Pipe dreams: A look at Canada’s six leading pipeline proposals

Pipelines are to a landlocked oil economy what supply lines are to invading armies: critical to success but vulnerable to attack.

Canada’s prairie oil producers – led by Alberta but including Saskatchewan and now Manitoba – have been wildly favoured in geology but less so in geography. While the provinces are enjoying a boom in production from oil sands and new light oil prospects, they are located far from the massive refining hub on the U.S. Gulf Coast, and far from ocean ports that would allow them to reach energy-hungry customers overseas.


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Government and industry are now frantically looking for options. Companies are pursuing a series of pipeline projects through the U.S. and moving west and east in Canada. Recently, they have talked about ambitious plans to use rail cars and river barges to get their oil to market – even shipping crude by rail to Alaska to reach the Pacific.

But their pipe dreams have drawn fierce opposition from environmentalists and some first nations communities, and the regulatory process has at times bogged down.

The current lack of pipeline access is exacting an enormous cost on Canada, and especially Alberta, by driving down the price that Canada reaps for its oil, the country’s most valuable export by far. Alberta has long depended on central Canada and the middle of the United States as its oil markets. But those regions are now saturated with crude from booming North American production, and the glut has driven down prices.

That in turn has blown a $6-billion hole in the province’s budget, and will result in lower corporate tax revenues for Ottawa.

As protesters flooded Washington this weekend to demand President Barack Obama turn down a proposal to build a major pipeline through the U.S. heartland to the Houston-area refineries, Alberta politicians and industry officials were scrambling to promote other export pipelines, and even rail links.


Proponent: TransCanada Corp.

Volume: 850,000 barrels per day, which is about 85 per cent of the capacity of Canada’s existing main export pipeline to the U.S.

Destination: Texas Gulf Coast, home to the world’s largest refining market

State of play: The U.S. government is still considering environmental, economic and security implications after Nebraska approved a new route.

Decision expected: TransCanada had hoped for a ruling by March 31, but it is now not expected before the end of June, at the earliest.

Opposition: U.S. environmental groups have targeted the pipeline as a litmus test in President Barack Obama’s promise to address climate change. Opponents say it will make U.S. more dependent on a carbon-intensive type of fuel.

Pipe dream: Prime Minister Stephen Harper once called Keystone a “no-brainer,” but handicappers would now give it no better than 50-per-cent chance of approval.


Proponent: Enbridge Inc.

Volume: 300,000 barrels per day.

Destination: Montreal, home of Suncor Energy’s refinery

State of play: Enbridge wants to reverse a line that had been delivering imported oil to southwestern Ontario, allowing it to send Western Canadian crude to Montreal to be refined. It has filed an application with the National Energy Board, which last year approved Enbridge’s first phase in the project, reversing the flow of the line from Sarnia, Ont., to Imperial Oil’s refinery at Nanticoke, Ont.

Decision expected: Following new federal rules enacted last spring, the regulator has until March, 2014 to make a decision.

Opposition: Canadian environmental groups intervened to oppose Enbridge’s previous reversal of an Ontario portion of the Line 9 pipeline, but new federal rules will limit their involvement in this application.

Pipe dream: Because Enbridge is reversing an existing line, odds are very good the project will be approved.


Proponent: TransCanada Corp.

Volume: 500,000 to 1 million barrels per day

Destination: Quebec, possibly Saint John, N.B., home of the 325,000-barrel-per-day Irving Oil refinery and a deep-water port that would facilitate ocean-bound exports

State of play: TransCanada says the project – which would convert an existing, under-utilized natural gas pipeline – is commercially viable and the company is now looking to line up support from producers who would need to commit to ship oil on the line. An application to the National Energy Board would follow.

Decision expected: Assuming producer support, the company expects to file later this year, and the regulator would then have 18 months to consider the application.

Opposition: Canadian environmental groups are gearing up to oppose the pipeline, and hope for an ally in the Parti Québécois government, but Premier Pauline Marois has so far been neutral to positive on the project.

Pipe dream: So long as oil producers support it, TransCanada is likely to win approval for transforming its natural gas line to oil as far as Montreal. It faces tougher odds to extend the line to Quebec City or Saint John, since it will need to build a new pipeline, which always attracts greater opposition.


Proponent: Enbridge Inc.

Volume: 525,000 barrels per day of exported oil sands bitumen, 193,000 barrels per of imported diluent, an oil-based solvent used as a thinning agent so the thick, heavy bitumen can be shipped by pipeline

Destination: Kitimat, the small British Columbia town at the head of the Douglas Channel. Super tankers would deliver oil to refineries in Asia and California.

State of play: Enbridge is mid-way through regulatory review, and has received financial support from major oil companies and foreign refiners interested in shipping crude on the line.

Decision expected: The National Energy Board has been mandated to provide a decision by the end of 2013.

Opposition: Environmental groups and first nations in B.C. and across Canada have placed massive emphasis on blocking Gateway. The B.C. government has given the project a cool reception, releasing five conditions for its support of a new oil pipeline. Legal challenges are expected if Gateway gains regulatory approval.

Pipe dream: With implacable opposition from some first nations and the B.C. New Democratic Party – which is favoured to win a May election – Enbridge faces extremely long odds in getting Gateway built.


