The People of America's Oil and Natural Gas Indusry

Energy Tomorrow Radio: Episode - 120 Benefits of the Keystone Pipeline

Jane Van Ryan

Jane Van Ryan
Posted October 26, 2010

In today's episode, I interview Dan Gunderson, a consultant to API, who describes the benefits of the proposed Keystone XL pipeline, which would carry oil-sands derived crude oil from Canada to markets in Oklahoma and refineries along the Gulf Coast.

Use the audio player below to listen to information about the article and follow along with the show notes. I hope you find the podcast informative.

00:17 A controversy is brewing over the building of a major pipeline that could carry oil-sands derived crude oil from Alberta, Canada, to refineries on the Gulf Coast. There's no doubt that America needs the oil to produce gasoline and other oil products for consumers, but critics have posed several objections. To discuss this controversy, we have Dan Gunderson on the telephone with us today. Dan is a consultant to API and is well-versed in the proposed Keystone XL pipeline.

00:52 Dan, please tell our listeners about the Keystone XL pipeline. Who wants to build it?

00:57 Mr. Gunderson: TransCanada is the corporation building it. They're a major pipeline company that is attempting to extend the pipeline infrastructure from the oil sands of Alberta south into the U.S. Canada is our largest supplier of crude oil, a democratic nation and our friend and cousin to the north. This is a great opportunity to bring crude from Canada to supply our refineries in south central U.S., places, like Oklahoma and the Gulf Coast region.

01:28 How many jobs would be created by this pipeline?

01:30 Mr. Gunderson: $20 billion in total spending with about 119,000 person years of employment. Now that's almost impossible to comprehend. When you talk about organized labor and the people that build pipelines, we're looking at upward of 10,000 jobs just putting the pipe in the ground in North Dakota down to Missouri.

01:56 I would think that jobs of that magnitude would certainly be welcomed during this economic climate we've been going through for the past couple of years. What's the approval process for the pipeline? I understand that the State Department is involved.

02:09 Mr. Gunderson: The Secretary of State Hillary Clinton has to approve the crossing permit, in layman's terms, to allow the pipeline to come from Canada into the U.S. That's really the critical step. The State Department is really evaluating the importance of this pipeline to energy and national security.

02:40 But I understand that some concerns have been raised about the proposed path of the pipeline, particularly in Nebraska, where Sen. Mark Johanns has expressed worries about the Ogalalla aquifer and the Sandhills area. I'm not familiar with that area. Perhaps you can explain it.

02:56 Mr. Gunderson: The Sandhills in north central Nebraska is a sensitive environment. It's sort of an ancient area in terms of topography and the folks in Nebraska are rightfully concerned about anything that would impact the area. What we tried to do, when working with the industry, is to impress upon folks that this by no means is the first pipeline to go through the Sandhills. It's one of many pipelines that would go over the Ogalalla aquifer. There are safety measures in place that would address any sort of leak or spill. After the pipe is in the ground and the work is done to restore the area, in almost every case no one would even know the pipe is there.

03:49 How is TransCanada dealing with local landowners who would need to give the company a right-of-way across their property?

03:56 Mr. Gunderson: With any major pipeline you have a long process where landowners are notified as the project gets closer and closer to actually being a reality. They're asked to comment. There are right-of-way officials that come out and meet with them. And they've done that. There's an assessment of what sort of intrusion there will be on their property and the cost it might incur. For example, if it goes across the corn field, TransCanada is working with the local land owner to determine how many bushels it will affect in the next growing season. There are typically some other dollars added into the mix to account for inconvenience in the right-of-way spread. It's a long rigorous process, and I know the company is dedicated to getting input from the landowners. They come to a mutual agreement on what the value is and a check is written. After, the company continues to work with landowners. After all it's their pipeline on the landowner's property. It's in their best interest to have good relations with landowners.

05:05 Yes, I would think so. How does the company plan to address any security or emergency response issues for the pipeline?

05:14 Mr. Gunderson: They have a central pipeline center that measures the operation. If a spill were to occur, they can isolate sections of pipe. They're also working with local emergency response folks, whether it's volunteer fire departments, EMT personnel, all along the route, for 1,600 miles, and I assume into Canada to ensure they have great relations there as well. The minute you find a leak in the pipe, you isolate it and shut that section down. Folks will want to know whether it will continue to leak. These sections might be a mile long, so once you shut it off there might be some petroleum that will continue to leak into the ground for a period of time. It moves very slowly and it will not contaminate an entire aquifer or even a portion of it. The companies are also very quick to respond.

06:18 You've already mentioned that Canada is the single largest supplier of crude oil to the United States. What would happen if this pipeline isn't approved?

06:29 Mr. Gunderson: To give folks perspective, the oil sands of Alberta rival those of Saudi Arabia in terms of known reserves. It's a huge amount of energy resources for us. We're shifting the flow of oil from south to north within the U.S., now from Canada south. It's a great opportunity to work with Canadians to transport crude over a much shorter distance. If it doesn't come there, then we've got to find it. The refineries in Oklahoma and Texas that supply Missouri and Nebraska and elsewhere will have to find a replacement in the future. That's when you begin to look to places like Venezuela, Nigeria and the Middle East, which are farther away and given national security issues is a lot more problematic.

07:23 Good point. You've been traveling in Nebraska and elsewhere in the Midwest to answer questions about the Keystone XL pipeline. What observations do you have about conversations you've had with reporters and people on the ground who live in the area? How are your messages being received?

07:40 Mr. Gunderson: I think the message is being received well. I think there are some very legitimate concerns, as there should always be with major construction projects of this type, concerns about the environment, particularly. Conversations over this last year have been great. We know those questions need to be answered. The media has said they appreciate that the industry is reaching out and that we're going out to answer questions, hopefully in front of the issue, and be available to answer any of these technical questions. The biggest problem is that some distortions are being placed out there that come from folks who may have an agenda other than the environment, For example, in Nebraska, we're trying to be straightforward and lay it out for them. They don't always agree with us, but they're listening. We think that in the long run they're going to balance the environmental compliance that we know is there with also the need for a new energy source from a friendly democratic country.

08:52 Balance between energy and the environment is indeed the key, isn't it?

08:56 Mr. Gunderson: It is. We're going to need petroleum well into this century and no amount of wishful thinking will change that. We need it for all sorts of uses, not just fuel. People need to be aware that plastic, carpet, paint and asphalt all come from a barrel of oil. Almost one-third of a barrel of oil produces those kinds of products as opposed to just fuel, diesel or gasoline.

09:23 Nicely put. Dan Gunderson, thank you so much for joining us today on Energy Tomorrow Radio.