As oil and gas pipelines go, none has faced as much pushback as the Keystone XL (KXL) pipeline, a planned 1,210-mile, $8-billion structure expected to carry 830,000 barrels of oil, per day, from Alberta, Canada, to Steele City, Nebraska. Angered that the pipeline will transport oil across environmentally sensitive areas of the Great Plains, threaten some states’ water supply, and contribute negatively to climate change, environmentalists have sought to stop it in its tracks. Encouraged that it will stimulate the U.S. economy, put the U.S. further along a course to energy independence, and provide a cheap and safe means of crude transport, backers of the pipeline have sought to push forward despite the opposition.
Embattled since its proposal in 2008, the long-delayed project has, most recently, been slapped with a federal court ruling in Montana that revokes a state water-crossing permit needed for continued construction. It’s a major setback for TC Energy Corp. and comes just weeks after the company’s pipeline was given $7 billion in financial support from the government of Alberta to keep building. Given the last decade of such legal, political and regulatory whiplash, how can a project that promises so much, economically, move forward?
The delay from the judge’s decision will not immediately affect the project schedule, as other activities and sections of the pipeline can be constructed while TC Energy works through the legal and regulatory proceedings to secure the permit. The company still proposes completion by 2023, regardless of the anticipated year-long delay the ruling poses and the potential to lose up to what some had placed at nearly $1 billion should such a delay occur. This also is regardless of the turnout of the 2020 presidential election, which might bring other regulatory hurdles should President Donald Trump, a pipeline proponent, be defeated.
Lending perspective
Opposition to the pipeline has little to do with its technical or even regulatory complexity, as thousands of miles of lines have been approved in the past 10 years. The challenges TC Energy faces are symptoms of a larger, underlying issue—the negative narrative and drive to eliminate Alberta’s oil sands. KXL is simply a means to achieving that end.
The groups in opposition to the extraction of the oil sands genuinely believe KXL is not in the best interest of society and the environment, and they have developed a strong coalition against the line. These individuals and groups might have good intentions, but their means to achieving their ends are questionable to some. After all, is disrupting this pipeline going to reduce reliance on fossil fuels? Probably not. If people intend on maintaining their current lifestyles and driving habits, then the cancellation of the KXL line will only change their oil supplier. The question then becomes, does the U.S. want to import the oil it uses from a country with a strong regulatory system (i.e., Canada), or from countries with little or no regulatory oversight (i.e., those in the Middle East)? An underlying assumption in this entire conversation is that all alternatives would be better than the Alberta oil sands; however, this line of reasoning could also be questioned. The increased scrutiny of the oil sands has led to the development of stringent regulatory frameworks in Alberta and this cannot be said of many competing sources.
The KXL has been heavily scrutinized from day one and in a world where regulations are open to subjective interpretation, their enforcement will depend on the leanings of the enforcer. If the body enforcing the regulations is opposed to the project, there are many ways it can interpret the regulations and develop ways to delay or halt the pipeline’s construction. There is a saying that goes, “If a police officer follows you for long enough, they will find a reason to pull you over.” KXL has been followed and pulled over by regulators, activists and special interests for the past 10 years and there is no guarantee this will stop with the resolution of the ruling in Montana.
Ultimately, this is about the ability of TC Energy to go the distance and persevere; to ensure that capital and contracts are set up to withstand delays; and to resolve as many conflicts as possible, taking into account that favoring governments might change hands.
Perception is everything
It also is a public-relations issue. The question TC Energy faces is, “How do we influence public perception and change the narrative?” Because media plays a critical role in the debate, one might go so far as to suggest that TC Energy create a documentary. Invest in a high-quality, interesting story that gives an honest perspective on the oil sands. Showcase the real issues as well as the positives including how oil and gas production benefits people (actual flesh and blood). Forego statistics and numbers; instead of indicating how many jobs will be produced, let’s see a family that has benefitted from oil and gas work. Show the damage that the cancellation of a project does to people who live in the affected towns along the pipeline.
We’ve seen the economic damage that one worldwide epidemic, COVID-19, has caused in communities across the globe. Perhaps the story, too, is that KXL can help jumpstart a community’s economy in this difficult time. Certainly, it can be no less effective than our government spending billions on a short-term stimulus package to keep businesses running through this challenging and historic time.
Many environmentalists have called the Keystone Pipeline the “Zombie Project” because no matter how many times it gets knocked down, it keeps coming back. While the word “zombie” has a negative connotation to it, it does attest to TC Energy’s commitment to getting the pipeline built. What TC Energy must now attest to is its commitment to reduce pipeline leaks – to show that the newest refining technology won’t give opponents further ammunition.
The Keystone XL pipeline won’t be the last pipeline to face opposition, but it is the first major infrastructure of its kind to be met by an economic crisis of global proportions. The developer of the pipeline has an opportunity to strike while the iron is hot and demonstrate its potential contribution to the economy of Central U.S. and Western Canada, and its potential role in providing market access to oil producers in these areas once the demand for energy rebounds. Now is the time to step up its PR game, primarily by educating the American public on its potential ability to help spark and even prolongate an economic recovery.
About the Author:
Anthony Ladipo is a project engineer who has worked in Alberta and in the U.S. on pipeline operations, engineering and construction for 12 years. He has a strong appreciation for the industry and the benefits it provides to the communities where pipelines operate. For further information, please send email to Anthony.ladipo@gmail.com.
