The study’s major conclusion was that, throughout its life cycle, oil sands crude is, on average, more greenhouse gas intensive than the crude oil it would replace in the US. However, the relative greenhouse gas intensity varies depending on (1) study design factors, such as the reference crudes selected for comparison with Canadian oil sands crudes (e.g., 2005 US average crude oil, Venezuelan Bachaquero, Middle East Sour, and Mexican Heavy) and the timeframe selected, and (2) study assumptions, such as the extraction method and the mix of crudes that would be transported by the pipeline.

For example, the Department of Energy’s National Environmental Technology Lab (NETL) study indicated that the life-cycle greenhouse gas emissions of gasoline produced from Canadian oil sands crude are approximately 17 percent higher than gasoline from the 2005 average mix of crude oil consumed in the US. The NETL study serves as a key input for analyses conducted by EPA and DOE.

In comparison, a study conducted by TIAX, LLC, found that the greenhouse gas emissions from gasoline produced from Canadian oil sands crude are only 2 percent higher when compared to gasoline from Venezuelan heavy crude, a type of crude oil that is similar to the crude oil that would be transported by the proposed Project and is currently refined in large quantities by Gulf Coast refineries.

The proposed Project is not likely to impact the amount of crude oil produced from the oil sands. However, for illustrative purposes, the DOS commissioned study estimated that incremental lifecycle US greenhouse gas emissions from displacing reference crude oils with Canadian oil sands crude oils imported through the proposed Project would be between 3 and 21 million metric tons of carbon dioxide emissions annually. This range is equivalent to annual greenhouse gas emissions from the combustion of fuels in 588,000 to 4,061,000 passenger vehicles.

In addition, current projections suggest that the amount of energy required to extract all crude oils is projected to increase over time due to the need to extract oil from ever deeper reservoirs using more energy intensive techniques. However, while the greenhouse gas intensity of reference crude oils may trend upward, the projections for the greenhouse gas intensity of Canadian oil sands crude oils suggests that they may stay relatively constant.

Although there is some uncertainty in the trends for both reference crude oils and oil sands derived crude oils, on balance it appears that the gap in greenhouse gas intensity may decrease over time.

—FEIS

The pipeline. The proposed Keystone XL Project consists of a crude oil pipeline and related facilities that would primarily be used to transport Western Canadian Sedimentary Basin (WCSB) crude oil from an oil supply hub near Hardisty, Alberta, Canada to delivery points in Oklahoma and Texas. The proposed Project would also be capable of transporting US crude oil to those delivery points.

The US portion of the pipeline would begin near Morgan, Montana at the international border of the United States and extend to delivery points in Nederland and Moore Junction, Texas. There would also be a delivery point at Cushing, Oklahoma. These three delivery points would provide access to many other US pipeline systems and terminals, including pipelines to refineries in the US Gulf Coast region. Market conditions, noted the EIS, not the operator of the pipeline, would determine the refining locations of the crude oil.

The proposed Keystone XL Project would primarily transport crude oil extracted from the oil sands areas in Alberta, Canada. Oil sands comprise clay, sand, water, and bitumen. Bitumen is treated in several ways to create crude oil suitable for transport by pipeline and refining. The types of Canadian crude oil that would be transported by Keystone XL would primarily consist of synthetic crude oil and diluted bitumen.

• Synthetic crude oil, similar to conventional crude oil, is created by upgrading bitumen (conversion into lighter hydrocarbons).

• For pipeline transport, bitumen is diluted to reduce its viscosity by mixing it with a diluent, a light hydrocarbon liquid such as natural gas condensate or refinery naphtha. Dilbit is also processed to remove sand, water, and other impurities. The diluents in dilbit are integrally combined with the bitumen to form a crude oil that is a homogenous mixture that does not physically separate when released.

Both synthetic crude oil and dilbit are similar in composition and quality to the crude oils currently transported in pipelines in the US and being refined in Gulf Coast refineries, the EIS notes. The FEIS notes that the US refineries that are likely to receive oil transported by the pipeline are already configured to process heavy crude oil, and in the future would seek to continue processing heavy crude oil whether or not the proposed pipeline is constructed. The analysis in the EIS, including a DOE-commissioned study, indicates that Keystone XL would not likely affect the overall quality or quantity of crude oil refined in the Gulf Coast region, and, as a result, would not likely effect refinery emissions.

Project rationale. The FEIS defined the primary purpose of Keystone XL as providing the infrastructure necessary to transport WCSB heavy crude oil from the US border with Canada to delivery points in Texas in response to the market demand of Gulf Coast refineries for heavy crude oil. This market demand, said the FEIS, is driven by the need of the refiners to replace declining feed stocks of heavy crude oil obtained from other foreign sources with crude oil from a more stable and reliable source.

