Canadian Oil Pipeline Plan Meets Resistance

Shawn McCarthy, reporter, The Globe And Mail (Toronto)
Cindy Schild, refining issues manager, American Petroleum Institute
Danielle Droitsch, senior adviser, Natural Resources Defense Council

The Canadian oil company TransCanada plans to expand a pipeline to transport crude oil from Alberta to Texas through the central U.S. The proposal has sparked debate on both sides of the border about energy security, the environment and safety.

Copyright © 2011 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

NEAL CONAN, host: This is TALK OF THE NATION. I'm Neal Conan, in Washington. Every day, for the past couple of weeks, a small group of demonstrators has gathered outside the White House to protest the Keystone XL Pipeline. A company called TransCanada proposes to ship oil from the tar sands of Alberta to refineries on the Texas Gulf Coast.

Critics object that the project would damage the environment every step along the way and perpetuate dependence on fossil fuels. Proponents argue that the pipeline will generate tens of thousands of jobs and improve national security. Yes, it's still foreign oil, but Canada is hardly Venezuela or Saudi Arabia.

Arguments on both sides in a bit. We'd also like to hear from you: How do you balance environmental and economic concerns? Our phone number is 800-989-8255. Email: talk@npr.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.

Later in the program, what we can learn from the stranger in our freshman dorm room. But first, the controversy over the Keystone XL Pipeline. We begin with Shawn McCarthy, a reporter with the Globe and Mail in Canada. He joins us from the CBC studios in Ottawa.

And thanks very much for being with us today.

SHAWN MCCARTHY: Hi, Neal.

CONAN: And it's clear that there's obviously enormous demand for this oil. As I understand it, it's not a question of whether it's going to be extracted and shipped, but rather where it's going to be shipped.

MCCARTHY: Well, that's what the producers and the proponents of the pipeline would largely like you to believe. There is a view, however, that if you don't build the pipelines, people aren't going to be able to get the oil out, and it will get shut in. And that's really the point that the environmental community is trying to push long-term. They would like to see it not get produced and not shipped anywhere, let alone to the U.S. Gulf Coast.

CONAN: And some that would say if it's not going to be shipped to the - if the Americans don't want it, we'll ship it to - we'll build a pipeline to Vancouver and send it to the Japanese and Chinese.

MCCARTHY: That's right. There are a couple proposals on the books right now that would ship large volumes to the West Coast for export to Asia. Those proposals face their own hurdles, their - a lot of opposition, especially among native communities and environmentalists who worry about tanker traffic along the islands of British Columbia.

CONAN: Take us to the origins of this. These are Athabascan tar sands. What is that area like?

MCCARTHY: It's muskeg, essentially. It's northern boreal forests. The tar sands are oil that's trapped. It's really called bitumen. It's oil that's trapped in sand and rock. It's very low-grade oil. It's - originally, it was extracted by mining. Huge - you'll see pictures of trucks that are the sizes of a house that are used in mining it. Now there are new techniques that inject steam to remove the oil from ground, from the rock and sand, and withdraw it that way.

In both cases, it's very energy-intensive to withdraw the oil, to extract it. But it still makes sense from a commercial point of view, especially at today's oil prices, to do that.

CONAN: And there's an awful lot of it.

MCCARTHY: There's a tremendous amount of it. Canada now has - well, it was the second-largest reserves of oil in the world, after Saudi Arabia. But recently, Venezuela, which also has huge deposits of similar type of bitumen oil, had that registered as reserve. So I think Canada is now registered number three, but huge, huge amounts of it. And it's - in some form or other, it exists around the world. And if it goes ahead, then people worry that that's the way we're going to be getting our oil in the future.

CONAN: And some say that this would be - I'm not sure apocalyptic is too strong a word for the sub-Arctic environment there.

MCCARTHY: Well, the on-the-ground impacts can be reduced and are being reduced. The mining is not as extensive in terms of future production as it was in past production. So, yes, it will have impact. It will clearly have impact. Apocalyptic might be too strong a phrase for it. Again, some of the native communities downstream are very worried about it. On the other hand, there are native communities up there that support it for the jobs that it creates. So all these things - in the same way that you led off the program with people on the one side and on the other, even in the local impacts, those exist.

