Keystone Pipeline: Overview

Introduction

The Keystone Pipeline is a North American petroleum-transport system designed to distribute bitumen (asphalt) and synthetic crude oil from the Athabasca oil sands in Alberta, Canada, to various locations in Canada and the United States, where these preliminary petroleum products can then be processed into oil and gas for consumers. The pipeline is owned and operated by TC Energy (formerly TransCanada Corporation) of Calgary, Alberta, one of North America’s largest suppliers of natural gas. The first part of the system went into operation in 2010, connecting harvesting facilities in the Canadian city of Hardisty, Alberta, with pumping stations in Illinois and Nebraska.

In February 2011, TransCanada completed one of three planned expansions of the Keystone Pipeline. Known as the Cushing Extension, this expansion added pipeline to connect the pumping stations in Steele City, Nebraska, with a distribution and pumping center in Cushing, Oklahoma. Another expansion, known as the Gulf Coast Project, was completed nearly three years later, in January 2014, connecting the Cushing facilities with refineries in Nederland, Texas. By August 2016, construction had been completed on the Houston Lateral Project, a forty-eight-mile adjunct connecting the Cushing–Nederland pipeline to Houston refineries, and TransCanada Corporation was still hoping to add an additional expansion, the Keystone XL, which would connect Hardisty, Alberta, to Steele City via a more direct route, thereby increasing the transport capacity between these major petroleum hubs. President Barack Obama had formally rejected the proposal for the Keystone XL pipeline extension in November 2015, citing that its construction would undercut US commitments to fighting climate change; the Donald Trump administration renewed interest in the proposal, and thus the debate, in 2017. Trump authorized a new permit for Keystone XL in March 2019, which was subsequently revoked by President Joe Biden in January 2021.

The Keystone Pipeline project has been a controversial issue since it began due to the environmental hazards involved in the construction and operation of the pipeline. Some object to the bitumen-harvesting process because they view it as more environmentally damaging than traditional oil drilling, as well as less efficient. They maintain that the planned route for the Keystone XL pipeline would require the alteration or destruction of a number of sensitive ecological areas. TC Energy has also been criticized for misrepresenting the potential economic and employment benefits of the pipeline project. Supporters of the pipeline expansion contend that further harvesting North American oil reserves would benefit both the United States and Canada by creating employment and domestic revenues from petroleum-product sales. In addition, some supporters believe that the expansion would reduce North American dependence on oil shipments from other, less reliable oil-producing nations.

Understanding the Discussion

Bitumen: Asphalt, tar, or any other dark brown or black viscous semi-liquid material that results from the decomposition of organic matter and can be used to produce crude oil.

Crude oil: Petroleum as it is found in nature.

Oil depot: A facility designed to store and maintain petroleum and petroleum products for distribution to refineries or sales facilities.

Oil refinery: A facility where bitumen and petroleum are processed into useful petroleum products such as diesel, gasoline, kerosene, and liquefied petroleum gas.

Oil sands: Deposits of sand and clay mixed with bitumen and other raw hydrocarbons from which petroleum may be extracted.

Pumping station: A facility from where oil, gas, and other petroleum products can be transported via hydraulic pumping machines to other locations.

Slurry: Any mixture of liquid and pulverized solid, often used to facilitate the transport of solid material by means generally designed for the transport of liquids.

History

The Athabasca oil sands are vast deposits of bituminous sand and clay covering more than 140,000 square kilometers of Alberta, Canada. Bituminous sands are sand deposits that contain high levels of bitumen, a semi liquid mix of hydrocarbons that can be used as a source of crude oil. Extraction of bitumen from the Athabasca oil sands began in the 1920s, and the first commercially viable operations to harvest petroleum from the oil sands went into operation in the late 1960s. In 2006, the Alberta Energy and Utilities Board estimated that Alberta’s oil sands contained more than 1.7 trillion barrels of bitumen altogether, of which the Athabasca deposit accounted for approximately 80 percent (the remaining 20 percent is located in the much smaller Cold Lake and Peace River deposits). Of those 1.7 trillion barrels, 168 billion, or nearly 10 percent, are considered recoverable via existing technology.

