WHY DO WE NEED

THE KEYSTONE XL
PIPELINE?
Professor Benjamin Nussdorf
Washington College of Law &
George Washington University Law School

The views expressed herein are the authors own, and do not reflect the position of the Department
of Energy or the United States Government
 WHY DO WE NEED THE
KEYSTONE XL PIPELINE?
1179 mile pipeline transporting diluted bitumen from Hardisty,
Canada to Steel City, Nebraska.
Has a capacity of 830,000 bbl/d
Proposed in 2008, and requires both Canadian and American
approvals.
State Department Issued a favorable SEIS for the Project in January
2014.
http://keystonepipeline-
xl.state.gov/documents/organization/221137.pdf
President Trump is attempting to use this EIS to approve the pipeline
in 2017.
 WHY DO WE NEED THE
KEYSTONE XL PIPELINE?
Generally, oil, or in this case, bitumen, which is extracted and can not be
moved by pipeline is moved by rail car or truck.
Transporting oil by truck or train is significantly more dangerous than transportation
by pipe, and about double or triple the expense.
According to statistics provided by the Government of Alberta, in 2014, tar
sand production measured 2,300,000 barrels per day.
The current capacity of approved pipelines may question the need for
Keystone XL:
Keystone 1: 591,000 barrels per day
Alberta Clipper: 800,000 barrels per day
TransMountain: 890,000 barrels per day
Thus, there currently exists 2,281,000 barrels per day of pipeline capacity approved.
WHY DO WE NEED THE
KEYSTONE XL PIPELINE?
CURRENT PRODUCTION IN ALBERTA
COMPANIES DIVESTING THEIR TAR
SANDS ASSETS OR DECLINING TO
INVEST IN NEW PROJECTS
 WHY DO WE NEED THE
KEYSTONE XL PIPELINE?

Majorinternational oil companies (supermajors)

arent investing because the breakeven cost of oil for
new, greenfield projects is $85-$95 per barrel.
Oil is currently trading around $50 per barrel.
Withglobal supermajor oil companies declining to
invest in new projects, it may be difficult to increase
production along the lines predicted by Albertas
energy regulator.
 WHY DO WE NEED THE
KEYSTONE XL PIPELINE?
If production does not increase, current permitted pipeline
capacity almost encompasses all current production.
The gap could easily be transported by rail, which currently
transports a significant amount of tar sands production.
Pipeline would need to move approximately 25% capacity to be
safe and economical, using the Trans-Alaska Pipeline as a
reference.
Under current conditions, it would be difficult to reach 25% capacity.
WHY DO WE
NEED THE
KEYSTONE XL
PIPELINE?
Much of the support for
building the Keystone XL
pipeline is to feed oil into
certain oil refineries in the Gulf
Coast, who have excess
capacity due to the drop in
production of heavy crude oil
in Venezuela.
 WHY DO WE NEED THE
KEYSTONE XL PIPELINE?

Based on current production, filling capacity on the

Keystone XL would likely deplete capacity on other
permitted pipelines.
Itis unclear if production will increase significantly due
to negative investment conditions and the low price
of oil.
Itremains to be seen whether or not production will
support a fourth pipeline out of the tar sands.