The other big concern is, from a climate-change perspective, these are very - as I said, it requires a lot of energy to get the oil out of the ground and to process it into products that we use every day. And that increases green house gas emissions. And that is a big concern.

CONAN: And what does the Canadian government say?

MCCARTHY: The Canadian government says that the oil sands - or the tar sands, as the opponents prefer to call it - are really not that much worse than the oil that you're getting from Saudi Arabia or Venezuela, from the perspective of green house gas emissions, that getting it from Canada is preferable, both from environmental transparency, that we actually know what's happening up there, but also from a national security perspective. And the favorite phrase now from the energy industry is conflict oil, that you don't want to be buying oil from the Middle East, where there's conflict going on. And they're trying to clearly steal a page from the conflict diamonds movement that went on, and proposing that Canadian oil is better because it comes from a democratic, relatively peaceful country.

CONAN: There is, then, the argument about environmental damage along the way. This would cross several American states, as well as Canadian territory, as well, of course. Many...

MCCARTHY: That's right.

CONAN: ...rivers and - go across the Ogallala Aquifer, which is a main supply of water for many American states. We remember, earlier this year, an oil pipeline spilled into the Yellowstone River, with some difficult consequences there. Canada, of course, is already America's largest single foreign source of oil. What's the record on safety of pipelines?

MCCARTHY: It's spotty. I mean, there have been - there - you know, that the spill in the Yellowstone River, TransCanada's competitor Enbridge had a major spill in Michigan that required weeks to clean up, and it spilled into the river there. So, yes, there have been breaks. Even on the precursor to the Keystone XL Pipeline, the original Keystone line, there have been spills. The industry would argue that it's safer than tanker, that the accident rate is much lower than getting tankers to bring it in. It's - you're weighing the risk and reward, I suppose. There's always going to be, with a pipeline, a risk of spill.

The State Department, in its review of the environmental impacts that was released last week, suggested that the risks of spill can be greatly reduced by TransCanada adhering to a number of special conditions that were laid out, and that there will be very tight monitoring of it by the Department of Transport, which regulates the pipeline industry. But there's no question there's risk, and there's no question that the pipeline goes through some very fragile ecosystems and very important water resources that will only make the risk that much greater.

CONAN: So as the people in Canada look at this situation, this would obviously be of enormous benefit economically. Would you say opinion is pro or con?

MCCARTHY: I suppose the opinion is probably pro in Canada. It depends on where you are in Canada. Quebec and eastern Canada - and to some degree Ontario - is not as favorable towards the oil sands as clearly western Canada, which is more resource-heavy, used to the type of impacts that you get from mining and oil and gas extraction.

The government that recently was elected to a majority position in our parliament was clearly very much in favor of exploiting the oil sands and hasn't done much on the greenhouse gas emissions, and still they were elected with a majority in parliament. So I guess you'd have to say if Canadians are concerned about it, they don't vote that way.

CONAN: And where do we stand at the moment on whether the Obama administration is going to approve construction of this pipeline or not?

MCCARTHY: Well, the State Department, everybody believes, seems to be very much in favor of it. The environmentalists who have been lobbying so heavily are very concerned that - at the analysis that the State Department did on the environmental impacts and don't see the department as aggressive enough in questioning the value of it.

And they're hoping that within the debate within the Obama administration, cooler heads will prevail. The EPA has been very critical of previous efforts by the State Department to assess the environmental impacts, but the ball is in the court of the State Department, and there are broader issues that now come to - come into the equation, including national security and the jobs benefit of a major infrastructure project that's ready to go with no government funding. That will also be part of the equation.

I think the betting of most sort of industry analysts, political-risk-type people, is that this is something that's probably going to get approved.

CONAN: And is this a dispute between the EPA and the State Department. Is this a turf battle between you shouldn't be assessing the kind of risk, that's our job? Or is this over we really disagree with your analysis?