Proponent: Kinder Morgan

Volume: 590,000 barrels per day (current pipeline is 300,000 barrels per day; expansion will take it to 890,000)

Destination: Burnaby, B.C., home of Kinder Morgan’s Westridge Marine Terminal, where smaller tankers would take Canadian oil primarily to California, although Asian shipments are also possible

State of play: Kinder Morgan is mid-way through an application asking the National Energy Board to approve commercial tolls for the project. A formal application seeking authority to build the expansion is expected later this year.

Decision expected: Depending on when Kinder Morgan applies, the regulatory review could be completed by 2015, with construction starting in 2016 and operations commencing in 2017.

Opposition: Local forces have begun to marshal against the project, including some first nations and the mayors of Burnaby and Vancouver. British Columbia’s provincial leaders – Premier Christy Clark and Adrian Dix, the NDP Leader expected to gain power this year – have not yet made public their thoughts on the expansion.

Pipe dream: TransMountain hopes its route to approval will be less contentious than the Gateway brouhaha, but the line ends at the waterfront near Vancouver and there is much local opposition to the increased tanker traffic it would bring. 50-50, at best.


Proponent: Enbridge Inc.

Volume: 1 million barrels per day by 2015

Destination: The U.S. Midwest, Gulf Coast and possibly eastern seaboard

State of Play: Enbridge carries the bulk of Canada’s oil on its complex Mainline network of pipes. The company is mid-way through a broad expansion of that network to push more oil through. It will come in several stages, as Enbridge adds more pumping stations to a number of existing pipelines. It hopes to add 300,000 barrels per day this year, another 600,000 barrels per day in 2014 and one million in total by 2015.

Opposition: Because the pipelines are already built, the Enbridge plans have generated little profile, and little controversy. However, the company needs a presidential permit to expand one of its larger pipelines, Alberta Clipper, by 350,000 barrels per day, roughly a third of the total increase Enbridge is working toward. Seeking that approval – similar to what Keystone XL requires – could expose the company to the complicated U.S. political machinery.

Pipe dream: Since much of the work involves expanding existing pipelines, these are among the surest bests for Canada’s industry. But the need for a presidential permit does open this project to some of the same political firestorm that has met Keystone XL in the U.S.


Proponent: The Alberta government

Volume: Unknown

Destination: Churchill; Alaska via the NWT

State of Play: Desperate for more money – and equally desperate to show a restive public that it’s working to fix pipeline problems – the Alberta government has taken an unusual role as pipeline dreamer-in-chief. In recent weeks, ministers have come up with an array of new pipeline ideas. They have suggested a pipeline to Churchill, Man., which has the virtue of not crossing either B.C. or Quebec – but the significant downside of shipping oil through waters that are heavily choked with ice much of the year. And they’ve suggested pumping oil north through a small existing pipeline out of Norman Wells, NWT, then building a new pipeline along the Second World War-era Canol pipeline route through Yukon, and on to Alaska. This idea uses existing pipeline rights-of-way, but is unlikely to be celebrated by northern first nations groups.

Pipe dream: These are ideas generated by a government with no ability to actually build a pipeline, and therefore the latitude to toss out suggestions with little regard to their degree of craziness. Take them more as evidence of political desperation.

Kinder Morgan Town Hall at Stoney Creek

The first community forum on Kinder Morgan’s plan to radically expand their pipeline from Alberta to Burarrd Inlet in Burnaby, British Columbia was held on June 28th, 2012. The speakers included Michael Hale of Pipe Up Network and Sven Biggs of No Tankers.

The second community forum was held on July 7th, 2012. Speaking at the second forum were Kennedy Stewart, MP Burnaby North, Ben West, Wilderness Committee, and Celine Trojand, Dogwood Initiative.Read more…

David Lavallee: White Water Black Gold Q&A

David Lavelee answering questions at a screening of White Water Black Gold held at the Capital Hill Community Hall hosted by the Burnaby Residents Opposing KinderMorgan Expansion (BROKE) on January 18, 2013. There are three parts to the series. The last part includes a segment with Sven Biggs of No Tankers and Karl Perrin of BROKE.

Part 1 David Lavelee

Part 2 David Lavelee

Part 3 David Lavelee

Empowered green groups gain upper hand in pipeline battle

WASHINGTON — Meet the people on the winning side of Canada’s oil discount — the U.S. environmental activists who have wreaked havoc in the oil sands industry by trashing its practices and shutting it out of new markets by stalling proposed pipelines such as Keystone XL.

They include Susan Casey-Lefkowitz, Danielle Droitsch, Anthony Swift of the Natural Resources Defense Council (NRDC), which bills itself as the United States’ most effective environmental action group backed by 350 lawyers; and Jason Kowalski and Ben Wesser, with 350.org, a grassroots organization that uses protests and social media to stop climate change.

They are uncompromising, empowered and feel good about their progress in capping the growth of fossil fuels — particularly those from Canada.

Agree with them or not, their record is astonishing: They have outmanoeuvred the powerful oil lobby and stalled the Keystone XL pipeline from Alberta to Texas; they have managed to blame emissions from oil sands’ fuels for U.S. climate disasters such as Super Storm Sandy; and they believe they are on the cusp of strangling oil sands growth.

