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Introduction
The Keystone Pipeline System is an oil pipeline system in Canada and the United States,
commissioned in 2010. It runs from the Western Canadian Sedimentary Basin in Alberta to refineries
in Illinois and Texas, and also to oil tank farms and an oil pipeline distribution center in Cushing,
Oklahoma.
Three phases of the project are in operation. They are:

The Keystone Pipeline (Phase I), delivering oil from Hardisty, Alberta, over 3,456 kilometres
(2,147 mi) to the junction at Steele City, Nebraska, and on to Wood River Refinery in Roxana,
Illinois, and Patoka Oil Terminal Hub (tank farm) north of Patoka, Illinois, completed in June
2010.
The Keystone-Cushing extension (Phase II), running 468 kilometres (291 mi) from Steele City to
storage and distribution facilities (tank farm) at Cushing, Oklahoma, completed in February
2011.
The Gulf Coast Extension (Phase III), running 784 kilometres (487 mi) from Cushing to refineries
at Port Arthur, Texas was completed in January 2014, and a lateral pipeline to refineries
at Houston, Texas and a terminal will be completed mid-2016, going online the following year.

The pipeline came to the a greater prominence of attention when a planned fourth phase, Keystone
XL, attracted growing environmental protest, became a symbol of the battle over climate change and
fossil fuels, and in 2015 was rejected by United States President Barack Obama.

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The proposed Keystone XL Pipeline (Phase IV) would have essentially duplicated the Phase I
pipeline between Hardisty, Alberta, and Steele City, Nebraska, with a shorter route and a larger-
diameter pipe. It would run through Baker, Montana, where American-produced light crude oil from
the Williston Basin (Bakken formation) of Montana and North Dakota would be added to the
Keystone's current throughput of synthetic crude oil (syncrude) and diluted bitumen (dilbit) from
the oil sands of Canada. However, after more than six years of review, President Barack Obama
announced on November 6, 2015, his administration's rejection of the fourth phase.

Timeline
The Canadian National Energy Board approved the Keystone XL pipeline in March 2010. Because the
XL pipeline crosses the US/Canada border, the project requires presidential permit prior to
construction.
The Keystone XL proposal faced criticism from environmentalists and a minority of the members of
the United States Congress. In January 2012, President Barack Obama rejected the application amid
protests about the pipeline's impact on Nebraska's environmentally sensitive Sandhills
region. TransCanada Corporation changed the original proposed route of Keystone XL to minimize
"disturbance of land, water resources and special areas"; the new route was approved by Nebraska
Governor Dave Heineman in January 2013. On April 18, 2014, the Obama administration announced
that the review of the controversial Keystone XL oil pipeline has been extended indefinitely, pending
the result of a legal challenge to a Nebraska pipeline siting law that could change the route. On January
9, 2015, the Nebraska Supreme Court cleared the way for construction, and on the same day the
House voted in favor of the pipeline. On January 29, 2015, the Keystone XL Pipeline was passed by
the Senate 62-36. On February 11, 2015, the Keystone XL Pipeline was passed by the House of
Representatives with the proposed Senate Amendments 270-152. The Keystone XL Pipeline bill was
not officially sent to President Obama, starting the official ten-day count towards the bill becoming
law without presidential signature, until February 24, 2015. Republicans delayed delivering the bill
over the Presidents Day holiday weekend to ensure Congress would be in session if the president
were to veto the bill. On February 24, 2015, the bill was vetoed and returned for congressional
action. On March 4, 2015, the Senate held a vote and failed to override President Obamas veto of the
bill; the vote was 62 to 37, and failed to reach the two-thirds majority required to override a
presidential veto. The review by the State Department is ongoing. On June 15, 2015 the House
Oversight Committee threatened to subpoena the State Department for the latter's withholding of
records relevant to the process since March 2015 and calling the process "unnecessarily
secretive". Despite some records being posted by consulted agencies such as the EPA, the State
Department has not responded to the request. On November 2, 2015, TransCanada asked the Obama
administration to suspend its permit application for the Keystone XL.

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Issues and Controversies surrounding Keystone XL
Environmental Issues
Different environmental groups, citizens, and politicians have raised concerns about the potential
negative impacts of the Keystone XL project. The main issues are the risk of oil spills along the
pipeline, which would traverse highly sensitive terrain, and 17% higher greenhouse gas emissions
from the extraction of oil sands compared to extraction of conventional oil.

Potential for oil spills

A concern is that a pipeline spill would pollute air and critical water supplies and harm migratory
birds and other wildlife. Its original route plan crossed the Sandhills, the large wetland ecosystem in
Nebraska, and the Ogallala Aquifer, one of the largest reserves of fresh water in the world. Critics say
that a major leak could ruin drinking water and devastate the mid-western U.S. economy. After
opposition for laying the pipeline in this area, TransCanada agreed to change the route and skip the
Sandhills.

