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Dispelling 7 Keystone myths propagated by "fake news" media outlets

Dispelling 7 Keystone myths propagated by "fake news" media outlets

US President Donald Trump followed through on his promise to "put Americans back to work" this week and revived 2 pipeline projects placed on hold by the Obama Administration - Keystone XL and the Dakota Access Pipeline. Although it's not yet clear where we go from here, there is plenty of "slightly inaccurate" reporting by mainstream media.

Here are 7 "inaccurate" statements surrounding the Keystone XL project:


1. President Trump signed an "executive order" approving construction of Keystone XL

The president actually signed various memoranda to advance construction of the pipeline, including speeding up environmental approvals. This simply directs agencies to revive the permitting process and invites TransCanada to resubmit its application.

TransCanada pulled its application for Keystone XL in November 2015 just after Obama officially vetoed the project.


2. Keystone XL carries "dirty Canadian oil from the tar sands"

Actually, there are three fallacies in this statement:

  • Keystone XL transports diluted bitumen extracted from the oil sands. Oil sands are a bitumen-saturated deposit consisting mostly of silica sand and a small fraction of clays. Tar is a byproduct of coal distillation. So there's no "tar" in the oil sands. 
     
  • Crudes are classified by density, from extra-heavy to light oil. Raw bitumen is an extra-heavy crude. Once diluted for pipeline transport, the crude is classified as a medium/heavy oil. Venezuela, California, Mexico, Angola, Iran and countless other nations produce heavy oil. Heavy does not equate to "dirty". 
     
  • Keystone XL also transports "made-in-the-USA" light oil from the North Dakota Bakken area on its way down to a distribution hub in Nebraska.


3. Keystone XL only benefits Canada

Wrong for so many reasons. Case and point:

  • US refineries are designed for heavy crude feedstock, resulting in better yields and improved profit margins. That's a big win for American refiners, particularly those located in the US Gulf Coast.
     
  • The US produces mostly light oil from shale deposits, most of which is too light for US refineries. Canadian heavy oil allows Americans to blend their light oil to a more desirable density. That improves the marketability and selling price of US light oil. That's a big win for US shale producers.
     
  • Higher imports of discounted heavy crude from Canada will allow the US to export more light oil and refined products, which sell at a higher price. That improves the profitability of the US energy sector and the US trade balance in general.
     
  • Keystone XL gives Americans access to a safe and reliable oil supply from Canada, reducing reliance on countries like Venezuela and Mexico, that have declining oil production, and curtailing imports from the Middle-East and Africa, who show no concern for the environment or human rights and use oil revenues for "questionable" activities. And that's a big win for US energy security.

And that doesn't even take into account the billions that would be collected in personal, corporate, income and property taxes and contributions to the US GDP during pipeline construction, operation and maintenance over the next 40 years.


4. Keystone XL only creates 20 "long term" jobs

President Obama and several news agencies have diminished the economic impact of Keystone XL, pegging "long-term" job creation as just a few hundred post-construction, with some reporting the project will add only 20 full-time positions to the US labour market.

The same could be said for any infrastructure project. Once that bridge or highway or windmill is built, it doesn't take many people to run or maintain it. The benefit comes from engineering, project management, procurement of materials, logistics and the ripple effect of several thousand good paying jobs during construction.

TransCanada estimates 20,000 full time positions will be created during pipeline construction and manufacturing of piping and equipment. President Trump expects to put 26,000 Americans to work. The American Petroleum Institute (API) estimates the project will create 45,000 jobs and generate US$2 billion in wages alone.

It is mathematically unfathomable that an US$8 billion project only benefits a few hundred people.


5. Keystone XL would encourage expansion of the oil sands

Both the US State Department and the Department of Energy (DOE) concluded that expansion of production out of the Alberta oil sands is primarily a function of oil price. Although pipeline constraints and regulatory costs do add a few dollars per barrel to the breakeven costs, any one pipeline is unlikely to be enough to move the needle on oil sands expansion.

 
The dominant drivers of oil sands development are more global than any single infrastructure project. Oil sands production and investment could slow or accelerate depending on oil price trends, regulations, and technological developments, but the potential effects of those factors on the industry’s rate of expansion should not be conflated with the more limited effects of individual pipelines.
 

If Keystone XL is not built, Alberta's oil will likely get to market by an alternate pipeline route or by rail, which both agencies agree has a poorer safety record.  


6. Trump will require TransCanada to purchase pipe to be "made in the USA"

Much of the Keystone XL piping has already been purchased. About a third is already in the ground and the remainder sits in storage, mostly of it in North Dakota. TransCanada estimates half of the piping has been sourced from US steel mills, a quarter from Canada and the remaining one-quarter from Italy and India.


7. Most Americans (at least those that appear on the 6 o'clock news) don't support pipeline construction

Pipeline support south of the border is actually better than Canada. 

Almost 80% of Americans believe the US should import more oil from Canada and less from "hostile" enemies in the Middle-East, a sentiment echoed by the current Administration's "America First Energy Plan".

In fact, Keystone XL also has the support of most US politicians on both sides of the fence. Republicans and Democrats in both the House and Senate approved the project in 2015 after a Nebraska court approved the pipeline routing.

Sadly, that doesn't get as much media attention as the anti-pipeline protestors, who have repeatedly proven to be far more entertaining and news-worthy. Obama's Keystone veto was meant to appease his largest financial backers, and nobody else.


Although the battle is likely far from over for TransCanada, it's clear anti-pipeline activists have lost a major supporter in the White House. At least for the next 4 years.

Kinder Morgan continues to sharpen pencil on Trans Mountain Expansion

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