Yuri GripasNRDC’s Danielle Droitsch speaks next to advisor and lobbyist Susan Casey-Lefkowitz at their office in Washington in early February.
In interviews in the slick downtown Washington base of the NRDC, the activists were unapologetic about the distress their campaign is causing in Canada — and particularly in Alberta, where pipeline bottlenecks are depressing the price of oil, cutting into company revenues and forcing provincial budget cuts.

“The economic distress that we see right now is nothing compared to the economic distress that we will see in the future from the impacts of climate change,” said Ms. Casey-Lefkowitz, director of the international program at the NRDC.

The lesson to take away with what is happening with the shortfalls in Alberta is that diversification of the economy is critical
“The lesson to take away with what is happening with the shortfalls in Alberta is that diversification of the economy is critical … the way forward in terms of our economic and national security is building a world where we depend on clean energy.”

Their energy answer for Alberta? Forget the petrostate and switch to wind.

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Never mind that Canada is a sovereign country with the right to make its own decisions.

“This is not an issue of borders anymore,” she said. “And we are seeing that with a lot of our environmental work. Most of the environmental problems are global challenges. And that is why we work so closely with colleagues in Canada.”

How did groups like NRDC, 350.org, and their close partners the Sierra Club, the Community Environmental Legal Defense Fund, Friends of the Earth, become so powerful they believe they alone have the right answers on the climate and on energy?

James Vines, a partner in Washington at King & Spalding LLP, a top law and lobby firm representing major international energy players, said environmental organizations have been empowered by deep pockets and the U.S. legal system, which provides many avenues that allow private parties to challenge energy project.

While the fight against Keystone XL has garnered a lot of attention because of its size and because it crosses the Canada-U.S. border, he said it’s just one of hundreds of fossil fuel projects opposed by environmental non-governmental organizations during the permitting process.

If a permit for a project is granted, Mr. Vines said the fight moves to the courts, where the activists routinely challenge its validity and the validity of the environmental impact studies.

Even when NGOs don’t win, lengthy delays often frustrate proponents and some times cause them to give up.

The Albertans are simply not fighting back hard enough
“The Canadians are not experiencing in Keystone something that other oil producers aren’t facing,” Mr. Vines said. “The Sierra Club and others have very, very deep war chests to challenge all these projects and they win some and they lose some. From their perspective, if they keep one of those projects from being completed, that is a victory.”

The attacks are so common that project proponents are now building years of delays and lawsuits into their business strategies, he said.

Mr. Vines said it is disappointing that Keystone XL proponent TransCanada Corp. wasn’t able to contain the controversy by doing what other U.S. energy project proponents commonly do — use the legal system as aggressively as the NGOs, with the goal of keeping the permitting process based on fact and science.

Using basic public relations, the strategy largely employed by the oil sands sector, “just doesn’t get the job done when the opponents are as well-funded and determined as those who oppose K-XL,” he said. “Successful energy project proponents usually must use the legal system to create a rigorous and defensible formal record on the scientific and legal merit of their project, one that will withstand rhetoric-based counter arguments in the trial and appellate courts.”

Indeed, the decision on Keystone XL itself boils down to whether it can cross a border, he said.

But TransCanada has “allowed cumulative impacts under the [U.S. National Environmental Policy Act] to not just mean a couple of hundred yards from the border, and then what happens in the surrounding communities, they have allowed the cumulative effects to be the border to the Gulf, the whole 1,300 miles of the project.”

Even the messaging was late and poor, making Canada easy to pick on and a “soft target,” said policy advisor Fred Cedoz, vice-president with GWEST in Washington, who has represented Canadian interests including the Alberta Enterprise Group, an Edmonton-based public policy advocacy group.

“The Albertans are simply not fighting back hard enough,” Mr. Cedoz said. “In the U.S., in order to keep our energy sector alive, we know how to push back on these, we know all the processes to use.”

President Obama is expected to rule in the next few months whether to give a permit to Keystone XL, after twice rejecting it because of environmental movement opposition.

Indeed, environmental organizations opposing Keystone XL are planning to use available processes to the fullest.

Because they helped Barack Obama get re-elected, they will be watching for specifics on his climate change intentions when he delivers his State of the Union address Tuesday evening.

And to ensure he stays on plan, they are behind the mass demonstration at the White House planned for Sunday, the day before President’s Day, when 20,000 people are expected to converge from across the continent to demand rejection of the Canadian pipeline project once and for all.

With the regulatory process on Keystone XL still under way, they said they will keep working on Capitol Hill and on the Administration to ensure a “robust” discussion on the oil sands’ impacts on the climate.

Even if Keystone XL is approved, they’ve got a litigation strategy in their back pocket to dispute the permit and cause further delays.

The upshot? Keystone XL will not be built by 2015, as TransCanada anticipates, because they will have barely finished the first phase of litigation on the permit, Mr. Vines predicted.

U.S. environmental activists, lead by 350.org and the Natural Resources Defense Council, don’t believe a word that Canadian governments, the Canadian oil sands industry and myriad analysts and researchers are saying about environmental improvements, Canada’s plans to build pipelines West and East to sell the oil to other markets if the U.S. doesn’t want it, that producers are using rail, trucks and barges to move their product in the absence of pipelines.

