Thursday, November 10, 2011

Keystone XL Pipeline: Unofficially Canceled

Officially, the announcements about the Keystone XL Pipeline project are noncommittal. The State Department’s Inspector General is looking into the serious irregularities in the overview of the project, which include public hearings run by lobbying firms instead of government officials. According to reports, the White House has decided to look into an alternate route for the pipeline that would have a reduced threat of environment damage, and that is expected to be announced to the public this afternoon.

Changing the pipeline route won’t change much, though. There are problems with the route, but the fundamental problems with the pipeline are economic. The oil fields in and near Alberta will deliver only a modest amount of oil, and at a higher cost of extraction than the world’s currently active oil fields. With those limitations, the Alberta-to-Texas route doesn’t much any sense, unless you’re the owner of a refinery in Texas. The project stands a better chance of financial success if the oil doesn’t have to be carried the length of the continent for refining. The oil could easily be refined and used entirely in western Canada and the adjacent border states of the United States.

The premise of the project, of a massive public effort on behalf of an ill-conceived project that will only benefit a few people in Texas, helped to inspire a large-scale protest action last weekend, in which protesters circled the White House while carrying a large balloon in the size and shape of the proposed pipeline. The Texas oil refineries’ hope of getting the project quietly approved have obviously failed. Realistically, the announcement of a delay can be understood as a way to quietly cancel the whole project after the 2012 U.S. elections.