On May 4th 2012 TransCanada Corporation announced their application for a Presidential Permit to build the northern most section of the Keystone XL pipeline (Phase IV) from the Canadian Border from where Saskatchewan meets Nebraska using an as yet undetermined route through Nebraska to join up with the Keystone Phase II which runs from Steel City, Nebraska to Cushing, Oklahoma. This is the newest step after announcing on February 27th 2012 their intension to build the Cushing Oklahoma to the Nederland, Texas portion of the Keystone XL pipeline, the Keystone Phase III, a 435 mile extension of the existing Keystone pipeline to Port Arthur and Houston areas. The Keystone Phase III Project (Oklahoma to Texas) is expected to begin construction this summer and begin operations in mid to late 2013. TransCanada hopes to have the northern section completed in 2015.
If you recall the existing Keystone Pipeline Phase I runs from Hardesty, Canada to Steel City, Nebraska near the Kansas and Nebraska border. Keystone Phase II runs from Steel City to Cushing, Oklahoma where it terminates, leaving the Canadian crude oil stranded in Oklahoma along with U.S. domestic production from North Dakota that has been using the pipeline to reach the Oklahoma storage facilities. Increased U.S. oil production combined with the Canadian production has produced a glut of oil waiting to be refined in Cushing, OK.
Russ Girling, TransCanada's president and chief executiveofficer was quoted in the TransCanada press release as saying: "KeystoneXL will transport U.S. crude oil from the very large Bakken oil basin inMontana and North Dakota, along with Canadian oil, to U.S. refineries.” Mr. Girling added that he expected the cross border permit to be processed expeditiously and a decision made once a new route in Nebraska is determined. TransCanada is working directly with Nebraska's Department of environmental Quality (DEQ), to determine an alternative route for Keystone XL Phase IV that avoids the environmentally sensitive Sandhills watershed. Several alternate routes and a preferred route were submitted to the DEQ April 18. The DEQ will now determine a specific route and oversee the public comment and review process. Once a route is finalized, it will be submitted as part of the Presidential Permit application.
The Keystone XL Pipeline has been very controversial. Most of the environmental controversy has focused on the porous soils of the Sandhills and fears of a possible oil leak into one of the nation's most important agricultural aquifers. Moving the pipeline away from the aquifer should mitigate that concern. However, many who oppose the Keystone XL pipeline want to prevent the development of the oil sands resources in Canada to prevent the acceleration of global warming. The Canadian oil sands have been known for decades, but until oil prices rose and technology improved these oil deposits were too expensive to exploit beyond the limited scope of surface mining. Advances in technology in both oil sand extraction and refining techniques and rising oil prices altered the economics and have made the extraction of oil sand possible. While the advances in extraction techniques have quadrupled recoverable oil reserves and moved Canada into second place in proved world oil reserves, it requires more energy to produce the oil and increases the carbon footprint of the crude as compared to oil from the Middle East or Brazil.
The current method of mining the Canadian oil sands increases the CO2 released in every gallon of gas adding to man’s carbon footprint. In addition, older methods of mining the oil sands left open pits that still need to be reclaimed, thought today groups of wells are typically drilled off a central pad and like fracking wells and can extend for miles in all directions. This reduces surface disturbances of the land and the footprint of the area to be reclaimed.
The Keystone XL is planned to initially transport of 830,000 barrels a day with a planned expansion of 1.3 million barrels a day of oil, to be processed in the oil refineries along the Gulf Coast and in Oklahoma and used within the U.S. According tothe U.S. Energy Information Agency, the U.S. consumes 14 to 15 million barrels of oil each day. Current imports amount to almost 9 million barrels a day, approximately 60% of the United States' requirements. The Keystone XL pipeline could ultimately represent 10%-14% of oil imports.
In June 2010 TransCanada commenced commercial operation of the first phase of the Keystone Pipeline System. Keystone's Phase I was the conversion of natural gas pipeline to crude oil pipeline and construction of a bullet line that brings the crude oil non-stop from Canada to Steel City at 435,000 barrels a day. Phase II of Keystone was an extension of the pipeline from Steele City, Nebraska to Cushing, Oklahoma and began operations in February 2011. Keystone Phase II increased the volume per day of Keystone Phase I with the addition of pumping stations; the system now runs at 591,000 barrels a day. The Seaway pipeline, a joint venture between Enterprise Products Partners L.P. and Enbridge Inc., will begin operations in June completing the ability to pipe crude from Canada to the Gulf Coast carrying 150,000 barrels a day. The Keystone Phase III when it is completed will increase volume in the Oklahoma to Texas portion of the pipeline. The Keystone Phase IV when and if approved will increase volume of the upper portion of the pipeline from the current 591,000 barrels a day initially to 830,000 barrels a day then to 1.3 million barrels a day.