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| Keystone XL Pipeline: A New Opening, but What Lies Ahead? | Keystone XL Pipeline: A New Opening, but What Lies Ahead? |
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| In his first days in office, President Trump reversed the government’s position on a highly contentious energy project, reviving the Keystone XL, a pipeline that would link oil producers in Canada and North Dakota with refiners and export terminals on the Gulf Coast. | In his first days in office, President Trump reversed the government’s position on a highly contentious energy project, reviving the Keystone XL, a pipeline that would link oil producers in Canada and North Dakota with refiners and export terminals on the Gulf Coast. |
| The pipeline has long been at the center of a struggle pitting environmentalists against advocates of energy independence and economic growth. President Barack Obama rejected the project in late 2015, saying it would be antithetical to the United States’ leadership in curbing reliance on carbon fuels. | The pipeline has long been at the center of a struggle pitting environmentalists against advocates of energy independence and economic growth. President Barack Obama rejected the project in late 2015, saying it would be antithetical to the United States’ leadership in curbing reliance on carbon fuels. |
| But even with an opening for the pipeline to go forward, the energy markets are starkly different from what they were eight years ago, when the Obama administration began considering the pipeline. | But even with an opening for the pipeline to go forward, the energy markets are starkly different from what they were eight years ago, when the Obama administration began considering the pipeline. |
| When the project was conceived, the United States was struggling to lift domestic oil supplies and push down prices. The Keystone XL project was meant to supplement existing pipelines and increase Canada’s export potential. Since then, production has rebounded in the United States, and international oil markets are dealing with oversupply. Gasoline at the pump is cheap. | When the project was conceived, the United States was struggling to lift domestic oil supplies and push down prices. The Keystone XL project was meant to supplement existing pipelines and increase Canada’s export potential. Since then, production has rebounded in the United States, and international oil markets are dealing with oversupply. Gasoline at the pump is cheap. |
| As has been the case throughout the project’s history, however, economic forces alone will not determine its prospects. Political, commercial, environmental and even diplomatic factors will also play a role. | As has been the case throughout the project’s history, however, economic forces alone will not determine its prospects. Political, commercial, environmental and even diplomatic factors will also play a role. |
| The Keystone XL was originally planned to open in 2012. It was designed to send up to 830,000 barrels a day of Canadian and North Dakota crude to Steele City, Neb., where it would connect with an existing network to deliver the crude to refineries on the Gulf of Mexico. With domestic supplies already abundant, most of the refined oil would probably be sent on to other countries. It might also make some American oil available for export. | The Keystone XL was originally planned to open in 2012. It was designed to send up to 830,000 barrels a day of Canadian and North Dakota crude to Steele City, Neb., where it would connect with an existing network to deliver the crude to refineries on the Gulf of Mexico. With domestic supplies already abundant, most of the refined oil would probably be sent on to other countries. It might also make some American oil available for export. |
| The project would yield thousands of construction jobs — accounting for the support of several powerful unions — and a demand for equipment, lodging and food. But it would produce few permanent jobs and would add only modestly to the United States’ energy security. | The project would yield thousands of construction jobs — accounting for the support of several powerful unions — and a demand for equipment, lodging and food. But it would produce few permanent jobs and would add only modestly to the United States’ energy security. |
| The pipeline is a major symbol in the fight over how to control climate change. Environmentalists say it could leak and damage local water supplies, and they contend that the project would expand the extraction of oil sands, a heavy oil that has a relatively high carbon footprint because it requires extensive, energy-intensive processing and refining. | The pipeline is a major symbol in the fight over how to control climate change. Environmentalists say it could leak and damage local water supplies, and they contend that the project would expand the extraction of oil sands, a heavy oil that has a relatively high carbon footprint because it requires extensive, energy-intensive processing and refining. |
| Proponents argue that pipelines offer safer transport than trains or trucks, and that the carbon intensity of oil sands products is similar to several grades of crude currently refined in the United States, including oil extracted in California. | Proponents argue that pipelines offer safer transport than trains or trucks, and that the carbon intensity of oil sands products is similar to several grades of crude currently refined in the United States, including oil extracted in California. |
| Energy experts say the pipeline would help Canada, a close ally, and oil companies that have large investments in the Canadian oil sands fields. Investments have been slowing because of low global prices and limited links to energy-thirsty consumers in Asia. | Energy experts say the pipeline would help Canada, a close ally, and oil companies that have large investments in the Canadian oil sands fields. Investments have been slowing because of low global prices and limited links to energy-thirsty consumers in Asia. |