The Ogallala Aquifer spans eight states, provides drinking water for two million people, and
supports $20 billion in agriculture.

University of Nebraska professor Dr. John Stansbury conducted an independent analysis that
provides more detail on the potential risks for the Ogallala Aquifer. In his analysis, Dr. Stansbury
concludes that safety assessments provided by TransCanada are misleading.

According to Dr. Stansbury, "We can expect no fewer than 2 major spills per state during the
50-year projected lifetime of the pipeline. These spills could release as much as 180 thousand
barrels of oil each

Pipeline industry spokesmen have noted that thousands of miles of existing pipelines carrying crude
oil and refined liquid hydrocarbons have crossed over the Ogallala Aquifer for years, in southeast
Wyoming, eastern Colorado and New Mexico, western Nebraska, Kansas, Oklahoma, and Texas. The
Pioneer crude oil pipeline crosses east-west across Nebraska, and the Pony Express pipeline, which
crosses the Ogallala Aquifer in Colorado, Nebraska, and Kansas, was being converted as of 2013 from
natural gas to crude oil, under a permit from the Federal Energy Regulatory Commission.
Portion of the pipeline will also cross an active seismic zone that had a 4.3 magnitude earthquake as
recently as 2002. Opponents claim that TransCanada applied to the U.S. government to use thinner
steel and pump at higher pressures than normal.
TransCanada CEO Russ Girling has described the Keystone Pipeline as "routine", noting that
TransCanada has been building similar pipelines in North America for half a century and that there

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are 200,000 miles (320,000 km) of similar oil pipelines in the United States today. He also stated that
the Keystone Pipeline will include 57 improvements above standard requirements demanded by U.S.
regulators so far, making it "the safest pipeline ever built. However, while TransCanada had asserted
that a set of 57 conditions will ensure Keystone XL's safe operation, Anthony Swift of the Natural
Resources Defense Council asserted that all but a few of these conditions simply restate current
minimum standards.
TransCanada claims that they will take 100% responsibility for any potential environmental
problems. According to their website, "Its our responsibility as a good company and under law. If
anything happens on the Keystone XL Pipeline, rapid response is key. Thats why our Emergency
Response plans are approved by state and federal agencies, and why we practice them regularly. We
conduct regular emergency exercises, and aerial surveys every two weeks. Were ready to respond
with a highly-trained response team standing by."

Potential for increased carbon emissions

Environmental organizations such as the Natural Resources Defense Council (NRDC) also oppose the
project due to its transportation of oil from oil sands.
NASA climate scientist James Hansen stated in 2013 that "moving to tar sands, one of the dirtiest,
most carbon-intensive fuels on the planet" is a step in exactly the wrong direction, "indicating either
that governments don't understand the situation or that they just don't give a damn. The House
Energy and Commerce Committee's chairman at the time, Representative Henry Waxman, had also
urged the State Department to block Keystone XL for greenhouse gas emission reasons.
In a speech to the Canadian Club in Toronto on September 23, 2011, Joe Oliver, Canada's Minister of
Natural Resources, sharply criticized opponents of oil sands development and the pipeline, arguing
that:

The total area that has been affected by surface mining represents only 0.1% of Canada's boreal
forest.
The oil sands account for about 0.1% of global greenhouse-gas emissions.
Electricity plants powered by coal in the U.S. generate almost 40 times more greenhouse-gas
emissions than Canada's oil sands (the coal-fired electricity plants in the State of Wisconsin alone
produce the equivalent of the entire GHG emissions of the oil sands).
California bitumen is more GHG-intensive than the oil sands.

Geopolitical issues
Proponents for the Keystone XL pipeline argue that it would allow the U.S. to increase its energy
security and reduce its dependence on foreign oil. TransCanada CEO Russ Girling has argued that
"the U.S. needs 10 million barrels a day of imported oil" and the debate over the proposed pipeline
"is not a debate of oil versus alternative energy. This is a debate about whether you want to get your
oil from Canada or Venezuela or Nigeria." However, an independent study conducted by the Cornell
ILR Global Labor Institute refers to some studies (e.g. a 2011 study by Danielle Droitsch of Pembina
Institute) according to which "a good portion of the oil that will gush down the KXL will probably end
up being finally consumed beyond the territorial United States". It also states that the project will