Extracting oil from oil- or tar-sand deposits requires a complex process that removes overlying material and then mixes bituminous sand and clay with water and caustic soda to create a slurry, or liquefied material, that can be pumped to an extraction plant, where further chemical processes are used to distill the bitumen from the waste material. Numerous environmental organizations oppose the process due to the extensive environmental alteration required to extract petroleum from bituminous sand, which they view as a less efficient and more costly process than conventional petroleum-drilling operations.

The Keystone Pipeline project was first proposed on February 9, 2005, by a team of executives and analysts from TransCanada Corporation, with the primary goal of transporting bitumen slurry from Hardisty, Alberta, to processing and transport facilities in the United States. In September 2007, after more than two years of negotiation, the National Energy Board of Canada approved the company’s plans. Environmental groups in both the United States and Canada protested the expansion of oil-sands harvesting in the Athabasca region and also raised concerns about oil spills and other hazards along the new sections of proposed pipeline. In 2008, the United States government approved plans for the first phase of the Keystone Pipeline, which converted an existing natural-gas pipeline to run from Hardisty, Alberta, to a junction in Steele City, Nebraska, and then on to refineries and pumping stations in Wood River and Patoka, Illinois. Construction began in 2008, and the initial section of pipeline went into operation in June 2010.

The construction project involved the conversion of a preexisting pipeline that had formerly been used to carry natural gas from the Alberta-Saskatchewan border into Quebec. A 537-mile section of the pipeline, which ran from Alberta through Saskatchewan and into Manitoba, was repurposed to carry crude oil instead. This pipeline diverts from its original course just south of Winnipeg, and more than 1,300 miles of new pipeline were constructed, connecting it to sites in Nebraska and Illinois. Starting in September 2008, TransCanada Corporation began applying to US and Canadian authorities for permission to begin a series of expansion projects to the Keystone system, referred to as phase II (the Cushing Extension), phase III (the Gulf Coast Project and the Houston Lateral Project), and phase IV (Keystone XL). Phase I was the original Keystone pipeline.

Phase IV of the expansion project has been the most environmentally controversial. Its original proposed route would have taken it through the Sandhills wetlands in Nebraska, a designated national natural landmark. Among other concerns, the Sandhills sit above the Ogallala Aquifer, a large, naturally occurring formation that supplies water to thousands of homes and agricultural centers and is essential for the function of numerous ecosystems.

The Cushing Extension was approved and completed in 2010, adding 298 miles of pipeline from Steele City to Cushing, Oklahoma. The estimated cost of the pipeline construction from Hardisty to Cushing was more than $5 billion. TransCanada Corporation estimated spending at least $5 billion for the initial phase of the expansion and an additional $7 billion for the remaining expansion programs. The company also estimated that the future construction and operations projects involved would provide as many as twenty thousand jobs to American workers, though the employment estimates provided by the company were disputed.

In June 2010, the US Environmental Protection Agency (EPA) produced a report calling for further study to evaluate the environmental impacts of the proposed extensions leading to the Gulf Coast of Texas and over the Ogallala Aquifer. In addition, environmental organizations held a series of protests against the US government for failing to heed the warning of environmentalists. In November 2011, President Barack Obama announced that he would postpone making a final decision regarding the final phase of the Keystone expansion until 2013.

In late 2011, representatives of TransCanada met on numerous occasions with representatives of the US State Department to discuss potential solutions and alternate routes for the pipeline expansion. Among the proposed solutions to the prevailing environmental concerns were new routing plans designed to avoid laying new pipeline over the Sandhills, as well as several plans designed to reduce the extent of pipeline coming near this sensitive region.

In November 2011, a Republican-led coalition in Congress introduced a legislative measure aimed at compelling the Obama administration to decide whether to approve or reject the Keystone XL expansion before the end of that calendar year; the measure was later attached to a bill regarding payroll tax cuts. In December, Congress approved the legislation, formally giving President Obama sixty days to approve or disapprove the existing proposals for the expansion program.

