Keystone XL – The Balance Sheet

The U.S. will soon make a decision on to allow the build of the “final” segments to the Keystone pipe line, or not.  This proposal is called Keystone XL by TransCanada Corporation. It is to replace parts and to build an extension of its private pipeline for transporting a petroleum fluid (bitumen slurry mixed with naphtha for pipeline transport) to the Texas coast on the Gulf of Mexico.  Keystone is not unique; there are other competing pipeline companies with currently operating lines to other parts of the United States.

KeystoneDisclaimer_txtThe decision path now passes through Secretary of State Hillary Clinton who will pass her recommendation to President Barack Obama for his decision.  Expect resolution before the end of the year.

Jump to Keystone Description, History, Considerations ( Relaxed Standards, Increased leakage, Environmental Damage National Security ), and Assessment.

Keystone Description

Keystone_mapThe Keystone XL issue is over a new short cut around a current portion and an extension to the Texas coast.

The current TransCanada Keystone line, shown in green, originates at Hardisty Alberta leads to Steele City Nebraska.  It splits Eastwards to refineries at Wood River and Patoke Illinois, and Southwards to Cushing Oklahoma.

In this map, the XL upgrade is the dotted red.  The tar sands region is the brown pool in northern Alberta.

History and background

The 2150 mi (3460 km) pipeline was first proposed in 2005 to be done in 4 phases.

Phase 1 and 2 can carry up to 3% of maximum US demand.  The XL proposals will increase the pipe diameter and allow transport of up to  5.5% US demand.

Current US demand has dropped from the peak value of nearly 20 M bbl/d.  Fox News must be pleased:  all that is needed now is to terminate all  jobs and our entire demand could be met by those friendly Canadian suppliers they talk on about.    I used a maximum demand of 20 M bbl/d.


Canadian proven reserves jumped in 2002.

Canada started tar sand development less than 10 years ago when the geological size was confirmed.  Previous to this recognition, Canada’s petroleum resources were crude oil deposits that can be pumped.  The new source is bitumen, whose properties range from very cold molasses to soft rock (a kind of coal) and mixed through a sand bed.

Bitumen sources cannot be pumped, they must be strip mined as ore. Most of Canada’s petroleum supply is in this form.

The US EIA estimates a total reserve of about 175 G bbl of petroleum, making it the third largest source after Saudi Arabia and Venezuela.  This is down from an earlier proved resource estimate.  This is contentious: oil companies estimate the Canadian reserve at 2 T bbl., equal to that of the reserves from the rest of the entire world. My view?  EIA tries to get the base data, Corporate execs try to sell stock. The Canadian bitumen reserve is huge, no matter who wins the estimation argument.

US Considerations

In all the other categories of petroleum reservoirs we have examined, the size of the reserve did not warrant the damage and disruption that would be required to tap it.    The “too-small-to-justify-damage” argument is not the case here.

Canadian resources are the responsibility of the Canadian people, and there is strong controversy there. Converting half of Alberta into sludge waste is their issue; we have lots of our own, including hydro-fracking Pennsylvania groundwater and other super-toxic waste areas in the making.  The only U.S. XL decision is whether or not the current 590 G bbl/day supply should be increased to 1.1 M bbl/day and sent to the great shipping ports on the Texas coast.


A segment of petroleum pipeline

What is at stake in our decision?

• Relaxed Standards — TransCanada has petitioned to use extra thin tube at extra high forcing pressure.   Their desire is to enlarge the diameter for higher throughput, but the larger pipe is pretty costly with the usual wall thickness and they want to thin out the walls to help profits.

The fluid is grainy and frictional compared to crude, the increased pressure is needed to assure the flow.


Results of inital process — coarse coal-like lumps in a slurry

The material pumped through the pipe is not crude oil, as sometimes stated, but a slurry, of little chunks of coal-like bitumen, see the New York Times image from an Alberta processing facility.  The U.S. EIA calls this a petroleum product, and one makes synthetic oil from it.  The system transports fluids more reactive than oil, in pipes larger diameter than usual, using thinner than normal walls, and higher than normal pressures.  We should to demand ultrasound and/or x-ray wall inspection several times a week, along almost every inch of the entire route, for as long as the pipeline is standing.

