Why Keystone XL Is Dead

Once seeking a fast approval, TransCanada wants to pause the pipeline’s review

By David Biello | November 4, 2015

stop-keystone-xl-nebraska — **PIPELINE PROBLEMS:** The Keystone XL pipeline has faced challenges based on its proposed route through Nebraska.

*© David Biello*

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Tough times have come to Alberta's tar sands. The oil-rich region enjoyed a long boom in the early 21st century. A truck driver could make $100,000 per year hauling bitumen-rich sand. Man camps sprang up in the boreal forest to house workers from as far away as Venezuela and Angola. Strips of cleared land crisscrossed the seemingly endless woods so that geologists could precisely tell where to mine for oil sands or flood the depths with steam to melt the bitumen in place. Clouds of steam and pyramids of sulfur rose at the vast industrial machines to turn bitumen into oil.

But with oil hovering around $50 per barrel, companies working the oil sands could barely make existing projects worthwhile, let alone start new ones. For example, oil giant Shell not only withdrew from its Arctic oil ambitions but also shelved plans for more oil sands action at Pierre River and Carmon Creek, eating billions of dollars in investment.

What did Shell blame for its retrenchment? The lack of infrastructure to move oil from the tar sands into the global oil market.

That problem just got worse. The builder of the 830,000 barrel-per-day Keystone XL pipeline—enough alone to increase oil sands production by more than 40 percent—wants a time out. TransCanada has asked the U.S. State Department to pause its review (pdf) of the pipeline that crosses an international border for roughly a year while the state of Nebraska deliberates about changes in the proposed route, also, perhaps, amid concerns that the Obama administration might reject the pipeline outright.

In fact, with hindsight, if TransCanada had simply followed this new route from the beginning in September of 2008, the $8 billion, nearly 2,000 kilometer-long pipeline would likely be up and running today. The new route follows existing easements rather than cutting a new swath through private properties and seizing land. Instead of a quiet approval, there have been seven years of delay, legal wrangling and, most importantly, activism.

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A quiet approval is no longer possible. Activists have helped to hamper the expansion of pipelines like KXL, while also organizing against the railcars, tanker trucks and other conveyances that transport the oil instead. Canada's attention has turned to other pipeline projects to transport oil from the tar sands either west to British Columbia, a project known as Northern Gateway, or east to the existing infrastructure in Ontario and Quebec, dubbed Energy East. Both do not cross any international borders.

TransCanada could also want to hold out for a more friendly U.S. administration, one easier on the industrial infrastructure that supports the fossil fuel economy and more favorable toward Canada's tar sands. The company could also be hoping for more expensive oil to revive the good times in Alberta's tar patch. But the momentum of this fossil fuel juggernaut is hard to stop and oil production from the tar sands will continue to increase even as the companies producing it may end up suffering a loss on that low-price oil. The excess oil will help keep global prices low.

Still, Keystone XL is not dead, merely sleeping. While the pipeline proposal slumbers, circumstances will continue to change, however. Already, Hillary Clinton, the presumed Democratic candidate for president, has explicitly rejected the pipeline. While Republican contenders Jeb Bush and Marco Rubio have indicated they would approve the pipeline as soon as possible. And it's possible the current occupant of the White House could reject the pipeline before leaving in 2017.

Regardless of what happens at the national level, Nebraska and the issue of state's rights still mean the pipeline might not go through. After all, even if the federal government approves the border-crossing that does not obligate the Cornhusker State to approve the pipeline's path through its territory. And if the world decides to get serious about climate change, tar sands—among the world’s most polluting forms of oil—may not find favor anywhere.