In January 2012, Obama confirmed that he was choosing to reject the proposed expansion, saying the congressional move forcing a decision within a sixty-day deadline prevented a thorough investigation into the potential environmental impacts of the project. However, in March 2012, he announced that phase III of the pipeline extension, the Gulf Coast Project, would be on a prioritized track for approval. Critics such as House Speaker John Boehner (R-Ohio) criticized the president for his announcement, saying that he was trying to take undue credit for a phase of the pipeline that was already slated to start, with or without his approval. (The expansion was completed and began operation in January 2014.) Obama indicated in 2013 that he would only approve the final phase if it would not significantly increase greenhouse gas emissions, which have been identified as key drivers of global climate change.

Following Obama’s rejection of phase IV of the Keystone expansion, further deliberations and potential alternatives were postponed. In January 2013, Nebraska governor Dave Heineman approved an alternative route that, according to TransCanada, would “minimize disturbance of land, water resources and special areas in the state.” However, in February 2014, in response to a suit filed by several landowners whose properties would be affected by the pipeline, a Nebraska court struck down the law that had enabled the governor to approve the route. The state appealed the decision, and the Nebraska Supreme Court heard arguments on the matter in September 2014.

The Keystone XL expansion was a major issue in the 2014 general elections. Despite calls from Democratic senators for the president to approve the project to improve their chances of reelection, Obama declined to do so. In November, Republicans, who already held the majority in the House of Representatives, took control of the Senate as well, and Senate majority leader Mitch McConnell (R-Kentucky) promised that the Republican-dominated Congress would make approving Keystone XL a top priority. On January 6, 2015, the White House warned that Obama would veto any legislation to approve the expansion.

Three days later, on January 9, the Nebraska Supreme Court deadlocked, effectively upholding TransCanada’s alternate route, and the House passed the Keystone XL Pipeline Act. On January 29, the Senate approved its own version of the measure, returning the bill to the House, where it was approved on February 11. On February 24, Obama issued the anticipated veto. Thus, proponents set their sights on 2017, when Obama would no longer be in office, and made the expansion a major presidential campaign issue, with four Democratic contenders opposing it and sixteen Republican candidates and one Democrat supporting approval.

In June 2016, almost one year after Obama's rejection of the Keystone XL pipeline proposal, TransCanada, which had already filed a lawsuit against the United States seeking to overturn that rejection, also lodged an arbitration request seeking compensation for costs and damages related to the rejection under provisions of the North American Free Trade Agreement (NAFTA). However, when Republican Donald Trump was elected president in November, TransCanada and supporters of the pipeline gained renewed hope that the new administration could be convinced to go forward with the project. Not long after Trump's win, TransCanada had reaffirmed its commitment to the Keystone XL pipeline, and within Trump's first week in office in January 2017, he had signed an executive order to speed along approval of the Keystone XL pipeline project with the caveat of it being subject to renegotiations. A State Department permit was granted in March 2017, and environmental and Indigenous groups challenged it in court.

In mid-November 2017, a crack in the existing Keystone Pipeline leaked 210,000 gallons of oil in South Dakota, constituting the third and largest major spill along that pipeline within eight years and prompting investigations by the South Dakota Public Utilities Commission and the US Pipeline and Hazardous Materials Safety Administration. Opponents of the XL extension feared that the leak was a harbinger of future threats to underground aquifers and to farms and grazing lands. Supporters pointed out that TransCanada had a better safety track record than other companies and that pipelines are safer than trucks or railcars, the other modes of transport by which oil is moved from Canada and around the United States.

Later that same week, the Nebraska Public Service Commission approved a permit for the somewhat longer Keystone Mainline Alternative Route, one of three proposed pipeline routes, but not TransCanada's preferred route, which had been vetted by the federal government. On December 29, 2017, opponents appealed the commission's decision, claiming that it had authorization to decide on only the route for which TransCanada had made its initial application. Oral arguments were heard by the Nebraska Supreme Court in October and November 2018. Speculation remained, however, over whether TransCanada would move forward with construction as oil prices remained low and as new easements and payments would have to be negotiated with landowners by November 2019 or eminent domain obtained. Severe flooding in May 2019 also raised concerns about the safety of aboveground pipeline infrastructure, prompting the Pipeline and Hazardous Materials Safety Administration to advise pipeline owners to secure their equipment from erosion.