They believe a rejection of Keystone XL will go a long way to capping oil sands growth, but they are hedging their bets by also working with “Canadian partners” to stop Northern Gateway, the reversal of Line 9 and any other oil sands pipelines that would enable oil sands exports.

Here’s what they are saying about Keystone and the oilsands in general:

On Keystone XL: “The Keystone XL pipeline, by virtue of its size, by virtue of the fact that it’s opening up the Gulf Coast, has grown to be a very significant issue. The NRDC has identified that pipeline to be a very significant decision that signals both the expansion [of the oil sands] and where the U.S. is going on its clean energy policy.” — Danielle Droitsch, senior attorney at the NRDC focusing on Canada.

On why Keystone XL is not needed: “We made a major stride with car efficiency standards, and Keystone XL is not just about what our energy mix is today, it’s a 50-year piece of infrastructure that would increase the carbon intensity of the oil we do use, and once its built, we are stuck with it.” — Anthony Swift, attorney for the international program at NRDC.

On rail transport: “There is no question that … marginal barrels are being moved to the Gulf Coast, but the fact of the matter is that rail doesn’t support a model that justifies dramatic tar sands expansion.” — Mr. Swift.

On continuous improvement in the oil sands: “We are not convinced, from the outside looking in, that the environmental impacts are really being addressed. The issue is on the ground, and that includes expanding at these phenomenal rates. Right now the impacts on land, air and water are significant, and the technological improvements are microcosmic compared to what the impacts are.” — Ms. Droitsch.

On China’s investment in the oil sands: “Right now China doesn’t have the refining and upgrading capacity to take the bitumen. We have a large program in China and an office in Beijing. As far as we can tell, there is no intent by the Chinese government to take that capacity. We treat them more as investors than we do as consumers,” Susan Casey-Lefkowitz.

On Keystone XL’s contribution to U.S. energy security: “We don’t believe at all this is going to help energy security. We think this is an export pipeline.” — Ms. Droitsch.

On the U.S. relation with Canada if Keystone XL is rejected: “I don’t think that a rejection of Keystone XL would be a huge blow to Canada, or a huge surprise necessarily. The public concerns from Americans have been very clear, but also concerns in Canada have been very clear, about tar sands development, about the rate of expansion, about what it means climate change within Canada.” — Ms. Casey-Lefkowitz.

On the fossil fuel industry: “The fossil fuel industry has had their way with the world for a century and needs to be on the way out,” Jason Kowalski, policy director, 350.org.

Secret funding helped build vast network of climate denial thinktanks

Conservative billionaires used a secretive funding route to channel nearly $120m (£77m) to more than 100 groups casting doubt about the science behind climate change, the Guardian has learned.

The funds, doled out between 2002 and 2010, helped build a vast network of thinktanks and activist groups working to a single purpose: to redefine climate change from neutral scientific fact to a highly polarising “wedge issue” for hardcore conservatives.

The millions were routed through two trusts, Donors Trust and the Donors Capital Fund, operating out of a generic town house in the northern Virginia suburbs of Washington DC. Donors Capital caters to those making donations of $1m or more.

Whitney Ball, chief executive of the Donors Trust told the Guardian that her organisation assured wealthy donors that their funds would never by diverted to liberal causes.

The funding stream far outstripped the support from more visible opponents of climate action such as the oil industry or the conservative billionaire Koch brothers. Photograph: Chip Somodevilla/Getty Images

“We exist to help donors promote liberty which we understand to be limited government, personal responsibility, and free enterprise,” she said in an interview.

By definition that means none of the money is going to end up with groups like Greenpeace, she said. “It won’t be going to liberals.”

Ball won’t divulge names, but she said the stable of donors represents a wide range of opinion on the American right. Increasingly over the years, those conservative donors have been pushing funds towards organisations working to discredit climate science or block climate action.

Donors exhibit sharp differences of opinion on many issues, Ball said. They run the spectrum of conservative opinion, from social conservatives to libertarians. But in opposing mandatory cuts to greenhouse gas emissions, they found common ground.

“Are there both sides of an environmental issue? Probably not,” she went on. “Here is the thing. If you look at libertarians, you tend to have a lot of differences on things like defence, immigration, drugs, the war, things like that compared to conservatives. When it comes to issues like the environment, if there are differences, they are not nearly as pronounced.”

By 2010, the dark money amounted to $118m distributed to 102 thinktanks or action groups which have a record of denying the existence of a human factor in climate change, or opposing environmental regulations.

The money flowed to Washington thinktanks embedded in Republican party politics, obscure policy forums in Alaska and Tennessee, contrarian scientists at Harvard and lesser institutions, even to buy up DVDs of a film attacking Al Gore.

The ready stream of cash set off a conservative backlash against Barack Obama’s environmental agenda that wrecked any chance of Congress taking action on climate change.

Those same groups are now mobilising against Obama’s efforts to act on climate change in his second term. A top recipient of the secret funds on Wednesday put out a point-by-point critique of the climate content in the president’s state of the union address.

And it was all done with a guarantee of complete anonymity for the donors who wished to remain hidden.