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increase the heavy crude oil price in the Midwestern United States by diverting oil sands oil from the
Midwest refineries to the Gulf Coast and export markets.
The US Gulf Coast has a large concentration of refineries designed to process very heavy crude oil. At
present, the refineries are dependent on heavy crude from Venezuela, including crude from
Venezuelas own massive Orinoco oil sands. The United States is the number one buyer of crude oil
exported from Venezuela. The large trade relationship between the US and Venezuela has persisted
despite political tensions between the two countries. However, the volume of oil imported into the
US from Venezuela dropped in half from 2007 to 2014, as overall Venezuelan exports have dropped,
and also as Venezuela seeks to become less dependent on US purchases of its crude oil. The Keystone
pipeline is seen as a way to replace imports of heavy oil-sand crude from Venezuela with more
reliable Canadian heavy oil.
TransCanada's Girling has also argued that if Canadian oil doesn't reach the Gulf through an
environmentally friendly buried pipeline, that the alternative is oil that will be brought in by tanker,
a mode of transportation that produces higher greenhouse-gas emissions and that puts the
environment at greater risk. TransCanada had said that development of oil sands will expand
regardless of whether the crude oil is exported to the United States or alternatively to Asian markets
through Enbridge Northern Gateway Pipelines or Kinder Morgan's Trans-Mountain line.

Indigenous issues
Many Native Americans and Indigenous Canadians are opposed to the Keystone XL project for
various reasons, including possible damage to sacred sites, pollution, and water contamination,
which could lead to health risks among their communities.
TransCanada's Pipeline Permit Application to the South Dakota Public Utilities Commission states
project impacts that include potential physical disturbance, demolition or removal of "prehistoric or
historic archaeological sites, districts, buildings, structures, objects, and locations with traditional
cultural value to Native Americans and other groups.
Indigenous communities are also concerned with health risks posed by the extension of the Keystone
pipeline. Locally caught fish and untreated surface water would be at risk for contamination through
oil sands extraction, and are central to the diets of many indigenous peoples. Earl Hatley, an
environmental activist who has worked with Native American tribes has expressed concern about
the environmental and public health impact on Native Americans.
TransCanada has developed an Aboriginal Relations policy in order to confront some of these
conflicts. In 2004, TransCanada made a major donation to the University of Toronto"to promote
education and research in the health of the Aboriginal population. Another proposed solution is
TransCanada's Aboriginal Human Resource Strategy, which was developed to facilitate aboriginal
employment and to provide "opportunities for Aboriginal businesses to participate in both the
construction of new facilities and the ongoing maintenance of existing facilities.
Economic issues
Russ Girling, president and CEO of TransCanada, touted the positive impact of the project by "putting
20,000 US workers to work and spending $7 billion stimulating the US economy. These numbers
come from a 2010 report written by The Perryman Group, a financial analysis firm based in Texas
that was hired by TransCanada to evaluate Keystone XL. However, it will increase gasoline
availability to the Northeast and expand the Gulf refining industry. The U.S. State Department's
Preliminary Supplemental Environmental Impact Statement, issued in March 2013, estimated 3,900
direct jobs and 42,000 direct and indirect jobs during construction. According to the Final

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Supplemental Environmental Impact Statement (SEIS), the Pipeline will only create 35 permanent
jobs.
Glen Perry, a petroleum engineer for Adira Energy, has warned that including the Alberta Clipper
pipeline owned by TransCanada's competitor Enbridge, there is an extensive overcapacity of oil
pipelines from Canada. After completion of the Keystone XL line, oil pipelines to the U.S. may run
nearly half-empty. The expected lack of volume combined with extensive construction cost overruns
has prompted several petroleum refining companies to sue TransCanada.
In the United States, Democrats are concerned that Keystone XL would not provide petroleum
products for domestic use, but simply facilitate getting Alberta oil sands products to American
coastal ports on the Gulf of Mexico for export to China and other countries.

Change in Administration
As the President, Barack Obama rejected the Keystone XL pipeline citing that the environmental
concerns could not be compromised with and the multiple issues described above were not projected
to be dealt with by TransCanada in a satisfactory manner. This decision was a major symbolic step in
the legacy that Mr. Obama was trying to build on climate change and a sign that he was willing to risk
the anger of the Senate to push his environmental agenda.
Donald J. Trump was elected as the 45th U.S. president in the 2016 election on the Republican ticket,
defeating Democratic nominee Hillary Clinton, and is scheduled to take office on January 20, 2017.
His surprise win in the general election, held on November 8, 2016 has already resuscitated plans to
build the Keystone XL pipeline.
TransCanada, the company behind the proposed 1,179-mile oil conduit from Alberta to
Nebraska, announced plans on November 9th to meet with Trump officials to once again pitch the
pipeline. TransCanada remains fully committed to building Keystone XL, Mark Cooper, a
spokesman for the company, said in a statement. We are evaluating ways to engage the new
administration on the benefits, the jobs and the tax revenues this project brings to the table.
Trump said in May that he would support the pipeline if the U.S. government could get a share of its
revenue. I want it built, but I want a piece of the profits, Trump said during a speech on his energy
policies to oil-industry workers in North Dakota. Thats how were going to make our country rich
again.
Trump has vowed that as president he would work with the company on a reapplication for a border-
crossing permit, stating that he would "absolutely approve it, 100 per cent."

