen upgrade.

        And Alberta’s gas is going to be produced in any event. It is too good a fuel to leave in the ground. And it can be used directly in transportation as a substitute for oil. I was just pricing a Ford cargo van, and the CNG prep package was only $315.


    • Sam Taylor says:


      I think the worry is more that as we move to lower and lower EROI fossil fuels if we can manage to get by adequately with them then there’s the potential for CO2 emissions to really shoot up, since as EROI declines then the amount of energy (and thus CO2) produced by the extraction process could really shoot up. Suddenly 80mbpd might turn into 120 or 160 because of the oil used in the extraction process. Which would be a worry.

    • Mark Shortreed says:

      Yet CO2 as a precursor to warming has been debunked. As a greenhouse gas it has orders of magnitude less impact than water vapor. Why are we spending national treasure fighting plant food? Oh right, if we can be convinced CO2 is a pollutant, the control measures would give the controllers carte blanche over all aspects of modern life.

    • BigComfySofa says:

      Hello Dave:
      CO2 emissions come from extraction through mining (lot of diesel/CNG used in heavy machinery) or from burning natural gas to heat steam in the SAGD process.

      Some also argue that refining is more carbon intensive, but none more so than another sour crude.

      These CO2 emissions are negligible compared to the amount of CO2 comes from the world’s coal power plants.

  2. Phil Chapman says:

    If the price of oil drops much farther it may make crude from tar sands uneconomic, in which case Keystone XL could lose its raison d’être. If so, Obama may be hailed as prescient for stopping construction. Of course, the oil price will rise again, sooner or later.

    • Sam Taylor says:


      While I don’t disagree that the price of oil is likely heading up again soon, a bigger question is whether an oil price at which the Canadian tar sands are profitable is long term viable. If this price crash is more down to demand destruction than a supply glut, then I suspect that tar sands projects would struggle long term.

      • It’s not demand destruction or a supply glut; it’s a cartel manipulating prices, just as classic economic theory says they would. Saudi’s cost to pump a barrel is less than $5 (IIRC). When high price competitors come along, the cartel cuts its price to the point where the competitors are no longer profitable (this took a while, but who ever said OPEC was smart?) and they slowly or quickly go out of business. At that point, the cartel lets the price creep back up. Lather, rinse, repeat.

  3. Joe Clarkson says:

    How does the building of more and more fossil fuel infrastructure jibe with the desire to wean ourselves off a finite fuel supply that is also causing dangerous destabilization of the climate? If two thirds of our remaining fossil fuel legacy must remain in the ground to protect the climate, then surely we should be talking about dismantling existing oil and gas pipelines and the facilities they supply, not building new ones.

    Of course, if you believe that climate change is a hoax, perpetrated by greedy grant-hogging scientists and that coal, gas and oil should be burned as fast as possible, right down to the last drop, then this post makes perfect sense.

    • Graeme No.3 says:

      The claim that burning fuel is causing dangerous destabilization of the climate lacks any proof. Nor are the proposed remedies for that non-problem going to do any good.
      Germany subsidised lots of wind and solar capacity and the result? Emissions rising.
      The UK has subsidised lots of wind capacity and the result? Panic about supply and lots of diesel generators replacing CCGT plants so emissions aren’t dropping at all (except by the export of industry overseas).

      The “scientists” are third-rate but it is the greedy subsidy-hogging financial institutions you should be concerned about.

      • Louis says:

        I would have thought that the energy security argument would ultimately win here. Whilst the price dynamic and delivery rate might seem uncertain in the short term the long term outlook would surely be that a supply line from the Canadians is the safest investment regarding long term politically reliable supply no matter how much the short term fluctuation in pricing might be. Factor in the transport cost, road instructor maintenance and environmental/civilian safety from the road/rail accident perspective and I would think building it is a foregone conclusion with the Canadian government likely to be in the pro-build lobby.égantic_rail_disaster

        • Joe Clarkson says:

          I would have thought that the energy security argument would ultimately win here.

          If a finite quantity of anything is used at any positive rate, variable or continuous, it will be consumed. Some time during the consumption process, it will be consumed at its maximum rate.

          We humans have been using fossil fuels at exponentially increasing rates for a few hundred years. There is a lot of it left, but not a great deal more than we have already used. If we keep increasing the rate at which we use it, all of it will be gone in a matter of decades. We are probably near the maximum rate of use.

          Why would anyone consider that the energy security of our civilization should depend on something that we will use up rather quickly (on a civilizational time scale)? Regardless of whether fossil fuels cause climate change, we should have been preparing for the day they run out since the day we started using them.

          • We humans have been using fossil fuels at exponentially increasing rates for a few hundred years. There is a lot of it left, but not a great deal more than we have already used.

            Please supply some numbers to back this claim up.

            If we keep increasing the rate at which we use it, all of it will be gone in a matter of decades.

            Numbers to back this claim up too, please. Note also that it’s not a valid objection to Keystone XL, which won’t increase “the rate at which we use it.”

          • Joe Clarkson says:

            There was no reply possible to Roger Andrew’s comment asking for information, so I am including the information he asked for as a reply to my own comment.