MCCARTHY: There are pretty substantive disagreements as to how State carried out its assessment. So, you know, there may be some turf battle there. It may be people in EPA don't think State has the wherewithal to do it. Criticism of some of the consultant reports that the State Department relied on to reach its conclusions or to draw out its analysis, the State Department argues that the analysis is neutral.

It doesn't say, you know, the impacts are so little that we should let it go. It just lays out the impacts, and that no decision has been made yet and won't be until the end of the 90-day comment period, which expires the end of November.

CONAN: Shawn McCarthy, thanks very much for your time today. Appreciate it.

MCCARTHY: All right. Thank you.

CONAN: Shawn McCarthy is a reporter with the Globe and Mail in Canada, and joined us from the CBC studios in Ottawa. We're talking about the costs and benefits of the planned Keystone XL oil pipeline. Up next, arguments on both sides. We'd also like to hear from you.

Given the prospect of thousands of jobs and the oil security that was mentioned, is this something that ought to go ahead? How do you balance that against the environmental risk, not just in Canada, but along the way to America's rivers and aquifers? Stay with us. I'm Neal Conan. It's the TALK OF THE NATION, from NPR News.

(SOUNDBITE OF MUSIC)

CONAN: This is TALK OF THE NATION, from NPR News. I'm Neal Conan. Customers are already lined up for much of the crude oil from the proposed Keystone XL pipeline. That's according to a spokesman for TransCanada, the company that wants to connect the tar sands around Alberta with the U.S. Gulf Coast.

The reality, he says, is the U.S. needs the oil the pipeline will carry. Others, including ranchers who live near the proposed pipeline, disagree. It risks spoiling the environment, they say, polluting water and adding to the U.S. dependence on foreign oil and perpetuating our dependence on fossil fuels.

How do you balance environmental and economic concerns? 800-989-8255. Email: talk@npr.org. You can also join the conversation on our website. Go to npr.org. Click on TALK OF THE NATION.

Joining us now, Cindy Schild, refining issues manager with the American Petroleum Institute. Her organization advocates for expansion of the Keystone Pipeline. She joins us from her office here in Washington. Nice to have you with us today.

CINDY SCHILD: Thanks for having me. Good afternoon.

CONAN: Good afternoon. And also with us, Danielle Droitsch, a senior adviser to the international program at the Natural Resources Defense Council. She's with us here in Studio 3A. Thanks very much for coming in.

DANIELLE DROITSCH: Thank you.

CONAN: Cindy Schild, let's start with you. Today, the governor of Nebraska, Dave Heineman, urged President Obama and Secretary of State Clinton to deny the federal permit to build this pipeline. He's not opposed to the pipeline, he said, but worried about the risk of the contamination of drinking water in his state, which includes the Ogallala Aquifer, which we mentioned earlier, that provides drinking water to several states.

We've seen pipelines can leak. Does the governor have a point?

SCHILD: Yeah, we saw his announcement today, and again, we certainly think that we have to look to the assessment, the thoroughness of the assessment. And everything that we have seen as far as results from this three-year review by the State Department led in conjunction with dozens of agencies from a local to state to federal level has shown that there's limited adverse impact.

And again, this is part of the environmental portion of the review, and there's been a thorough assessment. So at this point, we really need to be looking at the project from a national security element, and that's what the next phase is.

CONAN: Danielle Droitsch, there's a clear demand for crude oil in this country. Many, many people out of work would love to help build the XL Pipeline. Is there a way to balance those two interests?

DROITSCH: Well, Keystone XL is not in the national interest. No matter how you cut it, this pipeline is not - does not make any sense, whether you're looking at the environmental issues, you're looking at the economic issues, you're looking at the price of gas, even if you're looking at the energy security issues. It actually doesn't meet any of the national objectives that we have. And so as a result of that, this pipeline must be denied by the State Department.

CONAN: Well, go to the national security issue, which was just mentioned by Cindy Schild. We're going to buy it from Canada or from Saudi Arabia.