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Benefits from Keystone XL

While the construction of the Keystone XL pipeline is plagued by multiple issues and controversies,
there are multiple reasons why the bill for the construction of the pipeline was passed by the Senate
and why it would be beneficial to the U.S. economy.

Canada already sends 550,000 barrels of oil per day to the US via the existing Keystone Pipeline. The
oil fields in Alberta are landlocked and as they are further developed, require means of access to
international markets. Many of North America's oil refineries are based in the Gulf Coast, and
industry groups on both sides of the border want to benefit.

An increased supply of oil from Canada would mean a decreased dependency on the oil from
Venezuela, Middle Eastern Countries and Africa.

The infrastructure project would create 42,000 jobs over a two-year construction period, the US State
Department estimates - 35 of which would remain after the pipeline is built.

The Canadian Energy Research Institute estimates that the increased production from Canada will
increase U.S. economic output by $45 billion per year until 2035 and that one out of every three jobs
created by oil sands development will be in the United States.

TransCanada has posited that both the XL and Gulf Coast Pipeline projects are anticipated to have a
positive impact on the economy and will, generate $20 billion in economic impact in the United
States, including $99 millions in local government revenues and $486 million in state government
revenues during construction.

The numbers shown in the figure are supply of crude in Millions of Barrels Per Day

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Public opinion

Public opinion polls taken by independent national polling organizations have shown majority
support for the proposed pipeline in the US. A September 2013 poll by the Pew Center found 65%
favored the project and 30% opposed. The same poll found the pipeline favored by majorities of men
(69%), women (61%), Democrats (51%), Republicans (82%), independents (64%), as well as by
those in every division of age, education, economic status, and geographic region. The only group
identified by the Pew poll with less than majority support for the pipeline was among those
Democrats who identified themselves as liberal (41% in favor versus 54% opposed).
The overall results of polls on the Keystone XL pipeline taken by independent national polling
organizations are as follows:

Gallup (March 2012): 57% government should approve, 29% government should not approve
Rasmussen (January 2014): 57% favor, 28% oppose (of likely voters)
Pew Center (September 2013): 65% favor, 30% oppose
Washington Post-ABC News (April 2014): 65% government should approve, 22% government
should not approve
USA Today (January 2014): 56% favor, 41% oppose
CBS News Roper (May 2014): 56% favor, 28% oppose

Conclusion
The Obama administration removed the hopes of the construction of the Keystone XL taking place,
while bringing a huge loss to TransCanada and the economic profits to be gained by both sides, but
also handing green advocates one of their biggest victories in recent history. The reasons for not
constructing the pipeline the potential for multiple oil spills in the Sandhills region and the above
the Ogallala aquifer, debate over the economics of the project and jobs creation, geopolitical issues
and damage to Native American culture, are valid. At the same time, we can agree on the fact that the
increased transport of Canadian Oil through American land would lead to increased profitability for
both the countries, decrease USAs dependency on OPEC countries and lead to creation of thousands
of jobs over a two year period. However, with a change in the presidency, and with the U.S.
lawmakers set to pass the bill again, the possibility of the Keystone XL seeing light at the end of long
tunnel seems very likely. At this point, we as responsible members of the Oil & Gas industry need to
ask ourselves not IF Keystone XL should be constructed, but HOW to do it without compromising the
future of the planet.
Deliverables
1. What should be the actions of President elect Trump after taking office to ensure maximum
benefits for USA?
2. Is there an alternate route from Alberta to Cushing, Oklahoma while avoiding geologically
and indigenously sensitive areas?
3. If the pipeline follows the same disputed route through Nebraska, what should be the safety
procedures adopted and standards upheld to minimise damage to the Sandhills region and
the Ogallala aquifer? (Hint: Use data from the previous pipelines in the area)

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 4. Do you think the geopolitical, economic and indigenous issues mentioned above can be
eliminated? If yes, how?
5. Can you think of an alternate method for Canadian oil companies to transport its crude to
Asian and European markets, bypassing the American Gulf Coast Refineries, while
maintaining the same profitability?

You are advised to use data and information available in the public domain to come up with
creative and innovative solutions to the case study.
You have to make an abstract consisting of the deliverables of less than 350 words and send it to
territude2016@gmail.com by 15th November, 11:59pm. Shortlisted candidates will be notified
and will be asked to give a presentation of their analysis.

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