Misguided Protest? I Don’t Think So.

I do not think that last week's protest against the Keystone XL pipeline was misguided. 

What will be transported through the pipeline?

The pipeline will be carrying tar-sand derived bitumen.

Bitumen is not the normal garden variety crude oil produced from conventional oil fields. It is heavy tar with the viscosity of peanut butter, which is diluted with natural gas condensates so that it can be transported at pressures of 1,440 psi and temperatures of 160 degrees Fahrenheit to keep the product at a low enough viscosity to flow. Diluted Bitumen is also known by as “dilbit.”

This is not to say that conventional crude oil can be put over ice with a slice of lime and consumed at happy hour, but dilbit is not the same as crude oil by a long shot.  In fact, it is not even considered crude oil so it is exempt from taxes paid to the U.S. government which are used to fund clean ups from pipeline breaks.

Dilbit is also very corrosive, because it still contains quartz sand particles from the tar sands from which it was mined, which wears out pipes much faster than conventional crude. Dilbit pipelines in Canada had 25 times the number of ruptures per mile than U.S. pipelines due to internal corrosion.

Dilbit spills are not like crude oil spills

A dilbit pipeline spill into the Kalamazoo River in July of 2010 permanently polluted about 30 miles of the Kalamazoo River in Michigan because after the highly volatile dilution fluids evaporated, the remaining bitumen sank to the bottom of the river, where it could not be effectively cleaned up.  Still, whatever cleanup was performed cost almost $30,000 per barrel, compared to $2,000 per barrel for conventional crude spills.  (Full disclosure – this pipeline was not owned by TransCanada; however this is an example of the kind of hazard dilbit represents).

The National Transportation Safety Board said that this mess represented “a complete breakdown of safety.”  Leak detection systems failed, previously reported pipeline defects were not repaired. In fact, failures of leak detection systems are endemic to the U.S. pipeline system.  Members of the public report pipeline leaks 20 times more often than pipeline operators.

Note that during its first year of operation, over 30 spills have already occurred in the completed portions of the Keystone pipeline in Canada and the U.S, in addition to 14 reported leaks.  Regardless of all the promises made by TransCanada to the State of Nebraska to both prevent spills and respond to them in a timely manner, this sort of record still makes me wary of broad brush conclusions that TransCanada does will do “anything and everything” to minimize these risks, based on their own history of operations.

Also note that even though a big deal has been made about TransCanada shifting the route of the pipeline to avoid the Ogallala aquifer in Nebraska (source of most Nebraska’s groundwater), the fact is that it is still crossing the aquifer for a distance of about 250 miles. It was just rerouted to go around most of a major wildlife refuge.

Does Keystone XL create thousands of new American jobs?

Short answer – no.

A comprehensive study the Cornell University College of Industrial and Labor Relations and a study by the State Department indicate that the number of jobs created by the pipeline will be far less than estimated by TransCanada’s consultant.

The Cornell report stated:  “The Perryman study offers no figure for the direct jobs that might be created by Keystone XL, but it does claim that the project will generate “118,935 person-years” of employment. A “person year” of employment is not equivalent to an individual job in the real world, despite the obvious inference that it is. Perryman also claims that the project will, over time, lead to 250,000 - 450,000 jobs. These numbers are also cited on a frequent basis.”

So . . . the jobs claim is for the number of “person-years” of jobs created over an entire century of pipeline operations, not 100,000 jobs created right now. Also, many of the jobs in the claim are jobs that already exist, not new jobs.  The Cornell report goes into great detail on the flaws in TransCanada’s report but their conclusion is that the TransCanada consultant's report is “deeply flawed”.

The Cornell report estimates between 2,500 and 4,650 temporary construction jobs during the time the pipeline is being built. The State Department report estimates that 6,000 jobs will be created during construction and operation. 

Very few manufacturing jobs for pipeline materials will be created. Most of the pipe has already been procured and it was not made in the US, but in Russia and India. U.S. contractors will be used for final pipe preparation, but that's it.

Of concern here according to the Cornell report is that one of the major suppliers of pipe “the Indian company, Welspun, which is likely to be the largest steel pipe manufacturer for the project, is currently being sued for the sales of defective pipelines and has been repeatedly found to produce substandard steel.”

Will the pipeline help the U.S. become independent of Middle Eastern oil imports?

Short answer – no.

Ironically, the petroleum products that will be refined from tar sands bitumen at refineries in the Gulf of Mexico will probably not even be consumed in the United States but will be exported, according to the Cornell report.  Formerly, this product was refined in Midwest refineries, but by diverting the dilbit to the Gulf Coast, it is estimated that the loss of locally refined petroleum products will actually raise the price of gasoline in the Midwest and cost jobs, not create them.

Oil imports into the United States have been decreasing over the last decade and we now get about 45% of our oil from foreign sources and half these imports come from the Western Hemisphere and not the Middle East.  In fact, only 22% came from the Middle East in 2011, according to the U.S. Energy Information Administration. Saudi Arabia crude constituted 14% of total imports.

Projections are that with exploitation of the Bakken formation in the Dakotas and Wyoming and newer technologies to extract oil from existing oil fields – the U.S. will achieve energy independence in the next decade or two.

Regardless, use of American military power to protect sea lanes in the Middle East will probably not end even if we no longer import any oil from there.  There are other geopolitical considerations which will probably require the U.S. to keep bases and Navy fleets in and around the Persian Gulf for years to come, so in my mind, this pipeline will do nothing to lessen the need for U.S. presence in that unstable part of the world.

The Bottom Line

Regardless of the impacts to global climate and the environment around the Athabasca tar sands which are manifest (and I could go on for many pages about those), it is clear to me that the United States does not need the Keystone XL pipeline.  It will not create any significant amount of jobs, it will not decease oil imports from the Middle East.  It will not decrease the price of refined petroleum products in the United States. 

Misguided protest? – I don’t think so.

Sources:

http://www.eia.gov/energy_in_brief/article/foreign_oil_dependence.cfm

http://www.nytimes.com/2012/08/21/opinion/the-dangers-of-diluted-bitumen-oil.html?_r=0

http://www.ilr.cornell.edu/globallaborinstitute/research/upload/GLI_KeystoneXL_012312_FIN-2.pdf

http://www.ilr.cornell.edu/globallaborinstitute/research/keystonexl.html

https://ecmp.nebraska.gov/deq-seis/DisplayDoc.aspx?DocID=X%2b8r0lVUkVbPlXZQuhcbaw%3d%3d

http://primis.phmsa.dot.gov/comm/reports/safety/PSI.html