The Keystone XL Pipeline is a proposed project of TransCanada Corp to move bitumen from the Alberta oil sands to refiners in the Texas Gulf area. Bitumen is the intermediate product (thick and gooey, extracted from the ground) that is delivered to refiners to become commercial grade fuels (diesel, gasoline, etc.) and other oil products. Of particular note is that the pipeline is big, targeting moving 800,000 barrels/day to refiners.
The pipeline has garnered much popular opposition among celebrities aligned with the environmental movement. The route goes through the US mid-west, a diverse and highly desirable landscape that is different in different areas. Whether the pipeline will be “safe” is one issue. For many protesters, though, the need for a pipeline is an indication of the “continuing US oil habit.” And Alberta oil sands to these people is “dirty,” meaning even its extraction and refinement contributes disproportionately to greenhouse gas emissions and other issues.
Toss into the mix the high profile publicity that pipeline breaks in the last 18 months have had, and opponents are galvanized.
Forces in favor of the pipeline cite energy needs (US current and forecast needs for oil), international political issues (their current sources of oil include some less-than-friendly nations) and economic ones (ideologically, the US Government would rather send cash to friendly countries for oil).
Put these two together, and TransCanada Corp is caught in an epic battle that lines up, what they see as logic vs. emotion. It’s logical that the US needs the oil, and it may be imperfect, but the US and the world still need it. Emotionally, it would be nice if the US used less oil, needed less oil, polluted less, and emitted less greenhouse gas. But that kind of change is slow.
The impact of the newly announced review is that it will permit President Obama to have a bullet-proof rationale for any decision he needs to announce. It also takes a politically hyper-sensitive decision and pushes it out in time.
This is political risk. For most energy investment decisions, the choice boils down to engineering calculations. While that matters here, at some level, if the forces in favour of the pipeline can’t find a way to convince people it will be a net good, then the likelihood that politicians will approve something that gets them voted out is unlikely.