Is the Keystone Pipeline Really Dead?

The president postponed the project - but Big Oil is already looking for another way to burn Canada's tar sands

November 23, 2011 8:00 AM ET

A mock oil pipeline is carried during a Keystone XL tar sands oil pipeline demonstration near the White House in Washington
Andrew Harrer/Bloomberg via Getty Images

Not since the days of George W. Bush's "Clear Skies" and "Healthy Forests" initiatives has America been presented with a project as cravenly corporate and backward-looking as the Keystone XL pipeline. The 1,700-mile-long pipeline, designed to funnel tar sands oil from Canada into refineries along the Gulf Coast, was sold as a cure for America's energy crisis and a way to put thousands of Americans to work. In fact, it was nothing but a giant boondoggle, propped up by industry lobbying and corrupt science. If it were built, it would have helped cook the climate and made our addiction to oil even tougher to kick.

But thanks to a surprise decision by President Obama, the Keystone XL is dead in its tracks. Because the $7 billion pipeline would have crossed an international border, it needed a special permit from the State Department – giving Obama the power to cancel the project. "In effect, whether or not to build this pipeline was Obama's call," says Bill McKibben, the climate activist and author who played a lead role in organizing protests to stop the pipeline. On November 10th, the State Department announced that it was postponing a decision on the pipeline's permit until 2013 at the earliest, pending further review of the project's proposed route. The White House immediately released a statement emphasizing the president's "support" for the decision – giving environmentalists a rare reason to celebrate. "I wish the president would have killed Keystone outright, but he did the smart thing politically," says Erich Pica, president of Friends of the Earth. "By kicking the can down the road until 2013, he both stalled the construction of the pipeline and defused it as an election-year issue."

Obama was apparently swayed, in part, by the widespread demonstrations organized to protest the pipeline. The permitting process ran into stiff opposition from a loud and diverse coalition, from Nebraska ranchers who feared that a pipeline leak could pollute the state's drinking water to Tea Party activists who were pissed off that a foreign company could be granted the right to confiscate private property from U.S. citizens to clear a path for the pipeline. Only four days before Obama's decision, 10,000 anti-pipeline activists built a human chain around the White House; many carried signs that challenged Obama with his own words: "Let's be the generation that finally frees America from the tyranny of oil."

The oil industry fought hard to keep Keystone alive, making wildly exaggerated claims that the pipeline – the country's largest infrastructure project – would create tens of thousands of jobs and decrease America's reliance on oil from the Middle East. TransCanada, the company building the pipeline, had already spent nearly $2 billion buying land and parts for the project, anticipating approval by the end of the year. But Keystone took another blow when The New York Times unearthed evidence revealing an unsavory relationship between TransCanada and the State Department.

Even worse, scientists warned, the amount of carbon locked up in the tar sands – 230 billion tons – would be more than enough, if burned, to spike global warming to catastrophic levels. James Hansen, NASA's leading climate scientist, predicted that if Keystone went through it would be "game over" for the planet. "The pipeline became more than an environmental or energy issue," says Michael Brune, executive director of the Sierra Club. "It was almost a philosophical referendum on who we are as Americans, and what we care about."

Although most Americans don't know it, the U.S. gets more oil from Canada than it does from the entire Middle East. Of the 9 million barrels of oil we import each day, 2 million come from Canada – half of them from a vast expanse in Alberta called the tar sands. Most of the major oil companies have operations there, including two of the biggest funders of the climate disinformation machine: ExxonMobil and Koch Industries, the Kansas-based refining and pipeline operation that handles 25 percent of the tar sands oil currently heading into America.

Extracting oil from the tar sands is a nasty, polluting, energy-intensive business. To get at the tar sands, oil companies must first cut down huge tracts of the boreal forests that cover Alberta before deploying huge, industrial-scale shovels and draglines to dig up the tar sand itself – a black goo that resembles roof tar mixed with beach sand. After dumping the goo into enormous vats of superhot water to separate out the sand and skim off the oil, refiners use an expensive and complex process called hydrocracking to turn the thick, sulfury gunk into gasoline or diesel. Finally, all the water and sand left over from the process – laden with heavy metals and toxins – is pumped into giant holding areas that form massive lakes of toxic sludge. In Alberta, all this takes place on a scale so large that it can be seen from space; the "lakes" of sludge alone are among the largest human-built projects in the world. It has also wreaked enormous environmental destruction in Canada: killing off scores of migrating ducks, polluting local water supplies and coinciding with an alarming increase in cancer rates for indigenous people who live downstream from the tar sands operations.

Right now, the tar sands produce some 1.5 million barrels of oil a day – but by 2030, oil producers in Alberta hope to double that output. There's only one problem: The tar sands are landlocked. Unlike Saudi Arabia, where oil can be quickly and easily transported to the sea, the tar sands are transported to market through an extensive network of pipelines. And with the Midwest currently experiencing an oil glut, thanks to a boom in shale oil, Canada's tar sands can receive top dollar only if they're transported all the way to the Gulf Coast, where they can be refined and shipped overseas. The Keystone XL pipeline, in effect, was a way for oil companies to leapfrog the United States by digging a four-foot-deep trench and laying a three-foot-wide steel pipe nearly 2,000 miles long to get their product from Canada to Europe and Asia.

"The pipeline was absolutely central to the industry's expansion plans," says Lorne Stockman, research director at Oil Change International, a nonprofit group in Washington, D.C. One market analysis conducted for TransCanada predicted that the pipeline would nearly double annual revenues from the tar sands to $3.9 billion by 2013. TransCanada itself would profit from Keystone by securing a stranglehold on the flow of oil out of Alberta, charging a tariff of about $7 for each barrel shipped down the pipeline.

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