“The funding of the denial machine is becoming increasingly invisible to public scrutiny. It’s also growing. Budgets for all these different groups are growing,” said Kert Davies, research director of Greenpeace, which compiled the data on funding of the anti-climate groups using tax records.

“These groups are increasingly getting money from sources that are anonymous or untraceable. There is no transparency, no accountability for the money. There is no way to tell who is funding them,” Davies said.

The trusts were established for the express purpose of managing donations to a host of conservative causes.

Such vehicles, called donor-advised funds, are not uncommon in America. They offer a number of advantages to wealthy donors. They are convenient, cheaper to run than a private foundation, offer tax breaks and are lawful.

That opposition hardened over the years, especially from the mid-2000s where the Greenpeace record shows a sharp spike in funds to the anti-climate cause.

In effect, the Donors Trust was bankrolling a movement, said Robert Brulle, a Drexel University sociologist who has extensively researched the networks of ultra-conservative donors.

“This is what I call the counter-movement, a large-scale effort that is an organised effort and that is part and parcel of the conservative movement in the United States ” Brulle said. “We don’t know where a lot of the money is coming from, but we do know that Donors Trust is just one example of the dark money flowing into this effort.”

In his view, Brulle said: “Donors Trust is just the tip of a very big iceberg.”

The rise of that movement is evident in the funding stream. In 2002, the two trusts raised less than $900,000 for the anti-climate cause. That was a fraction of what Exxon Mobil or the conservative oil billionaire Koch brothers donated to climate sceptic groups that year.

By 2010, the two Donor Trusts between them were channelling just under $30m to a host of conservative organisations opposing climate action or science. That accounted to 46% of all their grants to conservative causes, according to the Greenpeace analysis.

The funding stream far outstripped the support from more visible opponents of climate action such as the oil industry or the conservative billionaire Koch brothers, the records show. When it came to blocking action on the climate crisis, the obscure charity in the suburbs was outspending the Koch brothers by a factor of six to one.

“There is plenty of money coming from elsewhere,” said John Mashey, a retired computer executive who has researched funding for climate contrarians. “Focusing on the Kochs gets things confused. You can not ignore the Kochs. They have their fingers in too many things, but they are not the only ones.”

It is also possible the Kochs continued to fund their favourite projects using the anonymity offered by Donor Trust.

But the records suggest many other wealthy conservatives opened up their wallets to the anti-climate cause – an impression Ball wishes to stick.

She argued the media had overblown the Kochs support for conservative causes like climate contrarianism over the years. “It’s so funny that on the right we think George Soros funds everything, and on the left you guys think it is the evil Koch brothers who are behind everything. It’s just not true. If the Koch brothers didn’t exist we would still have a very healthy organisation,” Ball said.

Nearly 50 Climate Activists Arrested Outside Obama’s White House

We’re not protesting against Obama, say groups, we’re applying the pressure he’s requested
– Jon Queally, staff writer

Forty-eight climate activists representing themselves and various groups were arrested Wednesday outside the White House. (Photo via Flickr | Tar Sands Action) Forty-eight individuals were arrested outside the White House on Wednesday afternoon as they urged President Obama to take a strong stand on climate change by rejecting the Keystone XL pipeline and embracing a clean energy future without fossil fuels.

Among the notable leaders involved in the civil disobedience were Michael Brune, executive director of the Sierra Club, which made news recently by declaring its leaders and membership would end an almost 120 year ban on participating in acts of civil disobedience. Large cheers went up in the gathered crowd of supporters as Brune was led away in handcuffs.

“For the first time in the Sierra Club’s 120-year history, we have joined the ranks of visionaries of the past and present to engage in civil disobedience, knowing that the issue at hand is so critical, it compels the strongest defensible action.” –Michael Brune, Sierra Club

“For the first time in the Sierra Club’s 120-year history, we have joined the ranks of visionaries of the past and present to engage in civil disobedience, knowing that the issue at hand is so critical, it compels the strongest defensible action,” said Brune prior to his arrest. “We cannot afford to allow the production, transport, export and burning of the dirtiest oil on Earth via the Keystone XL pipeline. President Obama must deny the pipeline and take decisive steps to address climate disruption, the most significant issue of our time.”

Other notable arrests included environmental lawyer Robert F. Kennedy Jr.; Bill McKibben, Founder of 350.org; Julian Bond, civil rights leader and former president of the NAACP; and Daryl Hannah, an actress who has become well known for her climate activism from previous acts of civil disobedience in Washington and elsewhere.

After blocking the sidewalk in front of the White House—with some attaching themselves to the tall iron fence—and refusing to move when asked by Capitol Police, the activists were arrested one-by-one, handcuffed and led away.

“The threat to our planet’s climate is both grave and urgent,” said Julian Bond, who was among the last to be taken into custody. “Although President Obama has declared his own determination to act, much that is within his power to accomplish remains undone, and the decision to allow the construction of a pipeline to carry millions of barrels of the most-polluting oil on Earth from Canada’s tar sands to the Gulf Coast of the U.S. is in his hands. I am proud today to stand before my fellow citizens and declare, ‘I am willing to go to jail to stop this wrong.’ The environmental crisis we face today demands nothing less.”

