Questions and Answers


Economy / Supply


Q. 1. The International Energy Agency (IEA) has forecast that U.S. domestic oil production will increase and demand for imported oil will decrease dramatically. Why does the U.S. still need Canadian oil?

A. 1. Even with the IEA's forecasts of rapid growth in American oil production, the U.S. will need to import 3.4 million barrels of oil per day in 2035 to meet projected demands.1 Securing that oil from Canada represents a pivotal opportunity for the U.S. to achieve North American energy independence.

Canada is the largest exporter of crude oil to the U.S. at 2.4 million barrels a day in 2012, according to the US Energy Information Administration (EIA). In the future, with growth in oil sands production, Canada could supply most or all the U.S. imported oil needs, thereby reducing dependence on Middle East and other offshore oil. The Keystone XL (KXL) pipeline would be a critical part of ensuring North American energy independence.

Americans face an important choice: buy oil from a friend and ally who has strong and transparent environmental standards, or purchase from less stable suppliers with weaker environmental regimes.


Q.2. What is the benefit to the U.S. from the Keystone XL pipeline?

A. 2. The Keystone XL pipeline - the southern portion of which has been approved and is almost completed - would create tens of thousands of jobs on both sides of our shared border. This includes 5.3 billion in new spending for the U.S. economy2 according to the U.S. State Department.

Keystone XL will also grow opportunities for more than 1,000 U.S. companies that supply goods and services to Canada's oil sands3.


Q.3. How will Keystone XL benefit U.S. consumers?

A. 3. Keystone XL pipeline will mean a secure and stable source of oil for U.S. refineries, which contributes to ongoing energy security and price stability at the pumps. This pipeline could transport up to 25 percent of U.S. crude from Montana and North Dakota to help get U.S. oil to Gulf Coast refineries4.

U.S. Gulf Coast refineries have long depended on other heavy crude oil producers for their refinery feedstock needs. Venezuela - still a major supplier of heavy crude to the U.S. - has threatened to cut supplies five times in as many years.

In addition to energy security, importing more oil from Canada comes with no discernable impact on GHGs. The latest studies confirm that current production from Canadian oil sands generates similar - or sometimes even fewer - GHGs than heavy oil from Venezuela5 or indeed California6.

And the environmental story of the Canadian oil sands will continue to improve as a result of world-leading research and development as well as strict government regulations requiring emission reductions.


Q. 4. Won't this pipeline just enable more oil product exports?

A. 4. The U.S. State Department EIS analyses in 2011 and again in 2013 confirmed that KXL will transport both Western Canadian and U.S. Bakken crude oil to the U.S. Gulf Coast to meet U.S. Gulf Coast refiners demand for heavy crude oil, and not so that this oil could be exported from the U.S. Gulf Coast.

The two State Department analyses also found that Gulf Coast refiners' traditional sources of heavy crudes, particularly Venezuela, were declining and expected to continue to decline.

For any U.S. export of crude oil, the U.S. Government requires companies to obtain an export license from the Department of Commerce Bureau of Industry and Security.

The export of any oil in the absence of such a license would be against federal law.

It is important to note that, the U.S. does not export crude oil in any significant quantity. According to US Government data, the little bit of crude oil that the United States licenses for export goes overwhelmingly to Canada.


Q.5. What happens if the United States does not proceed with this project?

A.5. Canada is America's biggest, most reliable and trusted energy partner and has the resources to fill that role for many decades into the future. Imports of Canadian crude and petroleum products in 2012 reached their highest level in history - three million barrels a day7. This important trade in oil will continue, with or without Keystone XL.

Canada supplies its oil energy almost exclusively to the U.S. But our oil export future is not tied to any one pipeline. Canada will continue to develop it oil sands and seek out new customers.


Q.6. If the U.S. does not get oil from Canada, what other countries could supply it?

A.6. The top 15 countries supplying crude oil to the U.S. in 2012 were Canada, Saudi Arabia, Venezuela, Mexico, Iraq, Nigeria, Columbia, Kuwait, Angola, Ecuador, Algeria, Russia, Chad, Brazil, and Gabon.

Canada is the only major supplier of oil to the U.S. that subjects its production to mandatory requirements to reduce GHG emissions.

Americans face an important choice: buy oil from a friend and ally who has strong and transparent environmental standards, or purchase from less stable suppliers with weaker environmental regimes.

Environment


Q.1. Won't this project lead to a big increase in greenhouse gas emissions?

A.1. No. Oil supplied by KXL will displace heavy oil already being refined in the United States from sources with similar or higher GHG intensity.

The U.S. State Department concluded in its KXL Final Environmental Impact Statement (August 2011) that any volume of oil sands crude transported via the pipeline would simply displace other heavy crudes already being imported into the U.S. Gulf Coast, such as Venezuelan and Mexican. These crudes have been shown to have similar GHG profiles to oil sands crudes, and therefore the latter would not result in significant incremental increases in greenhouse gases.