Relaxing standards might not sound like issue, but the new tubing has had only limited trials.  Even standard tube generates copious leaks, as demonstrated by operational history.  TransCanada, itself, has had 12 leaks, mostly minor, in the shiny new Phase1 and 2 segments. Competitors, such as Enbridge, a Texas based pipeline company, has had many leaks all over the continent.  Note that Shell Oil bragged about the safety of their offshore wells during its application for Arctic sea drilling.  Then it turned out they had been covering up an on-going leak at a North Sea well.

Ruptured oil lines may not sound like an issue if you live far from the pipeline, but it is hard to do without water if you are local.  Enbridge, a competing pipeline company, had a rupture in July, 2010, about 100 miles from my house.  This oopsie leaked down creeks and streams into the Kalamazoo River.  Our news was full of local upset due to the damage.  Remediation will take into 2012.

Hubbert-TarSands_txt • Increased Leakage — Ok, so maybe there will be increased leakage, per the last praragraph.  Who cares?  It is pretty flat and empty out in the American midwestern plains.   We all should care; This plan threatens the richest agriculture region in the world with potential destruction.  Per M. K. Hubbert (sidebar) we have the option to reject the argument “these are bad times, resources must be drained, and maybe bad things will happen. Live with it.”

Leaks could/will happen, especially if several things go wrong a the same time.  Think U.S. Northeast power outage of 2003, 3 mile Island reactor core melt and, especially, the Japanese Fukushima issues of March 2011.  Our safety systems are good at single, isolated events, but are overwhelmed by the inevitable simultaneous multiples.  Suppose such a complex of events happen and cause rupture at many points along the 2000 mile length. Suppose the damage were to release an Exxon Valdez sized volume of nasty, extra acid bitumen slurry.  Would there be any consequence?

• Environmental Damage — TransCanada proposes the XL extensions over one of our most vulnerable water resources, the Ogallala aquifer.

Keystone-Ogallala_mapOgallala is the light cross hatched puddle region near the center of the US.  (Click map for larger image.) The major rivers that pass through and near it are also shown.  The underground water reservoir formed 2 to 6 million years ago, refills slowly,  and is already in danger due to heavy draining during the last 50-100 years.  It is the source of drinking water for the cities and towns in the region and supplies 30% of irrigation. The Ogallala is 1000 ft deep at its richest Northern extent in Nebraska and 100 ft deep in Texas.

The XL project would cross at its most abundant region.  Who knows where the acid waste would drain to.  Recall the Enbridge example where small local creeks poisoned a local waterway in Michigan.  Now look at the waterways that are crossed by Keystone. If you do not see the threat, your visualization ability is faulty.

• National Security — There are a number of arguments here:  We need friendly suppliers, Canadian oil is required to fill our tanks, Alberta product should come to U.S., buy Canadian to keep oil from going abroad;  furthermore, it will provide jobs where they are really needed.

We need friendly suppliers.   We really do not want to become serfs of unfriendly nations.  This propaganda is grossly misleading at several levels.  Mostly, oil producing nations use private enterprise to sell the oil.   Each of these is as greedy or as high minded as any company.  For example, the Canadian companies are as friendly as the leaders of Aramco.  They are in the business to make money.  period.

The difference between the current 590 thousand barrels/d and projected 1.1 Million barrels/d is 510 thousand barrels/day. At $100 per barrel, this is $51 million gross in sales every day and a toasty net receipt for the bosses. (If $85/bbl, 0.85*51= $43M/d)

Friendly?   Leslie Kaufman and Dan Frosh published an article in the New York Times, Tues Oct 18, 2011 p A11, also on the NYT site.  Our friendly TransCanadian Pipeline company is using eminent domain actions to confiscate U.S. land for the Keystone XL upgrade, even though it has not been given U.S. approval.  The Canadian company is trying to take land from US citizens from Wyoming to Texas.  They are using the wholly owned U.S. subsidiary to do this, but at the direction of the Canadian executive board.  This is a fascinating story for those who like such things.