“We really shouldn’t have to be put in handcuffs to stop KXL–our nation’s leading climate scientists have told us it’s dangerous folly, and all the recent Nobel Peace laureates have urged us to set a different kind of example for the world, so the choice should be obvious,” said 350.org founder Bill McKibben. “But given the amount of money on the other side, we’ve had to spend our bodies, and we’ll probably have to spend them again.”

Wednesday’s action was designed as a smaller but dramatic preface for a rally scheduled for Sunday that organizers say will bring many thousands of activists from all over the country to the White House gates to ask Obama to move “forward on climate”.

Keystone XL: A Presidential Decision That Could Change the World

This article originally appeared at TomDispatch.com [1]. To stay on top of important articles like these, sign up to receive the latest updates from TomDispatch.com [2].

Presidential decisions often turn out to be far less significant than imagined, but every now and then what a president decides actually determines how the world turns. Such is the case with the Keystone XL pipeline, which, if built, is slated to bring some of the “dirtiest,” carbon-rich oil on the planet from Alberta, Canada, to refineries on the US Gulf Coast. In the near future, President Obama is expected to give its construction a definitive thumbs up or thumbs down, and the decision he makes could prove far more important than anyone imagines. It could determine the fate of the Canadian tar-sands industry and, with it, the future well-being of the planet. If that sounds overly dramatic, let me explain.

Sometimes, what starts out as a minor skirmish can wind up determining the outcome of a war—and that seems to be the case when it comes to the mounting battle over the Keystone XL pipeline. If given the go-ahead by President Obama, it will daily carry more than 700,000 barrels of tar-sands oil to those Gulf Coast refineries, providing a desperately needed boost to the Canadian energy industry. If Obama says no, the Canadians (and their American backers) will encounter possibly insuperable difficulties in exporting their heavy crude oil, discouraging further investment and putting the industry’s future in doubt.

The battle over Keystone XL was initially joined in the summer of 2011, when environmental writer and climate activist Bill McKibben and 350.org [4], which he helped found, organized a series of non-violent anti-pipeline protests [5] in front of the White House [6] to highlight [7] the links between tar sands production and the accelerating pace of climate change. At the same time, farmers and politicians in Nebraska, through which the pipeline is set to pass, expressed grave concern about its threat to that state’s crucial aquifers. After all, tar-sands crude is highly corrosive, and leaks are a notable risk [8].

In mid-January 2012, in response to those concerns, other worries about the pipeline, and perhaps a looming presidential campaign season, Obama postponed [9] a decision on completing the controversial project. (He, not Congress, has the final say, since it will cross an international boundary.) Now, he must decide on a suggested new route that will, supposedly, take Keystone XL around those aquifers and so reduce the threat to Nebraska’s water supplies.

Ever since the president postponed the decision on whether to proceed, powerful forces in the energy industry and government [10] have been mobilizing to press ever harder for its approval. Its supporters argue [9] vociferously that the pipeline will bring jobs to America and enhance the nation’s “energy security” by lessening its reliance on Middle Eastern oil suppliers. Their true aim, however, is far simpler: to save the tar-sands industry (and many billions of dollars in US investments) from possible disaster.

Just how critical the fight over Keystone has become in the eyes of the industry is suggested by a recent pro-pipeline editorial in the trade publication Oil & Gas Journal:

“Controversy over the Keystone XL project leaves no room for compromise. Fundamental views about the future of energy are in conflict. Approval of the project would acknowledge the rich potential of the next generation of fossil energy and encourage its development. Rejection would foreclose much of that potential in deference to an energy utopia few Americans support when they learn how much it costs.”

Opponents of Keystone XL, who are planning a mass demonstration at the White House on February 17 [11], have also come to view the pipeline battle in epic terms. “Alberta’s tar sands are the continent’s biggest carbon bomb,” McKibben wrote [7] at TomDispatch. “If you could burn all the oil in those tar sands, you’d run the atmosphere’s concentration of carbon dioxide from its current 390 parts per million (enough to cause the climate havoc we’re currently seeing) to nearly 600 parts per million, which would mean if not hell, then at least a world with a similar temperature.” Halting Keystone would not by itself prevent those high concentrations, he argued, but would impede the production of tar sands, stop that “carbon bomb” from further heating the atmosphere, and create space for a transition to renewables. “Stopping Keystone will buy time,” he says [12], “and hopefully that time will be used for the planet to come to its senses around climate change.”

A Pipeline With Nowhere to Go?

Why has the fight over a pipeline, which, if completed, would provide only 4 percent of the US petroleum supply, assumed such strategic significance? As in any major conflict, the answer lies in three factors: logistics, geography and timing.

Start with logistics and consider the tar sands themselves or, as the industry and its supporters in government prefer to call them, “oil sands.” Neither tar nor oil, the substance in question [3] is a sludge-like mixture of sand, clay, water and bitumen (a degraded, carbon-rich form of petroleum). Alberta has a colossal supply of the stuff—at least a trillion barrels in known reserves, or the equivalent of all the conventional oil burned by humans since the onset of commercial drilling in 1859. Even if you count only the reserves that are deemed extractible by existing technology, its tar sands reportedly are the equivalent of 170 billion barrels [13] of conventional petroleum—more than the reserves of any nation except Saudi Arabia and Venezuela. The availability of so much untapped energy in a country like Canada, which is private-enterprise-friendly and where the political dangers are few, has been a magnet [13] for major international energy firms. Not surprisingly, many of them, including ExxonMobil, Chevron, ConocoPhillips and Royal Dutch Shell, have invested heavily in tar-sands operations.

