Issues 2012: Could massive pipeline deliver on jobs? - - Jackson, MS

Issues 2012: Could massive pipeline deliver on jobs?

Updated: Jan 29, 2012 04:00 AM
President Barack Obama spoke about the country's decreasing reliance on foreign energy during his State of the Union address. But the Keystone XL pipeline has become a target for his critics. (Source: CNN) President Barack Obama spoke about the country's decreasing reliance on foreign energy during his State of the Union address. But the Keystone XL pipeline has become a target for his critics. (Source: CNN)

Editor's note: This is the first in a series examining the issues that will play a significant part in the 2012 presidential election. Periodically, we will take a closer look at these issues and present them in a way that will help you make an informed decision in November.

(RNN) – The Keystone XL oil pipeline has been batted about a lot lately by politicians - including the ones running for president - especially after President Barack Obama announced Jan. 18 he would not support it.

Those in favor of the $7 billion, 1,600-mile pipeline stretching from Canada to Texas claim it could provide thousands of jobs - anywhere from 20,000 to 500,000. Other estimates put job gains at more like 2,500 - or even at a net loss of jobs, depending on how you count them.

Detractors say more time is needed to look at the environmental impact of the massive project. Proponents say we need the jobs immediately.

For sure, the pipeline figures to be part of the discussion in the hundreds of campaign stops, fundraisers, rallies and debates yet to come.

Yet "figures" - or the lack of clarity thereof - seem to be the primary sticking point in allowing the public to arrive at an informed opinion on the subject.

What is Keystone XL?

It is an approximately 1,600 mile pipeline for the energy infrastructure company TransCanada that would run from Hardisty, Alberta, Canada across the border through Montana and South Dakota.

A TransCanada executive told CNBC the company's goal was to connect their oil reserves to the Texas Gulf Coast, the "largest refining center in the world."

The line would run to Steele City, NE, oil refineries. An additional line would be built from Cushing, OK, to the Gulf Coast, where additional refineries are located.

What it would not be is the only oil line running from Canada.

The Keystone (Phase I) line commenced operation in June 2010 and already runs from Alberta through, Saskatchewan, Manitoba, North and South Dakota to Steele City, according to TransCanada. From there, it turns east into Patoka and Wood River in Illinois.

Keystone Cushing (Phase II) connects the first line from Nebraska to Cushing and went into service in February 2011.

The "XL" parts of the project are Phase III and IV. Phase III would run 435 miles from Cushing to Gulf Coast refineries in Houston and Port Arthur, TX.

Phase IV would be a more direct route from Hardisty to Steele City (about 1,179 miles) stopping along the way in Baker, MT.

The lines already in place can transport 591,000 barrels of Canadian crude, including oil sands, per day. The $7 billion XL project would increase that to 1.3 million barrels.

How many jobs would it create?

This reports on this are extremely conflicting, with the most ambitious figures on either side taking a lot of latitude. Not surprising, the largest claims come from the project's biggest supporters and the smallest from the people and organizations against it.

The American Petroleum Institute, which represents the U.S. oil and natural gas industry, is responsible for the most generous claim of more than 500,000 jobs.

It claims the 20,000 jobs estimated by TransCanada, plus a half-million more jobs the project would "support the creation" of. The statement was not substantiated by any studies.

It was then amended, stating projects like Keystone AND additional investments "make it possible to realize an additional 500,000 U.S. jobs in 2035."

TransCanada's own estimation of 20,000 jobs - 13,000 temporary construction jobs and 7,000 manufacturing jobs - has been adjusted, too.

But the company counted construction employment in "job years," meaning they tallied a two-year job as two people, not one. Permanent jobs are estimated to be far fewer, somewhere in the hundreds.

A Cornell University study lowers the tally even further.

The study, done by the university's Global Labor Institute, said no more than 2,500-4,650 temporary construction jobs would be created. Also, the project total spent in the U.S. would reach, at most, $4 billion - not $7 billion.

Those who estimate a net loss in jobs say the project will have a negative impact on the "green" economy, according to the study, which could slow with more reliance on fossil fuels.

How would oil from Keystone XL affect the U.S.?

In the short term, it would have little to no effect on oil imports, according to a study commissioned by the U.S. Department of Energy.

The study, performed by Ensys Energy in December 2010, reported there was already more than enough pipe to ship Canadian crude to the U.S. It projected that if the maximum amount was brought in, XL would not be needed until after 2020.

However, the XL would increase the processing capacity of it in the Gulf Coast from 100,000 barrels to 2 million per day by 2030, and could allow for domestic oil transportation to the refineries.

In the long term, rising imports from Canada, along with a projected decrease in demand, would reduce foreign oil dependence from the Middle East and other places, according to the study.

In terms of environmental impact, the National Resources Defense Council and other conservation groups have been firmly against the pipeline.

Information on the council's website states tar sands oil generates three times the amount of global warming pollution compared to conventional production. It also states "leaks and spills threaten rivers, aquifers and communities all along the route."

The NRDC also points out the worst-case scenarios of the potential benefits. It states the oil would be diverted from the Midwest, which could increase fuel prices in the region, and be sent to the coast.

Some refineries there are in a foreign trade zone, where oil could be exported internationally and would not be taxed.

What is the status of Keystone XL?

The project required a Presidential Permit to proceed, pushing Obama to make a decision before the November election. It was rejected on Jan. 18, but the company can re-apply.

The U.S. State Department announced in November it wanted additional time to look at alternative pipeline routes that avoided the Nebraska Sand Hills.

The department stated the three-year review would likely have been completed by the first quarter of 2013.

But when Congress passed the temporary payroll tax cut bill in December, it attached a Feb. 21 deadline for a decision on Keystone XL.

Obama said he based his rejection on the U.S. State Department's opinion, and described the move by Republicans in Congress as a "rushed and arbitrary deadline."

The rejection allows for TransCanada to reapply, which the company's CEO said they planned to do. The State Department said it could not estimate how long the new application process would take, but they would be able to use the information already gathered.

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