Home / Exclusives / 2014’s Booms, Bans, and Busts no. 6: Keystone XL

2014’s Booms, Bans, and Busts no. 6: Keystone XL

The 2014 year is on its way out, and Shale Plays Media is taking these last two weeks to recap the various major stories that have impacted the world of oil and gas over the last year. Last Friday, the big moves from OPEC in the past year were highlighted in an original piece you can view here.

Today, in a continuation of our countdown series for the hottest oil and gas-related topics of 2014, we’re reviewing the momentous stories that came from the clash of the Keystone XL pipeline.

The 1,179-mile pipeline would move roughly 830,000 barrels per day of oil sands crude from Hardisty, Alberta, across the U.S. border to Steele City, Nebraska, where it would connect with the project’s already-built Gulf Coast leg.

Not Keystone’s best year

In 2014, the six-year-old quarrel over what might be the most frequently debated energy-related project (next to hydraulic fracturing, of course) of the early 21st century, the Keystone XL pipeline had another year of  expert analysis and close legislation calls.  Year after year, the XL’s epitaph is avoided. Most recently, through the efforts of House Rep. Bill Cassidy, (R-La.) and Senators Mary Landrieu (D-La.) and John Hoeven (R-ND), the Keystone came close to passing congress only to fail in the Senate with a 59 to 41 vote.

It was a long shot given the negative atmosphere the Keystone project existed in all year. Back in February, U.S. President Barack Obama claimed that within months, he would make a key decision on the pipeline. However, it seems Obama has nearly fallen off the band wagon. Even after five environmental impact studies,  he has stated that he won’t support any project that significantly raises greenhouse gas emissions or places heightened risks on the U.S. without the guarantee of accountability or benefits.

Additionally, the economic worth of the Keystone were again put into question throughout 2014. Make no mistake, though, extracting oil from tar sands is a difficult and expensive endeavor. With oil prices at a crushing low, industry analysts are questioning whether the plan to link Canadian tar sands with Gulf Coast refineries still makes economic sense. This would all depend on what level of glutinous oil production the energy market will see in the future. Many claim the current prices of petroleum are too low for investors to turn a profit, but barrel prices are fickle and the present values aren’t indefinite. Mark Cooper, a spokesman for TransCanada Corp., stated this month that investors “have a good understanding of what the market needs over time. They do not make decisions based on short-term views or changes in commodity prices.”

Nebraska’s Supreme Court could help settle the fate of the Keystone XL pipeline when it decides whether state lawmakers were right to clear the way for the controversial project. Many analysts expect word to come before state lawmakers assemble for their next session in the first full week of January.

Jobs, Jobs, Jobs

The regurgitated debate around job creation also made its rounds in the political debates as many opponents pointed to the lack of permanent jobs this pipeline would implement. When construction is completed, the project would employ 35 people permanently, according to the State Department’s final Environmental Impact Statement (EIS) on the project.

Since the Keystone is already 40 percent complete, analysts looked at areas where construction already came and went for a case study on the Keystone’s economic impact. For instance, construction of the Oklahoma portion of the pipeline is already finished. Over the last several years, Keystone-related construction brought thousands of good paying temporary jobs to Oklahoma, but those are all long gone now. Even so, a study commissioned by the Consumer Energy Alliance shows the Gulf Coast project, which began in 2012 and became operational in January, pumped $2.1 billion into Oklahoma’s economy, including more than $1 billion in wages and $72 million in total taxes.

For one to two years of construction, including indirect and induced economic effects, the project could create approximately 42,100 jobs, according to the state department’s EIS. About 3,900 of those jobs are projected to directly relate to construction activities in Montana, South Dakota, Nebraska and Kansas, along the pipeline’s route, according to the state department