What Keystone XL would carry. The pipeline would primarily transport crude oil from the WCSB and Bakken regions. The majority of the WCSB oil is considered a heavy crude oil, while Bakken crude is considered a light crude oil.

Gulf Coast area refineries are designed to process a mixture of heavy and light crudes; the refineries in that region possess one of the highest concentrations of heavy-crude refining capacity of any area in the world, according to the SEIS. Gulf Coast refiners use both domestic crude oil produced in the United States, and crude oil imported from foreign countries to create various petroleum products.

The crude oil from the WCSB is produced as raw bitumen, a viscous material that has the consistency of soft asphalt. Due to its viscosity, bitumen cannot be transported by pipeline on its own, but must be mixed with a petroleum-based diluent, such as naphtha or natural gas condensate, to make a less viscous liquid called dilbit; or it must be upgraded to a medium weight crude oil called “synthetic crude oil”. If diluents are not available, producers use synthetic crude oil as the diluent to create a product called synbit. (Earlier post.) Keystone XL is expected to carry predominantly either dilbit, synbit, or both, as well as synthetic crude oil and light crude oil produced from the Bakken.

Greenhouse gas LCA analysis. The DOS team compared life-cycle greenhouse gas emissions of petroleum products from WCSB oil sands crudes with reference crudes, using a number of life-cycle analysis (LCA) studies as input. Despite the wide variation in design, inputs, and assumptions within the LCA studies reviewed, the DOS SEIS identified several key findings, “clearly supported by the LCA results”:

1. % change in near-term WTW weighted-average GHG emissions from the mix of WCSB oil sands crudes that may be transported in the pipeline relative to reference crudes. Source: Draft SEIS. Click to enlarge.

   The WCSB crudes that would likely be transported through Keystone XL, are on average more GHG-intensive per MJ of produced gasoline than the current crudes they would displace in the United States—between 2% to 19%, depending on the study and the type of crude used as a reference.

   The difference between WCSB oil sands and heavy Mexican and Venezuelan crudes is narrower than lighter crudes, such as Middle Eastern Sour. Thus, the SEIS concludes, the life-cycle carbon footprint for transportation fuels produced in US refineries would increase if the Keystone XL project were approved.

2. The full range of incremental GHG emissions associated with the more carbon-intensive WCSB oil sands that would be transported through the pipeline across the analyzed reference crudes (which could be displaced at the Gulf Coast refineries) is estimated in the range of 3.3 to 20.8 MMTCO₂e annually.

   Should the Keystone XL project be denied, WCSB oil sands production could decline by 0.4 to 0.6% (approximately 20,000 to 30,000 bpd) by 2030. Should both Keystone XL and all other proposed pipeline projects not be built, a 2 to 4% (approximately 90,000 to 210,000 bpd) decrease in WCSB oil sands production could occur by 2030.

   The incremental indirect life-cycle emissions associated with those decreases in oil sands production are estimated to be in the range of 0.07 to 0.83 million metric tons CO₂ equivalent (MMTCO₂e) annually if the pipeline were not built, and in the range of 0.35 to 5.3 MMTCO₂e annually if all pipeline projects were denied.

3. A large source of variance for a given crude across the studies is the treatment of lower-value products such as petroleum coke, electricity exports from cogeneration, and secondary carbon effects such as land-use change and capital equipment.

   The issue of petroleum coke is not a standalone issue for the WCSB oil sands, the report notes; it is also a LCA consideration for the heavy conventional crudes. The petroleum coke-associated GHG emissions from oil sands should fundamentally be similar to some heavy reference crudes.

4. Upgrading bitumen to allow its flow through a pipeline shifts a portion of the GHG emissions from refining to further upstream in the life cycle, i.e., just prior to crude transport. Upgrading bitumen into SCO removes the light ends and heavy residuum ahead of transport to the refinery.

   As a result, a barrel of SCO will produce a greater quantity of premium products than a barrel of full-range reference crudes that have not been upgraded.