Canada recognizes that every ton of GHGs matters. That is why, under the Copenhagen Accord, along with the U.S., Canada has made a public commitment to reduce its GHG emissions. Canada is one of the only major suppliers of crude oil to Gulf Coast refineries planning concrete action to reduce emissions.

Canada's oil sands contributed 7.8 percent of Canada's total GHG emissions in 2011 - and they represent approximately 0.1 percent of global emissions.

The oil sands crude transported via Keystone XL would represent less than 0.05 per cent of global emissions.

Canada will also be introducing federal GHG regulations for the oil and gas sector.


Q.2. What is the impact of this project on the environment?

A.2. Keystone XL would mean that Gulf Coast refineries could import more Canadian oil. The latest studies confirm that current production from Canadian oil sands generates similar - or sometimes even fewer - GHGs than heavy oil from Venezuela and Mexico, which is now imported to feed Gulf Coast refineries.8 9

The U.S. State Department concluded in its KXL Final Environmental Impact Statement (August 2011) that the KXL would not impact the pace of oil sands development.

In addition, the State Department concluded in March 2013 that construction and operation of KXL would have no significant impacts to most resources along the proposed Project route provided mitigation measures are followed.

What's more, Canada has a strong record of environmental stewardship of the oil sands. Between 1990 and 2011, GHG emissions per barrel in the oil sands were reduced by 26 percent, and both government and industry continue to take steps to reduce those emissions further.

By law, all disturbed land in oil sands development must be reclaimed and returned to its comparable original state. Most of the water used in oil sands development is recycled - approximately 75 percent for mining and more than 90 percent for drilled. No water that has been in contact with oil sands operations can be returned to the river.

Canada's Oil Sands Innovation Alliance demonstrates industry's commitment to work collectively on environment-related issues. It has brought together the 14 major oil sands producers in a partnership to share intellectual property, innovation and technological advancements to reduce the environmental impact of the oil sands. To date, more than 300 patents to improve environmental performance have been shared among participating companies.

Canada has also put in place a world-class oil sands monitoring system to monitor impacts based on the best science, with information publicly available at: www.jointoilsandsmonitoring.ca.

Safety


Q. 1. Isn't there too great a risk of a leak?

A.1. In August 2011, the U.S. State Department found that Keystone XL would have a degree of safety greater than other typically constructed pipelines anywhere in the U.S.

Keystone XL will comply with 57 stringent special conditions established by the U.S. State Department and the Pipeline and Hazardous Materials Safety Administration10. These project-specific conditions are in addition to the existing regulatory requirements.

For example, Keystone XL must perform a surge analysis showing how the pipeline will be operated to be consistent with overpressure protection conditions and must equip the pipeline with field devices to prevent overpressure conditions. Other special conditions include at least 26 annual inspections along right-of-ways, and inspections for excavation activities, ground movement, unstable soil, wash outs, leakage, or other activities or conditions affecting the safety operation of the pipeline.


Q.2. Some people say that crude from Canada's oil sands is more corrosive than other crudes and therefore could lead to pipeline ruptures?

A.2. This allegation is false. Both scientific research and industrial experience have determined that bitumen-derived crude oil is no more corrosive in transmission pipelines than other crudes11.

In addition, the Nebraska Department of Environmental Quality confirmed that the physical and chemical properties of dilbit - one of the products carried by the proposed pipeline - are similar to other heavy crude oils.12



1 2012 IEA World Energy Outlook 2012. Under the IEA's New Policies Scenario, US oil demand is estimated at 12.6 million barrels per day in 2035 and US oil production is estimated at 9.2 million barrels per day.

2 State Department Keystone XL Draft Supplemental EIS, Executive Summary, pg ES-14, (March 1, 2013)

3 Source: Canadian Association of Petroleum Producers

4 Source: TransCanada

5 Jacobs Consultancy, EU Pathway Study: Life Cycle Assessment of Crude Oils in European Context, 2012

6 IHS CERA 2012, Oil Sands, Green house Gases, and U.S. Oil Supply: Getting the Numbers Right - 2012 Update.

7 Source: http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a.htm

8 Jacobs Consultancy, EU Pathway Study: Life Cycle Assessment of Crude Oils in European Context, 2012

9 IHS CERA 2012, Oil Sands, Green house Gases, and U.S. Oil Supply: Getting the Numbers Right - 2012 Update.

10 Draft Supplementary Environmental Impact Statement (SEIS), March 2013, http://keystonepipeline-xl.state.gov/draftseis/index.htm

11 Published studies supporting this can be found here: http://www.nrcan.gc.ca/pipeline/6698

12 Nebraska Department of Environmental Quality - Final Evaluation Report January 4, 2012.