The announcement, a week ago, that one of the first actions President Joe Biden would take would be to reverse the previous administration’s approval of the Keystone XL pipeline, received a predictable reaction from Montana’s politicians.
For better or worse, Montana politicians, Republicans and Democrats alike, have, by and large, supported the Keystone XL pipeline project, primarily from the jobs standpoint, temporary as they are. There was also the possibility that the pipeline would carry some crude oil from the Bakken oil field of North Dakota and eastern Montana.
The pipeline has had a controversial history. The Keystone pipeline system plan came into being in 2010, and it’s co-owned by TC Energy, a Calgary, Alberta energy company, with a presence in Canada, Mexico, and the U.S., and the Government of Alberta.
Several phases of Keystone are operational, with a pipeline running from Alberta, through Saskatchewan and Manitoba, then entering the U.S. in eastern North Dakota, going south through the Dakotas and Nebraska, where it branches off to route crude oil to refineries in Illinois and the Gulf Coast.
The Keystone XL pipeline, if completed, would run a larger pipeline through a shorter route, crossing across northeastern Montana, with a connection in Baker, Montana, where it would also take on crude from the Bakken oil fields.
While crude oil from the Bakken is part of the project, crude oil from tar sands in northern Alberta would be the main product.
The XL project has been controversial, with many starts and stops. Issues have included giving TC Energy rights of eminent domain to run the pipeline through private property, over objections from private property owners. In 2015, Congress approved construction of the line. President Obama vetoed that action. In later developments, Secretary of State John Kerry determined that the project was not in the public interest, and President Obama denied a federal permit for XL.
In his first week in office, President Trump issued a memorandum to revive the XL pipeline, and in March 2017, he signed a presidential permit to build XL. Despite this, there have been numerous legal challenges and the most recent court decision came when the U.S. Supreme Court rejected a request from the Trump administration to allow construction of parts of the pipeline that had been blocked by a Montana federal judge, Butte native Brian Morris.
While Keystone XL may currently be stalled because of court actions, economics may be a larger factor in the long run.
According to a New York Times story, economists estimate that producing petroleum from Canadian tar sands is only profitable when global oil prices range between $65 and $100. In 2020, global oil prices averaged around $40 a barrel, and are projected to stay below $50 a barrel through 2022, according to estimates from the Energy Information Administration, the statistics office of the Energy Department.
The Times story quotes Kevin Book, of ClearView Energy Partners, a research firm, who says, “The Keystone XL has been pending for a decade. If you can go one decade without it, investors might reasonably question if you can go three.”
While the Biden Administration was expected to cancel XL approval from the standpoints of climate change and of moving away from an oil-based economy, reversing Trump policy, there are many issues with XL.
The pipeline would cross both the Missouri and Yellowstone rivers in Montana, with serious risks of oil pollution in both Montana and North Dakota if a pipeline ruptured. In 2019, the existing Keystone pipeline ruptured and caused a big mess in Walsh County, North Dakota, where we lived prior to our move to Butte in 1988.
Producing petroleum from the Alberta oil sands involves injecting steam and chemicals deep into the tar sands to melt and extract petroleum. It’s costly and environmentally damaging.
Something I often wonder is why can’t Canada refine the petroleum and export the gas and oil, instead of sending crude all the way to the Gulf Coast?
In short, I applaud the new Biden Administration’s actions to let Keystone XL wither on the vine. It’s not worth it.