Home business Why the Keystone XL Pipeline Project is so controversial

Why the Keystone XL Pipeline Project is so controversial

The long delayed Keystone XL from TransCanada Corp. is a $ 8 billion project to build an oil pipeline that connects Alberta in Canada with US refineries on the Gulf Coast. It faces years of objections from environmentalists, but was eventually approved by US President Donald Trump. The project has now taken another roadblock, in the US courts.

1. What is the project?

The Keystone XL pipeline would span 1,177 kilometers (1,877 kilometers) of Alberta through three states – Montana, South Dakota and Nebraska – before being connected to an existing network supplying crude oil to the Gulf Coast. The line could contain 830,000 barrels of oil per day.

2. Why do environmentalists object?

Partly because of the nature of the fuel – derived from what "oil sands" are called by petroleum companies and "bitumen" by geologists. Its production and extraction emits more greenhouse gases than with conventional oil and, according to environmentalists, this would unacceptably contribute to global warming. They also point to the risks of water supply and the general environment of pipes throughout the US. More generally, they claim, the Keystone XL pipeline, by paving the way for more bitumen production, would help reduce oil dependency for decades and delay a transition to renewable energy.

3. When did Trump approve the project?

In 2017, his predecessor, Barack Obama, had rejected a permit for the project in 2015 after eight years of furious debate. Then, just a few days after taking office, Trump announced actions to advance the pipeline. That was not the end of the fight. Environmental buyers promised to take legal challenges. TransCanada also needs permission approvals to be able to work.

4. Who objects?

Nebraska created legal barriers for TransCanada during the first project review. But it was a federal court in Montana that denounced the project in November because it felt it needed a further environmental review from the US Department of State. The ruling came in lawsuits brought by the Indigenous Environmental Network, River Alliance and Northern Plains Resource Council. TransCanada joined the process to defend the approval of the license.

5. What is the position of Canada?

Prime Minister Justin Trudeau is in favor of the construction of new pipelines – including Keystone XL – but has also taken steps to do more about climate issues, hoping to win oil sands and pipeline opponents. Canadian oil must be sold at a discount to US crude oil due to transport restrictions.

6. How dirty is the fuel?

Fuel produced from tar sand bitumen leads to the release of more carbon than conventionally produced fuel, partly because more energy is needed to extract and refine it. A Canadian group of clean energy, the Pembina Institute, said the difference could be as high as 37 percent; the industry and the government of Alberta say that it is more 6 percent. Oil companies say that coal plants pump much more carbon dioxide into the atmosphere; environmentalists say the correct comparison with conventional oil is because, unlike coal, both types of crude oil are mainly used to make transport fuel.

7. What is Trump's position?

Trump said at the time of his Keystone decision that it was a step to "make the process much easier for the oil companies and anyone who wants to do business in the United States."

-With help from Dan Murtaugh.

Contact the reporters about this story: Grant Clark in Singapore at gclark@bloomberg.net; Andrew Harris in Washington, aharris16@bloomberg.net

Contact the editors responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net, Ramsey Al-Rikabi, Paul Geitner

© 2018 Bloomberg L.P.

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