   A barrel of dilbit contains 30% diluents (that do not make significant contribution to gasoline) and 70% bitumen (with a high fraction of residuum, requiring a higher amount of energy-intensive coking to make gasoline and distillate fuels along with a higher fraction of petroleum coke than light crudes). Studies that do not account for the reduction in refinery energy use for SCO will overestimate the GHG emissions from SCO relative to other crude sources.

5. The relative GHG-intensity of both reference crudes and oil sands-derived crudes will change differently over time. Conventional (deep) crude reservoirs require higher energy intensive secondary and tertiary production techniques as the reservoirs deplete and as water cut of the produced reservoir fluids increases, and even the best recovery techniques capture less than 50% of the original oil in place. Oil sands surface mining, given the vast aerial extent of the WCSB and that mining recovers 100% of the crude oil in place, is expected to have a relatively constant energy intensity long into the future.

6. The largest share of GHG emissions from the fuel life-cycle—some 70 to 80%—occurs from combustion of the fuel itself, regardless of the study design and input assumptions (i.e, tank-to-wheels, TTW). When well-to-tank (WTT) emissions and combustion emissions are evaluated together, the percentage change in WTW GHG emissions are much smaller than on a WTT basis.

While there was large agreement on the points above among the different studies reviewed, there remain a number of uncertainties, according to the SEIS:

1. It is not clear whether WCSB oil sands-derived crudes are currently more GHG-intensive than other heavy crudes or crudes with high flaring rates. The life-cycle GHG emissions of WCSB oil sands crudes can fall within the same range as heavier crudes such as heavy Venezuelan crude oil and California heavy oil, and lighter crudes that are produced from operations that flare most of the associated gas (e.g., Nigerian light crude).

2. There is no common set of LCA boundaries or metrics for comparing WTW GHG emissions across different fuels and crudes.

3. It is not clear how changes in technology will affect the relative GHG-intensity of reference crudes and WCSB oil sands-derived crudes, but it is believed the gap between these crudes is more likely to narrow than widen.

   ...the GHG intensity of reference crudes may increase in the future as more of the world crude supply requires extraction by increasingly energy intensive tertiary and enhanced oil recovery techniques, although the latter can be in part act as a sequestration method. The energy intensity of surface-mined Canadian crudes would likely be relatively constant while higher energy intensive in situ production may increase somewhat; the proportion of in situ extraction is forecast to increase relative to the less energy-intensive surface mining. Although there is some uncertainty in the trends for both reference crudes and oil sands derived crude oils, on balance the gap in GHG intensity is likely to decrease over time.

   —Draft SEIS

4. The oil sands’ GHG results do not necessarily represent the average or actual oil sands composition (i.e., the types and shares of oil sands-derived crudes) that would flow through the proposed pipeline.

Market analysis. The SEIS notes that while increasing domestic production of crude oil and decreasing demand for liquid transportation fuels will likely reduce the demand for total US crude oil imports, it is unlikely to reduce demand for heavy sour crude at Gulf Coast refineries.

Further, the new SEIS references the earlier 2011 Final EIS to suggest that the midstream industry is capable of developing alternative capacity to move WCSB and Bakken and Midcontinent crudes to markets in the event Keystone XL is not built. These avenues include alternative pipeline capacity to support Western Canadian, Bakken, and Midcontinent crude oil movements to the Gulf Coast as well as rail to transport large volumes of crude oil to East, West, and Gulf Coast markets.

In addition, the SEIS suggests, projected crude oil prices are sufficient to support production of essentially all Western Canadian (and US tight oil) crude oil projects, even with more expensive transport options to market. The new SEIS concurs with the earlier version that rail and supporting non-pipeline modes should be capable of providing the capacity needed to transport all incremental Western Canadian and Bakken crude oil production to markets if there were no additional pipeline projects approved.

Approval or denial of any one crude oil transport project, including the proposed Project, remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the US...Fundamental changes to the world crude oil market, and/or far reaching actions than are evaluated in this Supplemental EIS, would be required to significantly impact the rate of production in the oil sands.