            Here is a chart showing the exponential nature of our fossil fuel use history.

            Here is information on fossil fuel reserves showing how long they would last at current rates of use.

            If use rates keep climbing, they will be exhausted sooner. Of course, increasing difficulty of extraction will mean that effective use rates will decline after their peak and thereby extend the time these fuels will be “available”.

            How our civilization and global market economy will respond to a decline in fossil fuel supplies is open to conjecture, but it would be the height of imprudence to assume that nothing bad could happen and blithely continue depending on them.

            Roger is correct that if oil use does continue to increase, the construction of the the Keystone XL pipeline is not a matter of great importance, but would only facilitate the safe transport of oil that would be used anyway. I simply disagree that oil use should continue to increase, for what to me are obvious climate danger and energy security reasons.

          • Numbers! Thank you Joe.

            The problem with the analyses you cite is that they fail to take reserve growth into account. If you look up the BP data for 1980 you will find that oil reserves at the time were sufficient to last for 31 years at 1980 rates of consumption, and less if consumption increased. But 35 years later we still have oil. 2013 reserves were in fact sufficient to last for 51 years at 2013 rates of consumption. In short, between 1980 and 2013 the world discovered a lot more oil than it consumed. This trend obviously won’t continue indefinitely but right now there’s little sign of a reversal.

            Getting way off topic on my own thread. Better cease and desist.

    • jacobress says:

      So, you think that hauling the crude by rail (rather than by pipe) will save mankind from environmental doom?

    • A C Osborn says:

      Can you please provide the evidence for “causing dangerous destabilization of the climate”.
      It must of course show that this new Climate is “Unprecedented”.
      Or is it the case that you haven’t read any History books, or any weather statistics.
      If you would like me to point you to some forums that show historical weather data I am quite happy to do so.

    • Madman2001 says:

      I certainly don’t have a desire to wean myself off fossil fuels. And there is no evidence that fossil fuels are finite in the short run (and in the long run, everything is finite). You may well be thinking of the “peak oil” nonsense, but there are more oil reserves in the world today than there were 10 or 20 years ago.

      And where’s the evidence for “dangerous destabilization of the climate”? There has been no statistically significant warming (or, thankfully, cooling) in the past 18 years. Hurricanes and tornadoes are down.

      I’m not sure whether you’re sadly mistaken or trying to push an agenda, but you are so wrong, Joe Clarkson.

  4. there is an interesting published by nature

    The United States is banking on decades of abundant natural gas to
    power its economic resurgence. That may be wishful thinking.

  5. John Weber says:

    For those who support fracking, oil sands and the northern pipeline or for those who encourage investing in fracking, oil sands or the northern pipeline, I have this suggestion. Move your home next to a fracking well and put down your water well along side. Or better yet move your children there or better yet move your grandchildren there. Let the pipeline filled with toxic fluid come along the boundaries of your land here in lovely Northern Minnesota. The same for the oil sand works in Canada. Move your grandchildren up there in the poisonous air and next to the polluted rivers and environmental degradation.

    • Graeme No.3 says:

      Have you any idea what is actually in fracking fluid (outside of what could well be in your toothpaste)?

    • JerryC says:

      I guess everyone in favor of wind power has to live under a 300-foot windmill, too, eh? Sounds fair. I’d rather live near the gas well than the windmill, myself.

    • Sporty says:

      Too bad you’re so ignorant of the facts of fracking. You need to educate yourself. There is not one instance of fracking causing water well pollution – ever. You need to grow up and get an education and start living in the real world. Billions upon billions of gallons of oil is being moved daily by pipelines that you don’t even know exist. Billions more are being shipped by rail. In Quebec, Canada around 70 people died because a train exploded in a small town. Please show me when that many people were killed by an oil pipeline failure.

      • Euan Mearns says:

        Sporty, there are studies in the Marcellus,PA, that show elevated methane levels in drinking water wells close to fracking. Whether or not this is hazardous is another question. And of course most fracked wells in the USA are in the middle of nowhere. Its important to maintain a sense of balance.

        It does seem to make a lot more sense to transport oil by pipeline than by train and truck. Interested to see where Obama’s sense of Health and Safety lies. You say 70 people died in a train explosion – do you have a link? I think 13 died in Deepwater Horizon? Does that make your train explosion 5* as bad?

  6. A C Osborn says:

    Euan, I have had my disagreements with Willis in the past, but for me this latest post of his sums up my feelings precisely. It has an element of your post on the history of “Energy” in it as well.

  7. Louis says:

    Why would anyone consider that the energy security of our civilization should depend on something that we will use up rather quickly (on a civilizational time scale)?

    ….. well these guys will certainly have a number of reasons which will probably get due consideration in the debate.

    • Louis says:

      My apologies … this comment was supposed to be in response to Joe Clarkson above, not a standalone.

    • Joe Clarkson says:


      I read the interesting article from your link. I have no doubt that US petroleum use could be dramatically reduced. European energy use per unit of GDP is about half that of the US, so we in the US have lots of room for improvement. About the only big countries which are worse than the US are the Canada and China.