We need Keystone for access to Canadian crude.   This is a pretty self-serving story (to be polite).  First, what is being piped is not oil, it is a slurry of bitumen, a type of coal.  Second, this stuff is already coming into our country through many lines.  The  TransCanadian Keystone is only one.  Enbridge (of the Michigan leaky-pipe story) is another.  Canada is our largest supplier of petroleum products and virtually all is from the tar sand mining.  The Keystone XL proposal is to let only one of the several companies increase its throughput on one of its lines from 590 billion barrels/day to 1.1 million barrels/day; this particular single line is to provide access the shipping ports on the Gulf coast.

The in-place Keystone pipeline currently transports product to refineries in the heart of the U.S. Midwest.  The XL extension is meant to bypass these and take it straight to where it can most easily loaded onto ocean freighters.  Loaded, of course, after processing the slurry into a synthetic crude oil.  It is dirty-processed in Alberta so it can be piped.  It is not-so-clean final-processed at the pipeline terminus to make it usable as oil.  This stuff is not dedicated to U.S. use.  It is similar to the current attack on our Strategic Petroleum Reserve; we are not draining our stored cheap oil because America needs it so badly.  (It is going to international markets for huge profits).

Canadians want to sell to us Americans, but will sell abroad if rejected.   If they are not already selling abroad, why are there lines to the Pacific coast?  Why the lines to Superior, Wisconsin on Lake Superior?  Naturally they are currently selling abroad even as they sell to us.  These are businesses, of course.

Jobs!   This comes up again and again.  The XL project will be a big construction push down the length of the US Midwest.  If it were to start in 2012, the company estimates completion by 2013.   For a mere 12 months of work, (even with the rather good pay that is given) should we destroy the source of water in the Midwest farming country (ref. Ogallala, above)?    The jobs issue is a matter of size.  If it were to supply a permanent of middle class wage base for everyone in the the entire population of the region, I would be hard pressed to not say YES. If the payback were too small, the answer is an obvious NO.

Keystone XL upgrade is so short, will hire so few, and is has near certain potential of permanent damage that this is solidly in the NO portion of the decision spectrum.

Keystone XL Assessment

Good arguments against Keystone XL     There is no need for an unusually high-risk pipeline to cross the aquifer we depend on.    There is no need to make it easy for the company to make tidy profits selling oil shipments from the Gulf of Mexico.  There is no long-term benefit to anyone living in the region.  There is actually no real incremental benefit to U.S. citizens in the proposal.

Bad arguments against KXL     The Alberta operations is dumping carbon into the atmosphere, or toxic wastes into awful pools in Canada. Both true but as much as we wish, we do not affect Canadian mining, US citizen action will never change the mining activities there.    We do not need the oil because our demand has dropped and there are wonderfully efficient new technologies on the drawing boards.  True,  but demand is related to the economy;  drawing-board chickens are always unhatched eggs.

click for a list of our posts on KXL

Keystone XL is just not in our National interest.  But it does involve massive profits for the owners.

Pres Obama will be picking winners among the super rich families when he OK’s this project.

Note added in proof: On October 18, 2011, the website of  The Hill magazine posted  info on a new request from Henry Waxman, Ranking Member of the House Energy and Commerce Committee. It is a request for investigation into the relationship between the Keystone XL project and the very rich, “conservative” Koch family.  This is a very important facet to the project, if investigation proves true.  Conservative is in quotes because Charles and David Koch are pressing a radical agenda (as in radical surgery) to transform the U.S. into a feudal state or maybe “states.”

Update 2012 Mar 10:  (A) Reuters has a good discussion on the the constant buzz that Keystone is a new pipeline to go where none has gone before.   (B) Nice discussion on NPR about U.S. activists’ thoughts that stopping XL could stop Canada from destroying the Alberta environment and help stop global warming.  My own view remains  that we in the U.S. must not get involved with the raging Canadian fight over shale/tar sands exploitation.  No one likes outsiders telling them what to do – American preaching sounds like American domination; we might generate even more environmental damage.


Charles J. Armentrout, Ann Arbor
2011 Oct 19
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About LastTechAge

I am a physicist with years of work in fusion labs, industry labs, and teaching (physics and math). I have watched the tech scene, watched societal trends and am alarmed. My interest is to help us all improve or maintain that which we worked so hard to achieve.
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