DROITSCH: Well, that's a bit of an arbitrary distinction because of the way oil markets work. I mean, in fact, one of the very interesting things that came out today, from an organization, Oil Change International, is that this oil is actually going to be exported to other countries.

Right now, what we're doing is we're creating a superhighway for tar sands that's going to cut right through America's heartland, straight to the Gulf Coast, which is an international market. And, in fact, this is really not in America's national interest or energy security. This is really about giving oil companies a very specific highway to give them access to higher profits in other countries.

CONAN: Cindy Schild?

SCHILD: Yeah, I mean, what we need to do then is talk about how oil markets work and what is in our national interest. And, you know, from one standpoint, oil is going to be a part of our energy future, whether you look at our domestic agencies' projections or international projections.

It is part of our energy equation. Other countries are looking out for their energy futures, and we need to do the same. We have the ability to import more oil from Canada, our number one trading partner and our number one source of imported oil.

We have the ability to do that today. We have the ability to put Americans to work today to build this pipeline. And when you talk about national energy security and what's in our interests and the report that came out today, you've also got to look at it and do an assessment.

And when you really look at it, and you look at another memo behind this, as well as if you look at the assessment, what's in the environmental impact statement from the State Department, it actually concludes - and I can read word for word - that the refiners will likely consume additional oil sands well in excess of what would be provided for by the XL Pipeline.

It also concludes that exports of the oil sands from Port Arthur are unlikely. So this whole argument about bringing this down from Canada just to push it off is absolutely absurd. If you want to bring it out to a pipeline, bring it to Seattle. Bring it to the west coast of Canada. You're not going to make these billion dollars worth of investments and go through a three-year just portion of environmental...

CONAN: Well, the difference, there's no refineries in Seattle, or not as many...

SCHILD: Oh, they're not even talking about that. They're talking about bringing it down and shipping it through. I mean, either way you look at it - and the way markets work, sure, there could be some diesel that goes out. We're a gasoline-based economy. But that's not the problem.

There's no way - I mean, they're building refineries in China, if you're really going to look at it. So they can get their oil from somewhere else. We need all forms of energy. We're going to need more oil. So either way you look at it, we're getting our oil from somewhere.

CONAN: Let's see if we can get some callers in on the conversation. Let's go with Joe(ph)), and Joe's with us from Rapid City in South Dakota.

JOE: Hello. Say, I was thinking that, you know, no matter - maybe I'm cynical, but that greed will always win out, you know, wanting this oil, because if they can justify nuclear power, which is toxic, has toxic leftovers for, like, a million years or something, that this will definitely win whether the environmental problems are there or not.

CONAN: And South Dakota would be along the route of this pipeline.

JOE: Yes, yes.

CONAN: But Joe, do you drive a car?

JOE: I didn't drive till I was 39.

CONAN: But, in any case, you do now.

JOE: I do now, because my knees are shot from riding bicycles till I'm 39.

(SOUNDBITE OF LAUGHTER)

CONAN: I feel your pain. But a lot of people like to drive their cars. They like a low price of gas. They would like this to go ahead.

JOE: Well, you know, you always have to put first your environmental, because if you pollute your air, your land and your water, you're just shooting yourself in the foot.

CONAN: All right. Joe, thanks very much for the call, appreciate it. This is a correction that we had from Jeremy in Lansing, Michigan: I live in Michigan. The spill - we mentioned earlier in the program - did not take weeks to clean up. It's still going on right now, over a year later. Please correct that. So thank you very much for that.

Let's see if we can go next to Scott, and Scott's with us from St. Louis.

SCOTT: Hi, thanks for taking my call.

CONAN: Sure.

SCOTT: I just wanted to say I was living in Troy, Missouri, at the time this particular project went in. There's a pipeline right away there. I'm a third-party objective viewer. I have no real opinion one way or the other. I just know what I saw.

Local landowners had their properties trenched through by the pipeline, a lot of farmland. You know, they would basically pay the landowners, the farmers, for the corn they wouldn't be able to grow. They put their pipeline in - and I guess they tear them out every 20 years because the life of the line, they don't want it corroding there and forming leaks.