      But the rate of world wide increase in oil consumption has been about 1.7% in recent decades even with continuing efficiency gains. If that were to continue for the next 41 years, oil consumption would double. Not only that, but during that time the world would use as much oil as has been used in all of history up to now. This is the terrifying math of exponential growth.

      For those who haven’t seen it, this video on the exponential function by Professor Al Bartlett is a must.

      • Louis says:

        Big fan of Albert Bartlett’s decades long struggle to get people to understand percentage growth over the long term but as someone who worked on the Manhattan project I suspect he too would have advocated for building Keystone XL on the grounds of energy security. I would think he’d probably have pointed to capital costs and like the ever increasing costs of ski lift passes and abdominal surgery he would probably have said if you’re going to build it … build it now.
        Securing the supply of what’s left being the best hope for managing transition irrespective of how well that ultimately plays out.

  8. Glen Mcmillian says:

    Hat off to the author. This is the best and most comprehensive and most honest short article I have ever read about the Keystone XL .

    I will add just a little in response to those who think the security aspect is not important.

    Security on a national basis is the same sort of ongoing problem as food supply. It has to be dealt with constantly in the PRESENT.

    We need a secure supply of imported oil on a daily basis NOW and we will need it EVERY day from now until we manage – if we ever do – to break our oil addiction.

    From a national security pov building the Keystone is about the biggest no brainer I have run across in recent years.

  9. cgh says:

    Euan and others, there’s no such thing as the Canadian “tar” sands. The bitumen deposits in northern Alberta and Saskatchewan are a mixture of bitumen and sand. There’s no tar in it. Tar is a manufactured product, extracted from petroleum during the refining process. “Tar sands” was a term invented by environmentalists for its propaganda value.

    Other than this minor quibble, the article is an excellent summary of the project. It should be observed that the more obstacles that are placed in the path of this project, the greater the likelihood that Canadian crude oil will eventually find its way to customers other than the United States. It’s reasonable to think that over the long term, Canada has no intention of allowing the US to landlock it in an effective blockade.

    To that end it should be noted that a river of American money has been pouring into Canada over the past half-decade or so to fund domestic opposition, environmentalist and aboriginal,to the Northern Gateway project. So important is this that for two elections running, the environmental lobby has bought themselves the Mayor of Vancouver. Tides Canada has been the Mayor’s largest campaign donor for two elections running.

    • CGH: Thanks for that apropos comment. In the interests of terminological accuracy the post has now been updated with “tar” changed to “oil” except for one figure where “tar” appears in the caption, which I can’t do much about.

      • Dave says:

        I was about to comment on the same thing. Although you can call them tar sands if you also say that Scotland is trying to sell its excess electricity generated from bird slaughtering to England…

      • cgh says:

        Roger, now that I look at that figure in detail, there’s one other important clarification for it. Transmountain from Edmonton to Burnaby already exists. What is under consideration is expanding its capacity. Unsurprisingly, the enviros and Climate News are vigorously opposed to its expansion as well.

        It should also be understood that Climate News is NOT neutral when it comes to reporting on these issues.

        If I didn’t know better, I might suspect that various parties are trying to blockade the Canadian oil industry.

        • I noted Transmountain in the text, although I’m not sure I have the numbers exactly right:

          Canada already has ~1.7 million bpd of pipeline export capacity – 591,000bpd going to US refineries via Keystone I, and 800,000bpd in Alberta Clipper plus 300,000bpd in TransMountain

          • cgh says:

            Those numbers look right to me, Roger.
            Here’s a map of the existing structure.

            There’s a key piece of history which affects all this. Hurricane Katrina damaged a lot of US refinery capacity. So much so, that there were significant shortages of fuel for some time after. The then-US administration encouraged the oil companies to increase capacity and diversify into different crude sources. Keystone was to be a supply piece for this added refinery capacity.

            It’s probably fair to say that the Obama administration has thoroughly mucked up what was a coherent response to the fuel supply problem highlighted by Katrina.

          • BigComfySofa says:

            There is much more capacity existing than those three pipelines: the existing Enbridge system (Lines 1,2,3,4) before Alberta Clipper, as well as Spectra’s Express pipeline and Plains All American’s Rangeland. There is also the Cenex pipeline in Montana. Enbridge also has a pipeline which delivers crude to the Warren, PA refinery it crosses the border near Buffalo, NY.

            The U.S. imported over 3.0 million BPD of crude oil from Canada in October 2014

  10. Sooke says:

    I read many articles about the massive amounts of oil coming from US fracking , but none mention that the rest of the world will inevitably be using this technology, and most of them will pay wages far below what American oil workers make.

    So it seems to me the Saudi Oil Minister was right when he said that the world will never again see $100 a barrel oil.

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  12. From Obama’s State of the Union Speech, just delivered:

    21st century businesses need 21st century infrastructure – modern ports, stronger bridges, faster trains and the fastest internet. Democrats and Republicans used to agree on this. So let’s set our sights higher than a single oil pipeline.

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