Keystone XL Pipeline Project: Key Issues
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Keystone XL Pipeline Project: Key Issues Paul W. Parfomak Specialist in Energy and Infrastructure Policy Neelesh Nerurkar Specialist in Energy Policy Linda Luther Analyst in Environmental Policy Adam Vann Legislative Attorney December 12, 2011 Congressional Research Service 7-5700 www.crs.gov R41668 CRS Report for Congress Prepared for Members and Committees of Congress Keystone XL Pipeline Project: Key Issues Summary In 2008, Canadian pipeline company TransCanada filed an application with the U.S. Department of State to build the Keystone XL pipeline, which would transport crude oil from the oil sands region of Alberta, Canada, to refineries on the U.S. Gulf Coast. Keystone XL would have the capacity to transport 830,000 barrels per day, delivering crude oil to the market hub at Cushing, OK, and further to points in Texas. The project is expected to cost more than $7.0 billion, of which at least $5.4 billion would be spent on the U.S. portion. TransCanada plans to build a short additional pipeline so that oil from the Bakken formation in Montana and North Dakota can also be carried on Keystone XL. Many Members of Congress have expressed support or opposition to the pipeline due to its potential environmental, energy security, and economic impacts. As a facility connecting the United States with a foreign country, the pipeline requires a Presidential Permit from the State Department. In granting or denying a permit application, the State Department must determine whether a proposal is in the “national interest.” Such a determination must be arrived at in consultation with other relevant federal agencies and after public input. The determination includes an evaluation of factors including the proposed project’s potential to affect the environment, economy, energy security, or foreign policy. Potential environmental impacts of the proposed Keystone XL project were identified and considered in an Environmental Impact Statement (EIS) prepared by the State Department pursuant to the National Environmental Policy Act (NEPA). Publication of the final EIS on August 26, 2011, marked the beginning of a 90-day review period for the national interest determination. According to the State Department, a wide range of public comments both favoring and opposing the pipeline project were received during this period. In particular, the department cited concerns regarding the pipeline’s route through the Sand Hills region of Nebraska, an extensive sand dune formation with highly porous soil and shallow groundwater. On November 10, 2011, in response to concerns regarding the pipeline route and actions by the Nebraska legislature applicable to pipeline siting, the State Department announced a delay in its national interest determination to gather additional information necessary to assess a new pipeline route avoiding the Sand Hills. On November 14, 2011, TransCanada announced its decision to work with the Nebraska Department of Environmental Quality to identify an acceptable pipeline route around the Sand Hills. The State Department estimates that the preparation of supplemental environmental analysis necessary for a new route alternative may be complete in early 2013. International pipeline projects like Keystone XL are not subject to the direct authority of Congress. Nonetheless, several legislative proposals seek to impose deadlines on the permit process or require a permit to be issued. The Jobs Through Growth Act (H.R. 3400) would require the President to issue a final order granting or denying the Presidential Permit for the Keystone XL pipeline within 30 days of enactment. The North American Energy Security Act (S. 1932), the American Energy Security Act (H.R. 3537), and the Middle Class Tax Relief and Job Creation Act of 2011 (H.R. 3630) would require the Secretary of State to issue a permit for the project within 60 days of enactment, unless the President publicly determines the project to be not in the national interest. The North American Energy Access Act (H.R. 3548) would transfer the permitting authority over the Keystone XL pipeline project from the State Department to the Federal Energy Regulatory Commission (FERC), and would require the commission to issue a permit for the project within 30 days of enactment. Congressional Research Service Keystone XL Pipeline Project: Key Issues Contents Introduction...................................................................................................................................... 1 Pipeline Description .................................................................................................................. 2 Keystone XL Extension to Bakken Oil Production............................................................. 4 Presidential Permit Application Requirements and Status ........................................................ 5 Identifying Environmental Impacts of the Proposed Pipeline............................................. 6 Environmental Impacts and the Determination of National Interest................................... 8 Delay in Keystone XL Pipeline Permit Review.................................................................. 9 State Siting and Environmental Approvals.............................................................................. 11 Arguments For and Against the Pipeline ....................................................................................... 12 Impacts to the Nebraska Sand Hills......................................................................................... 12 Impact on U.S. Energy Security .............................................................................................. 14 Canadian Oil Imports in the Overall U.S. Supply Context ............................................... 15 Oil Sands, Keystone XL, and the U.S. Crude Oil Market................................................. 17 Economic Impact of the Pipeline............................................................................................. 20 Canadian Oil Sands Environmental Impacts........................................................................... 21 Fossil Fuels Dependence and Greenhouse Gas Emissions...................................................... 22 Figures Figure 1. TransCanada Keystone Pipeline and Original Keystone XL Proposed Route ................. 3 Figure 2. Keystone XL Pipeline Route Across the Ogallala Aquifer............................................. 13 Figure 3. U.S. Changes in U.S. Oil Imports, Selected Sources ..................................................... 16 Figure 4. Gross U.S. Oil Imports................................................................................................... 17 Appendixes Appendix. Presidential Permitting Authority................................................................................. 23 Contacts Author Contact Information........................................................................................................... 24 Acknowledgments ......................................................................................................................... 24 Congressional Research Service Keystone XL Pipeline Project: Key Issues Introduction In September 2008, TransCanada (a Canadian company) applied to the U.S. Department of State for a permit to cross the U.S.-Canada international border with the Keystone XL pipeline project. If constructed, the pipeline would carry crude oil produced from the oil sands region of Alberta, Canada, to U.S. Gulf Coast refineries. Because the pipeline would connect the United States with a foreign country, it requires a Presidential Permit issued by the State Department. Issuance of a Presidential Permit requires a finding that the project would serve the “national interest.” In the course of gathering information necessary to make its national interest determination, the State Department identified various concerns raised by the public. On November 10, 2011, the State Department announced its decision to seek additional information about alternative pipeline routes before it could move forward with a national interest determination. More specifically, concerns regarding potential environmental impacts of constructing and operating the pipeline along the proposed route through the Sand Hills region of Nebraska led the State Department to decide that an assessment of potential alternative routes that would avoid that area was necessary. Subsequently, on November 14, 2011, TransCanada announced an agreement with the Nebraska Department of Environmental Quality to identify a pipeline route that would avoid the Sand Hills. The State Department estimates that the preparation of supplemental environmental analysis necessary for a new route alternative may be complete in early 2013. Members of Congress have expressed support for the proposed pipeline’s potential energy security and economic benefits while others have expressed reservations about its potential environmental impacts.1 Though Congress has no direct role in permitting the pipeline’s construction, it may have an oversight role stemming from federal environmental statutes that govern the pipeline’s application review process or may seek to influence the State Department process through other legislative means. For example, the North American-Made Energy Security Act (H.R. 1938), which was not enacted, would have directed the President to issue a final order granting or denying the Presidential Permit for the Keystone XL pipeline by November 1, 2011.