But EPA was involved. Anyway, you talk to all the landowners, they were actually happy, because first of all, they got paid for corn without even having to grow it, and then they got a lump-sum payment. In some cases, you know, some of the landowners only had 300 acres, and they were getting over $50,000 every time the pipeline would come through.

One old man told me that he - every - they've been coming through every 20 years for a long time, and each time, he got a nice chunk of change. The EPA was involved. And what I saw was every time they came to a creek or a stream, they would bore underground. They would actually avoid disturbing the creek or the stream whatsoever.

And if you go back there today, because I've driven through, there's no trace that that thing was ever put in. You can't tell, except I guess every half a mile or something, you've got a little meter thing sticking up out of the ground that's, you know, a smaller diameter than a telephone pole.

CONAN: So your objective analysis, Scott, is that it's been a positive experience?

SCOTT: Yeah. I mean, perhaps somebody else from Troy is hearing this program and will call in, but based on what I saw, the only downside to it would be - you know, with trucking, you get regular, constant traffic, which, you know, is an economy, whereas this, the only economy was, you know, for the duration of the workers putting the line in.

But there was no - there was no environmental impact. You talk to people around there, I've got a lot of friends there. I've yet to talk to anybody that was unhappy about it because of the way they went about it.

Granted, other companies may not go about it as well as this particular company did, and you can have mistakes. But when it's done right, it's done right, and the environment's not disturbed, from what I saw.

CONAN: Well, let's put that to Danielle Droitch of the NRDC.

DROITSCH: Well, I do want to get to this really important question around the oil crisis. I mean, basically, we need this oil. There is actually a decline in gasoline demand right now. We have slow economic growth. We have higher fuel economy standards. In fact, we are reducing our actual demand for the oil itself. And so there is a manufactured oil crisis right now. We have tons of pipeline capacity in the Midwest right now. We do not need another pipeline. We already have tar sands pipelines coming in from Canada. And so the question is, do we need another pipeline? Well, the answer is no.

CONAN: This, though, from Les in Pinedale, Wyoming: We're bringing home wounded soldiers who "protected our strategic interest in the Middle East" - he put that in quotation marks. Canadian oil is a step in the right direction of extracting us from the stranglehold of the Middle East.

DROITSCH: And that is the - that is one of the key arguments that is being put forward by the oil companies and the government of Canada. We couldn't be any further away from - there's a distinction here. Our addiction to oil, any oil, is at the core of the problem for these conflicts. I mean, we do not want to be in any more conflicts, but it's not going to be transitioning our dependency on oil from the Middle East to Canada that's going to actually make any difference. We conduct...

CONAN: We're not transitioning to a hydrogen economy tomorrow. We're going to be using oil for - a lot of oil for a lot of time no matter what.

DROITSCH: Absolutely. But the question is: Do we need to build another tar sands pipeline to the United States? Already - Canada, we are importing more oil from Canada than any other country. We have two other tar sands pipelines. We have a glut of oil in the Midwest right now. We have extraordinary, massive pipeline capacity. There is no need for this pipeline right now.

CONAN: Cindy?

SCHILD: (unintelligible) if you look at what experts in the industry, experts in global economy, there is Daniel Yergin's group, IHS CERA, and they did a report, a special report to determine if there is a need for additional infrastructure. And they determined that there is. So, again, to refute the fact that we do not need infrastructure, we desperately need this infrastructure. They talk about the fact that U.S. pipeline infrastructure needs to catch up with changing supply trends and expanding supply, namely rising output from Canada as well as the (technical difficulties) output, as well as rapidly growing output from our own resources that we'll be able to develop in the Bakken and North Dakota and Montana.