Tar sands, however, bear little resemblance to the conventional oil fields which these companies have long exploited. They must betreated [3] in various energy-intensive ways to be converted into a transportable liquid and then processed even further into usable products. Some tar sands can be strip-mined like coal and then “upgraded” through chemical processing into a synthetic crude oil—SCO, or “syncrude.” Alternatively, the bitumen can be pumped from the ground after the sands are exposed to steam, which liquefies the bitumen and allows its extraction with conventional oil pumps. The latter process, known as steam-assisted gravity drainage (SAGD), produces a heavy crude oil. It must, in turn, be diluted with lighter crudes for transportation by pipeline to specialized refineries equipped to process such oil, most of which are located on the Gulf Coast.

Extracting and processing tar sands is an extraordinarily expensive undertaking, far more so than most conventional oil drilling operations. Considerable energy is needed to dig the sludge out of the ground or heat the water into steam for underground injection; then, additional energy is needed for the various upgrading processes. The environmental risks [3] involved are enormous (even leaving aside the vast amounts of greenhouse gases that the whole process will pump into the atmosphere). The massive quantities of water needed for SAGD and those upgrading processes, for example, becomecontaminated [14] with toxic substances. Once used, they cannot be returned to any water source that might end up in human drinking supplies—something environmentalists say [15] is already occurring. All of this and the expenses involved mean that the multibillion-dollar investments needed to launch a tar-sands operation can only pay off if the final product fetches a healthy price in the marketplace.

And that’s where geography enters the picture. Alberta is theoretically capable of producing [13] five to six million barrels of tar-sands oil per day. In 2011, however, Canada itself consumed [13] only 2.3 million barrels of oil per day, much of it supplied by conventional (and cheaper) oil from fields in Saskatchewan and Newfoundland. That number is not expected to rise appreciably in the foreseeable future. No less significant, Canada’s refining capacity for all kinds of oil is limited to 1.9 million barrels per day, and few of its refineries are equipped to process tar sands-style heavy crude. This leaves the producers with one strategic option: exporting the stuff.

And that’s where the problems really begin. Alberta is an interior province and so cannot export its crude by sea. Given the geography, this leaves only three export options: pipelines heading east across Canada to ports on the Atlantic, pipelines heading west across the Rockies to ports in British Columbia, or pipelines heading south to refineries in the United States.

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Alberta’s preferred option is to send the preponderance of its tar-sands oil to its biggest natural market, the United States. At present, Canadian pipeline companies do operate a number of conduits [13] that deliver some of this oil to the United States, notably the original Keystone conduit extending from Hardisty, Alberta, to Illinois and then southward to Cushing, Oklahoma. But these lines can carry less than one million barrels of crude per day, and so will not permit the massive expansion of output the industry is planning for the next decade or so.

In other words, the only pipeline now under development that would significantly expand Albertan tar-sands exports is Keystone XL. It is vitally important to the tar-sands producers because it offers the sole short-term—or possibly even long-term—option for the export and sale of the crude output now coming on line at dozens of projects being developed across northern Alberta. Without it, these projects will languish [17] and Albertan production will have to be sold at a deep discount—at, that is, a per-barrel price that could fall below production costs, making further investment in tar sands unattractive. In January, Canadian tar-sands oil was already selling [18] for $30-$40 less than West Texas Intermediate (WTI), the standard US blend.

The Pipelines That Weren’t

Like an army bottled up geographically and increasingly at the mercy of enemy forces, the tar-sands producers see the completion of Keystone XL as their sole realistic escape route to survival. “Our biggest problem is that Alberta is landlocked,” the province’s finance minister Doug Horner said [18] in January. “In fact, of the world’s major oil-producing jurisdictions, Alberta is the only one with no direct access to the ocean. And until we solve this problem… the [price] differential will remain large.”

Logistics, geography and finally timing. A presidential stamp of approval on the building of Keystone XL will save the tar-sands industry, ensuring them enough return to justify their massive investments. It would also undoubtedly prompt additional investments in tar-sands projects and further production increases by an industry that assumed opposition to future pipelines had been weakened by this victory.

A presidential thumbs-down and resulting failure to build Keystone XL, however, could have lasting and severe consequences for tar-sands production. After all, no other export link is likely to be completed in the near-term. The other three most widely discussed options [19]—the Northern Gateway pipeline to Kitimat, British Columbia, an expansion of the existing Trans Mountain pipeline to Vancouver, British Columbia, and a plan to use existing, conventional-oil conduits to carry tar-sands oil across Quebec, Vermont and New Hampshire to Portland, Maine—already face intense opposition, with initial construction at best still years in the future.