| Globally, more Canadian supplies would be superfluous. In 2016, liquid fuel inventories expanded around the world for the third year in a row. The pace of inventory expansion is expected to decline this year now that Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries are cutting production. But the United States Department of Energy projects that oil prices will remain below $60 a barrel through the end of 2018, a far cry from the prices of $100 to $140 a barrel when the Keystone XL was first proposed. | Globally, more Canadian supplies would be superfluous. In 2016, liquid fuel inventories expanded around the world for the third year in a row. The pace of inventory expansion is expected to decline this year now that Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries are cutting production. But the United States Department of Energy projects that oil prices will remain below $60 a barrel through the end of 2018, a far cry from the prices of $100 to $140 a barrel when the Keystone XL was first proposed. |
| And the project puts Prime Minister Justin Trudeau of Canada in a tricky position. He supports the pipeline and the oil sands, citing their economic importance to Canada. But any increase in oil sands production because of Keystone XL could undermine the country’s plans for cutting greenhouse gas emissions, a key item in Mr. Trudeau’s political program. | And the project puts Prime Minister Justin Trudeau of Canada in a tricky position. He supports the pipeline and the oil sands, citing their economic importance to Canada. But any increase in oil sands production because of Keystone XL could undermine the country’s plans for cutting greenhouse gas emissions, a key item in Mr. Trudeau’s political program. |
| Record levels of investment are being sunk back into several shale fields in Texas, while a number of giant offshore projects in the Gulf of Mexico that were delayed by the 2010 BP oil spill are now finally coming to fruition. New oil discoveries in Texas and Alaska assure plentiful domestic supplies for years to come, enough to export increasing amounts. | Record levels of investment are being sunk back into several shale fields in Texas, while a number of giant offshore projects in the Gulf of Mexico that were delayed by the 2010 BP oil spill are now finally coming to fruition. New oil discoveries in Texas and Alaska assure plentiful domestic supplies for years to come, enough to export increasing amounts. |
| In the final three months of 2016, oil companies in the United States increased their output by 200,000 barrels, to 8.9 million barrels a day. As decommissioned rigs have returned to the fields in recent weeks, Wall Street analysts have projected a daily output of 9.7 million barrels by the end of the year. That will be roughly equal to national production levels before the industry swooned with the collapse of oil prices a little more than two years ago. | In the final three months of 2016, oil companies in the United States increased their output by 200,000 barrels, to 8.9 million barrels a day. As decommissioned rigs have returned to the fields in recent weeks, Wall Street analysts have projected a daily output of 9.7 million barrels by the end of the year. That will be roughly equal to national production levels before the industry swooned with the collapse of oil prices a little more than two years ago. |
| Proponents of the pipeline have long argued that Canada’s heavy oil is a perfect fit for Gulf of Mexico refineries that were designed to process Venezuela’s and Mexico’s heavy oil. But the refineries have now been partly refitted to process the lighter crude pouring out of the newly exploited shale fields. | |
| Advocates have also argued that dependence on Canada for energy is far more secure than reliance on countries like Venezuela and Saudi Arabia. | Advocates have also argued that dependence on Canada for energy is far more secure than reliance on countries like Venezuela and Saudi Arabia. |
| But in recent years, other friendly countries in the Western Hemisphere have become major producers, including Brazil and Colombia. The government in Argentina is opening up a giant shale field in Patagonia to Western investment, and Exxon Mobil and Hess are finding large new reserves off the coast of Guyana. And Mexico, after years of falling production, is putting in place a new energy policy that is attracting large investments by the biggest global oil companies, including Exxon Mobil and Chevron. | But in recent years, other friendly countries in the Western Hemisphere have become major producers, including Brazil and Colombia. The government in Argentina is opening up a giant shale field in Patagonia to Western investment, and Exxon Mobil and Hess are finding large new reserves off the coast of Guyana. And Mexico, after years of falling production, is putting in place a new energy policy that is attracting large investments by the biggest global oil companies, including Exxon Mobil and Chevron. |
| The pipeline still has a long way to go before it can be built. TransCanada, the Canadian pipeline company, must reapply for permits, and the State Department needs to study the application and approve it. | The pipeline still has a long way to go before it can be built. TransCanada, the Canadian pipeline company, must reapply for permits, and the State Department needs to study the application and approve it. |
| President Trump wants to renegotiate the pipeline deal on better terms for the United States — including the possibility of requiring American-made pipes — and TransCanada’s response remains uncertain. Any deal, however, will surely be challenged in the courts and by vigorous local civil disobedience. | President Trump wants to renegotiate the pipeline deal on better terms for the United States — including the possibility of requiring American-made pipes — and TransCanada’s response remains uncertain. Any deal, however, will surely be challenged in the courts and by vigorous local civil disobedience. |