The Keystone XL Pipeline: Relevance in the Face of U.S. Oil Production Growth

With the expansion of U.S. oil production, the relevance of the Keystone XL pipeline has been a subject of much debate. The pipeline, originally designed to transport oil from Alberta to Texas refineries, no longer holds the same significance it once did. This article delves into why the Keystone XL pipeline is no longer necessary, despite the increasing domestic production of oil in the United States.

U.S. Oil Production vs. Canadian Oil Production

It is essential to clarify that the increase in U.S. oil production does not inherently necessitate the existence of the Keystone XL pipeline. Keystone XL was primarily intended to transport heavy crude oil from Canada's tar sands to U.S. Gulf Coast refineries. However, the increased U.S. production of oil does not mean that there is a need to import additional crude from countries like Venezuela, which has a different type of crude and is heavy in API.

U.S. Gulf Coast refineries are specifically designed to process heavy crude oil, such as that from the Canadian tar sands. The abundance of domestic oil production makes the import of oil from abroad less necessary. Therefore, the primary reason for the Keystone XL pipeline—providing an alternative to imported crude—no longer holds weight.

Is There Still a Need for the Keystone XL Pipeline?

The answer is unequivocally no. The Keystone XL pipeline was never intended to significantly impact the domestic oil production of the United States. In fact, the existing infrastructure has managed to transport the necessary oil to U.S. refineries since 2010. TransCanada, the original company responsible for the pipeline, has sold its assets and permanently cancelled any plans to build it further.

A judge in the Southern District of Texas has affirmed that ‘no President would ever be able to issue another permit for the Keystone XL project—because it ‘no longer exists.’’ This decision underscores the reality that the pipeline is no longer a viable or necessary component of the U.S. oil transportation infrastructure.

Global Context and Other Pipelines

Despite the growing global boycott of Russian oil, the revival of the Keystone XL pipeline is unlikely. The company responsible, TC Energy (formerly TransCanada), has already sold its assets and walked away from the project. The economic and environmental implications of a pipeline designed to transport heavy crude oil to Texas, ultimately for processing and exporting as bunker fuel, do not align with current global trends.

Furthermore, the pipeline was intended to transport oil from Alberta to Texas, but it now seems that this crude will be sold in British Columbia, Canada, where it will be refined and exported without the need for the Canadian-U.S. pipeline. This shift in export strategy further diminishes the need for the Keystone XL pipeline.

Understanding the Term "Oil"

A common misconception revolves around the term "oil." In reality, "oil" encompasses a variety of products, including heavy crude oil and natural gas liquids. The Keystone XL pipeline specifically deals with heavy oil, also known as bitumen, which is a form of liquid coal. It is not suitable for direct use in gas tanks and is considered a highly polluting petroleum product.

Since Canada permanently suspended the Keystone XL project in June 2021, the pipeline has little relevance to current U.S. oil production dynamics. Although some infrastructure was completed, the broader context indicates that the oil produced in Canada will be sold and processed in different regions, reducing the need for the Keystone XL pipeline.

Therefore, it is crucial to recognize that the Keystone XL pipeline is no longer a practical or necessary solution for U.S. oil transportation, given the existing domestic production capabilities and new export strategies.