An additional purpose of Keystone XL is to transport Canadian heavy crude oil to the proposed Cushing tank farm in response to the market demand of refineries in the central and Midwest US for heavy crude oil.

The 58 refineries in the Gulf Coast District provide a total refining capacity of approximately 8.4 million bpd, or nearly half of U.S. refining capacity. These refineries provide substantial volumes of refined petroleum product, such as gasoline and jet fuel, via pipeline to the Gulf Coast region as well as the East Coast and the Midwest.

In 2009, Gulf Coast refineries imported approximately 5.1 million bpd of crude oil from more than 40 countries. The top four suppliers were Mexico, Venezuela, Saudi Arabia, and Nigeria. Of the total volume imported, approximately 2.9 million bpd was heavy crude oil similar to the crude oil that would be transported by the proposed Project; Mexico and Venezuela were the major suppliers. However, imports of heavy crude oil from these two countries have been in steady decline while Gulf Coast refining capacity is projected to grow by at least 500,000 bpd by 2020, with or without the proposed Project.

—FEIS

Alternatives. The FEIS considered three major alternatives to Keystone XL:

• No Action: i.e., the potential scenarios that could occur if Keystone XL were not built and operated;

• System Alternatives: the use of other pipeline systems or other methods of providing Canadian crude oil to the Cushing tank farm and the Gulf Coast market; and

• Major Route Alternatives: other potential pipeline routes for transporting heavy crude oil from the U.S./Canada border to Cushing, Oklahoma and the Gulf Coast market.

No Action. The FEIS noted that here is an existing market demand for heavy crude oil in the Gulf Coast area, and that this demand is projected to increase and refinery runs are projected to grow over the next 10 years, even under a low demand outlook. A report commissioned by the Department of Energy (DOE) indicated that there would unlikely be an impact on demand for heavy crude if Keystone XL were not built.

Even if improved fuel efficiency and broader adoption of alternative fuels reduced overall demand for oil, demand for Canadian heavy crude oil at Gulf Coast refineries would not be substantially affected. At the same time, three of the four countries that are major crude oil suppliers to Gulf Coast refineries currently face declining or uncertain production horizons. As a result, those refineries are expected to obtain increased volumes of heavy crude oil from alternative sources in both the near term and further into the future. Implementation of the No Action Alternative would not meet this need.

If the proposed Project is not built and operated, Gulf Coast refineries could obtain Canadian crude oil transported through other new pipelines or by rail or truck transport. Other pipeline projects have been proposed to transport Canadian crude oil to the Gulf Coast area, and both rail transport and barge transport could be used to meet a portion of the need. In addition, the Gulf Coast refineries could obtain crude oil transported by marine tanker from areas outside of North America. Many of the sources outside of North America are in regions that are experiencing declining production or are not secure and reliable sources of crude oil, including the Middle East, Africa, Mexico, and South America.

As a result of these considerations, DOS does not regard the No Action Alternative to be preferable to the proposed Project.

—FEIS

System Alternatives. System alternatives would use combinations of existing or expanded pipeline systems, pipeline systems that have been proposed or announced, and non-pipeline systems such as tank trucks, railroad tank cars, and barges and marine tankers to transport Canadian heavy crude oil to Gulf Coast refineries. However, the report noted, none of the pipeline systems considered would be capable of transporting Canadian crude oil to Gulf Coast delivery points in the volumes required to meet Keystone’s commitments for transporting 380,000 bpd to delivery points in Texas.

While a combination of the pipeline systems considered could, over time, deliver volumes of Canadian oil sands crude oil in volumes similar to the volumes that would be transported by the proposed Project, that would not meet the near-term need for heavy crude oil at the Gulf Coast refineries, the FEIS concluded.

As a result of these and other similar and related consideration, the FEIS considered system alternatives either not reasonable or not environmentally preferable.

Major Route Alternatives. The FEIS considered 14 major route alternatives, but eliminated them from further consideration after analysis.

Next. The Department of State now begins a 90-day consultation period with eight cooperating federal agencies before making a decision on the Presidential Permit that would be required to allow the project to proceed. During late September and early October, the Department also will host a series of nine public meetings around the United States to give individuals an opportunity to voice their views on whether granting or denying a Presidential Permit for the pipeline would be in the national interest.

(Some 2,000 protestors seeking to prevent the pipeline from being built are providing their input early in the form of several weeks of civil disobedience in front of the White House.)

The overall proposed Keystone XL Project is estimated to cost $7 billion. If permitted, it would begin operation in 2013, with the actual date dependant on the necessary permits, approvals, and authorizations.

Resources

• US Department of State Keystone XL Pipeline Project website with full FEIS

• Life-Cycle Greenhouse Gas Emissions of Petroleum Products from WCSB Oil Sands Crudes Compared with Reference Crudes (FEIS Appendix V, Supplemental Data Responses and Technical Reports)