XL Pipeline Revisited

By Guest Contributor

Environmentalists across North America have recently become infatuated with the XL Keystone Pipeline System. The current proposals will expand the pipeline system to provide oil from Alberta, Canada to Texas. What many environmental groups protesting this pipeline fail to comprehend is that the oil will come to market, pipeline or no pipeline.

The United States has consumed between 18 and 21 million barrels of oil a day for roughly five years, of which Canada was the largest provider last year at an estimated 2.7 million barrels per day. Canada will increase this number over the next decade. The expansion of the Keystone Pipeline system is a crucial part of those plans. And as an environmentalist, Canadian and student living in Vermont, I find it bizarre that so many people would be against its construction. The prevention of this pipeline’s construction will simply mean that more oil is delivered to U.S. refineries by rail. There is no technology currently on the horizon that will replace oil in North America.

“There are hidden costs people aren’t taking into account when you are considering wind, solar and hydro power,” says Glenn Dawson, a geologist and president of Williston Hunter Canada Inc. “Solar panels are made entirely from oil. Wind turbines from steal that require iron ore, coal and energy to produce, ship and install. And while hydro might provide efficient energy, you can never reclaim an enormous dam, but you can reclaim the land from a mine.”

So who gains from protesting and preventing the XL expansions?

Not environmentalists. The political capital being drained from otherwise productive initiatives is unbelievable. No one is applying the appropriate amount of pressure to Congress and the administration to institute proper oversight and double well drilling required in every other modern oil-producing country in the world, which could have prevented the BP Horizon catastrophe.

Consumers lose too, as the oil will come to American market by rail, an inefficient form of transportation. 590,000 barrels a day will travel the XL into U.S. markets. A “whale belly” car carries roughly 33,000 gallons or 1,050 barrels. That means that 560 rail cars will need to be loaded with oil, shipped from Alberta to Houston while stopping at customs and other cities and then unloaded constantly. Adding in track repair and maintenance, the financial costs are enormous.

“Most people believe they are paying WTI (West Texas Intermediate) prices at the pump, but they’re not. They are paying Brent, which is $10-20 more per barrel. The people making the money are the middlemen that can buy Albertan oil at the wellhead for $45 and sell to gulf refineries after shipping by rail for the $100 Brent price. The pipeline should help narrow that gap for American consumers,” explained Mr. Dawson.

The environment also loses. How many extra tons of fossil fuels will be burned in order to accomplish this? It takes approximately one gallon of oil energy to transport 1 rail car approximately 440 miles. With the route to Houston roughly 2,500 miles, each shipment of 560 rail cars will take roughly 3,180 gallons of oil energy to transfer that oil from Alberta to Houston. And let’s not forget the huge impact of extra super tankers docking, loading and shipping oil from Africa and the Persian Gulf.

“We have the toughest regulations in the world,” reasons Mr. Dawson. “Do people really think that Venezuela, Africa and Russia adhere to the same environmental standards that Canadians and Americans do? We are constantly increasing our efficiency with water use and this oil will protect American needs from embargo, war and any other unforeseeable diplomatic squabbles.”

The relationship between two of the closest allies in the history of the world also suffers. The debate over this pipeline is a thorn in the side of two countries that are quite literally family. I love both countries. I am Canadian, but I call Vermont home, whether I’m traveling in America or Europe. And by the way, Canada is part of America too — it’s North America. And if I could have it my way there wouldn’t be a border between us.

However, there is a bright spot. Norwegian light crude (Brent) and Persian oil will both be cheaper relative to Alberta synthetic crude and Bakken shale oil from North Dakota and Montana. Americans will purchase more from abroad without even realizing it. The pipeline proposed to cross the Rockies and deposit crude into super tankers in the Pacific Ocean for distribution in Chinese and Japanese markets will also gain steam.

Meanwhile, the U.S. economy has steadily recovered for the past two years following the recession, steadily expanding demand for synthetic crude. Refineries along the gulf coast have met this demand by importing larger quantities of crude from Venezuela, whose profits go directly into a regime that promotes distinctly anti-American sentiment.

“The XL expansion is a win, win, win, for the environment, international political strength within America and the economy,” said Mr. Dawson, who feels that the facts are being ignored or skewed. “The pipeline provides a safe source of oil that allows Americans to pursue interests without the fear of an embargo. It will even help prevent Brent from controlling prices at the pump. Is oil ever going to be completely clean? No, probably not, but we are always trying to produce oil more and more efficiently.”

Donald Donaldson ‘13.5 is from Toronto, Canada