—Draft SEIS

Background. For proposed petroleum pipelines that cross international borders of the United States, the President, through Executive Order 13337, directs the Secretary of State to decide whether a project is in the “national interest” before granting a Presidential Permit. The national interest determination by DOS involves consideration of many factors, including energy security; environmental, cultural, and economic impacts; foreign policy; and compliance with relevant federal regulations.

TransCanada submitted a new application for the Keystone XL Project on 4 May 2012. The proposed Keystone XL project consists of a 36-inch, 875-mile (1,408-kilometer) long pipeline and related facilities to transport up to 830,000 barrels per day (bpd) of crude oil from the WCSB and the Bakken Shale Formation in Montana. The pipeline would cross the US border near Morgan, Montana and continue through Montana, South Dakota, and Nebraska where it would connect to existing pipeline facilities near Steele City, Nebraska for onward delivery to Cushing, Oklahoma and the Texas Gulf Coast region.

A previous application from TransCanada for a Keystone XL project (2008 application) was for a pipeline that would have been more than 1.5 times the length of the current proposal (1,384 miles), with nearly identical routes in Montana and South Dakota. The Final Environmental Impact Statement for that proposal was issued by the Department on August 26, 2011 (2011 FEIS). President Obama declined to issue a Presidential Permit for the pipeline based on the 2008 application, although he said that his decision was “not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people.” (Earlier post.)

TransCanada is building a separate pipeline through Oklahoma and Texas that terminates in the Texas Gulf Coast region (the Gulf Coast Project) that follows the southern portion of its previous application. The Gulf Coast Project does not require a Presidential Permit because it does not cross an international border.

The pending application proposes a new route through Nebraska. Specifically, the new proposed route is 509 miles shorter than the previously proposed route; however, it would be approximately 21 miles longer in Nebraska to avoid sensitive areas including the Nebraska Department of Environmental Quality (Nebraska DEQ)-identified Sand Hills Region. Thus, the newly proposed route is substantially different from the previous route analyzed in August 2011 in two significant ways: it avoids the NDEQ-identified Sand Hills Region and it terminates at Steele City, Nebraska.

As part of its review of the 2008 application, the DOS determined in November 2011 that environmental concerns, including those raised by the State of Nebraska, required additional information to ensure complete and transparent evaluation of alternative routes, specifically within Nebraska, that would avoid the Sand Hills. Congress subsequently included a provision in the Temporary Payroll Tax Cut Continuation Act that sought to require a decision on the Permit within 60 days. That deadline did not allow sufficient time to prepare a thorough, rigorous and transparent review of an alternative route through Nebraska. As such, the Presidential Permit was denied.

DOS is currently reviewing an application submitted by TransCanada in May 2012. This Draft SEIS presents an impact assessment that, where appropriate, draws upon the analysis released in August 2011 for the 2008 application. The Draft SEIS analyzes the newly proposed route, and presents expanded and updated information, especially with regard to the revised proposed route through Nebraska, as well as significant new circumstances or information that is now available for the entire route.

Following the receipt and publication of the May 2012 application, the Department asked for public comment on the scope of the Draft SEIS. These comments, as well as comments from other government agencies, were taken into consideration within the Draft SEIS.

The Department and the Nebraska DEQ signed a Memorandum of Understanding in May 2012 to ensure coordination of the State and Federal review efforts. The State of Nebraska released its review of the proposed route, based on their law, in December 2012. The Governor of Nebraska approved the new route through Nebraska in January 2013. The Department runs a complementary process on the entire route that is broader in scope and consistent with NEPA.

A 45-day public comment period will begin when EPA posts the Draft SEIS on its website, a process that generally takes about one week following the submission of the document to that agency, which occurred on 1 March. After the end of the public comment period, the Department will consider comments received and prepare a Final SEIS.

The National Interest Determination period will begin following the release of the Final SEIS, during which time the Department will obtain the views of other agencies about whether to grant or deny the permit.

Resources

• Draft SEIS