It talks about expanding pipeline capacity from Canada to the U.S. Gulf Coast via this pipeline project; would provide more flexibility to the U.S. supply system than we have and it would enable us to catch up with these trends. So it's not just about what's in the Midwest. This pipeline will, by enabling us to be able to bring that supply, as you mentioned, from Canada, our number one source of imported oil to the Gulf Coast, which is our number one refining center, will also enable that flexibility so that we can get more fuel to our East Coast consumers and to our Midwest consumers when we need to.

CONAN: Cindy Schild of the American Petroleum Institute. Also with us is Danielle Droitsch of the Natural Resources Defense Council. You're listening to TALK OF THE NATION from NPR News. And let's go next to Bridgette(ph), Bridgette with us from Oakland.

BRIDGETTE: Yeah, hi. I'm just calling up in response to the question about choosing between the environment and the economy. It's been my experience and observation that when you choose the economy, you generally lose in the long run, because when you damage the environment through - damage due to oil - or sorry, to the soil, the air, the water, to clean those things up is very expensive. And then also, the effects on the health of the people is very expensive. And we all know that health care cost is a big topic. So, generally choosing the economy over the environment is not a smart plan in the long run.

CONAN: All right. Bridget, thanks very much for the call. Let's go next to - this is Susan, Susan with us from Portland.

SUSAN: Yeah. Can you hear me?

CONAN: You're on the air. Go ahead, please.

SUSAN: Yes. What I'm frustrated hearing is this sort of not-in-my-backyard attitude from the people who are against these pipeline. These are the same people who are opposed to wind power that's going to spoil their view from their summer homes. I am both an environmentalist and an energy investor. And I can tell you that the choices - either we do clean drilling or clean extraction in Canada and clean pipelines in North America - or what we're using is filthy, dirty, you know, no regulations, no EPA, no protection for anybody, you know, oil that comes out of Africa, oil that comes out of Middle East.

And the people who are opposed to this who go up and see little spots of oil here and there, you know, these tiny spills that are being cleaned up beautifully, you know, and they're complaining they haven't seen how dirty it gets in the rest of the world. They haven't seen how dirty it gets in Nigeria, places like this. And so what they're saying...

CONAN: And, Susan...

SUSAN: ...is I don't want my house dirty. I am willing to see these other people in the third world exposed to terrible, toxic situations as long as my backyard is clean.

CONAN: And that's, I guess, an extension, Danielle Droitsch, of the conflict oil issue.

DROITSCH: Well, it's really interesting that we brought this up because the reality is that this pipeline actually is fraught with real concerns. We're not talking about small spills here. Right now, the - there is a major Yellowstone spill as some of your listeners pointed out. There is actually also another listener point out the Kalamazoo River. There was a tar sands spill there. We are still cleaning up that. If you have a tar sands spill - and we would be looking at a spill 20 times bigger than what we saw in Yellowstone....

CONAN: With this pipeline, which is much bigger.

DROITSCH: With the Keystone XL tar sands pipeline. We would actually see a tremendous spill. And we actually have evidence to suggest that there would be a - potentially a much higher incidence - a risk of a spill from the tar sands pipeline than there would be from other pipelines because of that incidence. So we're not talking about small spills here. We're talking about a real concern, which is why the governor of Nebraska today said, I'm not convinced this is safe.

CONAN: And, Cindy Schild...

SCHILD: May I respond to that?

CONAN: We're going to give you the last 30 seconds.

SCHILD: Yeah. You know, the reason we're cleaning it up is because we maintain a high level of cleanliness about it. We really want it clean. When these spills happen in Africa, nobody cleans them up. They're a disaster. You know, you end up with the kids being exposed to terrible toxins, and nobody cares about that. They only care when it's in our backyard.

DROITSCH: Yeah, certainly valid. Appreciate your having us on, and we do need to balance, you know, the economy as well as the environment, and that's what the State Department and the president is doing in making this decision. We look forward to having him put Americans to work and bring in 2012 and create some jobs and making the right decisions.

CONAN: Cindy Schild of the American Petroleum Institute, we thank her for her time. Danielle Droitsch of the Natural Resources Defense Council, thank you for your time. Coming up next, we're going to be talking about that freshman roommate issue. This is NPR News.

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