The People of America's Oil and Natural Gas Indusry

KXL is Clearly in the National Interest

Mark Green

Mark Green
Posted February 3, 2014

The Keystone XL pipeline now is in the “national interest determination” phase of a long process to gain federal approval for construction. Having cleared its fifth State Department environmental review, the project is to be judged by on whether its construction serves the U.S. national interest. Last week’s State Department report listed the key factors that go into that determination:

To make this decision (i.e., the National Interest Determination), the Secretary of State, through the Department, considers many factors, including energy security; environmental, cultural, and economic impacts; foreign policy; and compliance with relevant state and federal regulations.

kxl_report_coverLet’s examine some of these. First, energy security: Would construction of the full Keystone XL pipeline further the energy security of the United States?

Yes. Consider:

  • Keystone XL will be able to deliver 830,000 barrels of oil a day from neighbor and ally Canada and the U.S. Bakken region. Given the fact that oil and natural gas are projected to supply 62 percent of our energy in 2040, more North American oil reduces the need to import oil from countries that aren’t our friends – which makes the U.S. more energy secure.
  • Importing oil from Canada, our largest trading partner and largest source of imported oil, strengthens our relationship with our best ally – which makes the U.S. more energy secure.
  • With full development of Canada’s oil sands, in which the Keystone XL plays a major role, the U.S. could see 100 percent of its liquid fuels needs met domestically and from Canada by 2024 – which would make the U.S. more energy secure.


Energy security – the result of taking steps to lock in the energy we need to run our economy and support our modern standard of living – is one of the most compelling arguments for building the full Keystone XL. Gen. James Jones, President Obama’s former national security advisor:

“Any nation that fails to secure the energy its citizens need leaves itself vulnerable to the whims of those who may not share their national interests. … A nation begins to decline when it ceases to be able to make the decisions it must make, and it knows it must make, in order to support its own national interests and integrity. … If we fail to grasp the enormous opportunity presented by the Keystone XL pipeline, we will miss out on a chance to improve the energy security of the North American alliance.”

The environmental point was addressed – again – by a thorough State Department analysis. Keystone XL now has cleared five federal environmental reviews. Last summer President Obama said the key factor for him in the national interest determination would be whether the pipeline would “significantly exacerbate the problem of carbon pollution.” The answer, repeated through five State Department environmental studies, as well as a recent IHS report, is no. From State’s new review:

… approval or denial of any one crude oil transport project, including the proposed Project, is unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transport costs, and supply-demand scenarios.  

In other words, oil sands development is unlikely to be affected by what happens with Keystone XL, and therefore the project would not lead to a significant increase in greenhouse gas emissions, a point underscored in this MIT Technology Review post featuring an interview with MIT Professor Chris Knittel. Other points:

  • Greenhouse gas emissions from oil sands crude are comparable with average crudes refined in the U.S.
  • Most greenhouse gases – 70 to 80 percent – are emitted during combustion of fuel in engines. So the vast majority of emissions are the same whether the crude comes from Canada, Nigeria or California.
  • The value of Canada’s oil sands resource is such, as the State Department noted, that the oil will get to market. It would be better for the climate to have that oil processed at state-of-the-art refining facilities in the U.S. instead of other places where the technology isn’t as advanced.
  • Canada is the only country with any greenhouse gas regulations in place of the top five U.S. sources of imported oil.

How about economic impact: Will construction of the Keystone XL advance the economic interests of the U.S.? Yes again. According to the State Department the project will:

  • Generate 42,100 U.S. jobs during Keystone XL’s construction phase, putting $2 billion in workers’ pockets.
  • Contribute $3.4 billion to the U.S. economy overall.
  • Support $3.1 billion in construction contracts and materials in the U.S., with another $233 million expected to be spent on construction camps for workers in states along the pipeline’s route.
  • Generate about $55.6 million in property taxes spread across three states in Keystone XL’s first full year of operation.

These are broad economic benefits, but there’s more. Increased investment in Canadian oil sands – served by the Keystone XL – can create more than 500,000 new U.S. jobs and generate $775 billion in GDP by 2035. There are at least 2,400 U.S. companies in 49 states already involved in oil sands development.

One more economic point: The U.S. and Canada are each other’s largest trading partner. For every dollar the U.S. spends on Canadian products, including oil, Canadians buy up to 89 cents of U.S. goods and services.

We’ll continue analyzing these issues and others as the Obama administration focuses on the national-interest question. The Keystone XL has been thoroughly studied and discussed over the past five-plus years. The broad benefits to this country, in terms of energy security and economic stimulus, are compelling. For some, the Keystone XL is symbolic of an off-oil political agenda that’s largely untethered to the reality that our economic and security strength stem from the availability, reliability and energy density of oil. The foundation of the administration’s all-of-the-above approach to energy, embracing all sources of energy, is oil and natural gas for very good reasons – reasons the American people readily grasp and endorse. They see that the Keystone XL would be an important part of the infrastructure needed to continue the ongoing American energy revolution. Most Americans prefer substance over symbolism – jobs, economic growth and greater energy security over political messaging.

For a strong majority the Keystone XL national interest determination is a slam dunk: Let’s approve the pipeline and get it built.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.