In November 2018, a Montana federal district court suspended pipeline construction because of what it deemed inadequate environmental analysis and consideration of the impact on American Indian lands. In February 2019, that judge barred TransCanada (renamed TC Energy) from continuing most preparatory work during appeals, and the following month the Ninth Circuit Court maintained the injunction. Undeterred, Trump revoked the 2017 permit and signed a new presidential cross-border permit on March 29, 2019, in an effort to circumvent environmental reviews and court challenges. Another case was brought against the second permit. In June 2019, a Ninth Circuit Court judge allowed renewed construction because the Montana injunction was for the prior permit. Additional permits were still required, however.

Tribal nations and the Indigenous Rights Network have opposed the Keystone XL project because its proposed route would cut through burial grounds and sacred sites, as well as nearby water supplies that serve their people. In South Dakota in early 2019, the state government passed laws to deter so-called riot boosting and to cover the costs of policing pipeline protests, without consulting tribal nations located within the state. The governor contended that the XL route does not affect Indigenous people; however, the Native American Rights Fund criticized the governor for lack of consultation, saying the proposed route crosses Rosebud Sioux Reservation boundaries established by treaty. In Montana, the government conducted antiterrorism exercises and online monitoring in anticipation of large-scale protests like those held at Standing Rock Reservation over the Dakota Access Pipeline.

Keystone Pipeline Today

In March 2020, TC Energy announced it was investing $8 billion to start construction on the Keystone XL pipeline, which the company anticipated would be ready to carry oil in 2023. Environmental groups once more challenged the permit program in court, and in April 2020, a federal judge for the Federal District Court in Montana suspended the program, which effectively blocked construction of Keystone XL, as well as other such pipelines in the US. The Trump administration then asked the Supreme Court to overturn the judge's decision and allow construction on the pipeline to proceed, but in July 2020, the Court declined to do so. The Court did, however, temporarily lift restrictions on the permit program to allow other pipelines to proceed with limited regulatory oversight during the appeals process.

On January 20, 2021, President Joe Biden revoked the Keystone XL Pipeline 2019 permit by executive order on his first day in the Oval Office, as he had pledged to do during his 2020 campaign. TC Energy, anticipating that the new administration would rescind the permit, suspended its operations that same day and terminated the project in June 2021. Environmental safety advocates praised the cancellation of the project, while some Republican politicians criticized what they considered an unnecessary limitation on the nation's oil supply.

In December 2022, the Keystone Pipeline shut down for twenty-one days after it ruptured near Washington, Kansas, and spilled almost 600,000 gallons of bitumen oil (also known as tar sands oil) in what became the largest onshore crude pipeline spill in about a decade. The spill, which polluted 4.5 miles of Kansas's Mill Creek with heavy, hard to remove tar sands, prompted calls for stricter oversight of the existing pipeline and for TC Energy to improve its spill response plan.

Following a safety investigation of the Keystone Pipeline after the spill, the US Department of Transportation's Pipeline and Hazardous Materials Safety Administration shut down a section of the pipeline in March 2023 and added further corrective actions to one thousand miles of the Keystone Pipeline, including a study of what caused the pipeline to fail. The study found that the pipe failed due to a faulty weld that had been strained by bending and a misshapen section of pipe. TC Energy said it would use the study's findings to improve safety, but critics of the company and the pipeline said the study showed that the company had ignored warning signs and did not have sufficient safety controls.

Though in 2024 an arbitration tribunal ultimately rejected TC Energy's claim for $15 billion dollars owed from the US government due to the expansion project's cancellation, upon the election of Trump for a second presidential term that year, some speculation grew about whether his new administration might attempt to revive the project. He had indicated support for boosting domestic energy production and, specifically, oil production during his campaign. However, many experts noted that an effort to bring the Keystone XL project back would prove particularly difficult due to logistical and political challenges.

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