The Northern Gateway project, proposed by Canadian pipeline company Enbridge, would stretch from Bruderheim in northern Alberta to Kitimat, a port on Charlotte Sound and the Pacific. If completed, it would allow the export of tar-sands oil to Asia, where Canadian Prime Minister Stephen Harper sees [20] a significant future market (even though few Asian refineries could now process the stuff). But unlike oil-friendly Alberta, British Columbia has a strong pro-environmental bias and many senior provincial officials have expressed fierce opposition [21] to the project. Moreover, under the country’s constitution, native peoples over whose land the pipeline would have to travel must be consulted on the project—and most tribal communities are adamantly opposed [22] to its construction.

Another proposed conduit—an expansion of the existing Trans Mountain pipeline from Edmonton to Vancouver—presents the same set of obstacles and, like the Northern Gateway project, has aroused strong opposition [21] in Vancouver.

This leaves the third option, a plan to pump tar-sands oil to Ontario and Quebec and then employ an existing pipeline now used for oil imports. It connects to a terminal in Casco Bay, near Portland, Maine, where the Albertan crude would begin the long trip by ship to those refineries on the Gulf Coast. Although no official action has yet been taken to allow the use of the US conduit for this purpose, anti-pipeline protests have already erupted in Portland, including one on January 26 [23] that attracted more than 1,400 people.

With no other pipelines in the offing, tar sands producers are increasing their reliance on deliveries by rail. This is producing boom times [24] for some long-haul freight carriers, but will never prove sufficient to move the millions of barrels in added daily output expected from projects now coming on line.

The conclusion is obvious: without Keystone XL, the price of tar-sands oil will remain substantially lower than conventional oil (as well as unconventional oil extracted from shale formations in the United States), discouraging future investment and dimming the prospects for increased output. In other words, as Bill McKibben hopes, much of it will stay in the ground.

Industry officials are painfully aware of their predicament. In an Annual Information Form released at the end of 2011, Canadian Oil Sands Limited, owner of the largest share of Syncrude Canada (one of the leading producers of tar-sands oil) noted:

“A prolonged period of low crude oil prices could affect the value of our crude oil properties and the level of spending on growth projects and could result in curtailment of production.… Any substantial and extended decline in the price of oil or an extended negative differential for SCO compared to either WTI or European Brent Crude would have an adverse effect on the revenues, profitability and cash flow of Canadian Oil Sands and likely affect the ability of Canadian Oil Sands to pay dividends and repay its debt obligations.”

The stakes in this battle could not be higher. If Keystone XL fails to win the president’s approval, the industry will certainly grow at a far slower pace than forecast and possibly witness the failure of costly ventures, resulting in an industry-wide contraction. If approved, however, production will soar and global warming will occur at an even faster rate than previously projected. In this way, a presidential decision will have an unexpectedly decisive and lasting impact on all our lives.
Source URL: http://www.thenation.com/article/172822/keystone-xl-presidential-decision-could-change-world
[1] http://www.tomdispatch.com/blog/175648/
[2] https://app.e2ma.net/app/view:Join/signupId:43308/acctId:25612
[3] http://digital.library.unt.edu/ark:/67531/metadc98034
[4] http://www.350.org/
[5] http://www.nytimes.com/gwire/2011/08/19/19greenwire-protest-makes-canada-to-us-pipeline-project-ne-69344.html
[6] http://www.tomdispatch.com/blog/175435/bill_mckibben_jailed_at_the_white_house
[7] http://www.tomdispatch.com/post/175417
[8] http://www.guardian.co.uk/environment/2011/jul/11/us-pipeline-oil-yellowstone
[9] http://www.nytimes.com/2012/01/19/us/state-dept-to-put-oil-pipeline-on-hold.html
[10] http://www.ogj.com/articles/2013/01/senators-urge-obama-to-promptly-approve-keystone-xl-pipeline.html
[11] http://action.sierraclub.org/site/PageServer?pagename=forwardonclimate
[12] http://www.nytimes.com/2011/12/24/us/provision-may-halt-keystone-pipeline-but-oil-is-still-likely-to-flow.html
[13] http://www.eia.gov/countries/cab.cfm?fips=CA
[14] http://www.worldwatch.org/node/5287
[15] http://ngm.nationalgeographic.com/2009/03/canadian-oil-sands/kunzig-text
[16] https://subscribe.thenation.com/servlet/OrdersGateway?cds_mag_code=NAN&cds_page_id=122425&cds_response_key=I12SART1
[17] http://www.calgaryherald.com/business/Alberta+royalty+regime+take+steep+prices+sputter+energy/7847183/story.html
[18] http://www.upi.com/Business_News/Energy-Resources/2013/01/25/Alberta-faces-6-billion-bitumen-bubble/UPI-68911359131567
[19] http://www.nytimes.com/2012/06/14/science/earth/canada-seeks-new-ways-to-get-oil-reserves-to-market.html
[20] http://dealbook.nytimes.com/2012/12/07/canada-clears-15-billion-chinese-takeover-of-an-energy-company
[21] http://www.nytimes.com/2012/10/24/business/energy-environment/canadas-new-pipeline-woes.html
[22] http://naturecanada.ca/enews_mar10_enbridge.asp
[23] http://www.pressherald.com/news/Tars-sands-oil-opponents-march-in-Portland.html
[24] http://grist.org/climate-energy/no-keystone-xl-big-oil-will-just-take-the-train/