Build, Baby, Build

Why Keystone XL Makes Economic and Environmental Sense

For those of us old enough to remember the 1973 oil crisis, the current North American oil-and-gas boom has a slightly surreal quality: The familiar problem of high energy demand and low supply is being flipped on its head.

Forty years ago, oil was so scarce that the U.S. government was forced to turn to rationing and price controls. In 1974, the 24 Hours of Daytona race was canceled and newspapers carried public-service announcements with taglines such as “Last Out, Lights Out: Don’t Be Fuelish.” Some futurists predicted that the world oil supply would be exhausted within our lifetimes, and so we had better start building backyard windmills.

Those fears seem antiquated. In North America, new oil and gas discoveries -- coupled with the development of technologies for extracting hydrocarbons from rock formations and Canadian oil sands deposits -- have created a surge in fossil-fuel extraction. Natural gas is now so plentiful that prices have dropped, and import terminals of liquefied natural gas are being refitted for export. The United States is on track to attain oil self-sufficiency within the next 15 years, even as some coal plants are shut down to make way for cleaner fuels.

The challenge for both Canadian and U.S. policymakers is to create the infrastructure necessary to transport and process the riches dredged up from the great swath of land between northern Alberta and the American deep South. Williston, North Dakota, and Lethbridge, Alberta, have become great places to dig holes and make billions. But they are many hundreds of miles from the continent’s largest cities and export hubs. And the legacy pipeline network that services them was constructed largely for the purpose of pushing imported petroleum inland from coastal refineries -- not pumping domestically produced oil in the other direction.

That, in capsule form, is the case for the $5.3 billion Keystone XL project. TransCanada Corporation plans to build a 1,200-mile, 36-inch-diameter pipeline that would bring 830,000 barrels per day of land-locked Canadian synthetic crude and bitumen, the hydrocarbon goop pulled out of oil sands, and U.S. crude oil from the northern states to the existing pipeline hub at Steele City, Nebraska. From there, it would be routed to the massive refinery operations on the Gulf Coast.

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