Last updated on 08/08/2017

Nebraska and the Keystone XL Pipeline

A look into Nebraska’s involvement in the Keystone XL pipeline.
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Published by Victor Cassone

The construction of the Keystone XL pipeline has become a national headline. It has all the ingredients of a compelling story. There are landowners fighting with oil companies, a state government holding up the national government, worries about the environment, presidential vetoes, protesters, and much more.

The Keystone XL pipeline has put Nebraska on the national stage. Nebraska is the last state yet to approve their respective portion of the Keystone XL pipeline. This has become a rare issue where Nebraska’s State government will have a big impact on national politics.

Nebraska will only have influence over a portion of the pipeline. The Keystone pipeline as a whole is well under way. The Keystone XL Pipeline is merely a subsection of the whole Keystone Pipeline project. The Keystone Pipeline is being built in 4 phases. The objective for phases 1, 2 and 3 is to build a pipeline network that takes crude oil from Hardisty, Alberta, Canada down through the middle of the United States to the Houston area. Phases 1 and 2 are already complete. Phase 3 will be done by the end of 2017.

The portion of the pipeline that currently travels through Nebraska was built in phase 2. This portion of the pipeline runs vertically through eastern Nebraska and can be found somewhere west of Lincoln and east of Grand Island. This portion is operational and is currently transporting crude oil through Nebraska at this very moment.

Phase 4 of the pipeline, which is known as the Keystone XL Pipeline, travels on a direct line from Alberta, Canada to Steele City, Nebraska. The difference between the Keystone XL pipeline and the core Keystone Pipeline(phases 1, 2 and 3) is that the core Keystone Pipeline travels east through Canada for a few hundred miles then turns south, creating a right angle. The Keystone XL spends no time going east and has a direct path to Steele City. The Keystone XL pipeline would thus add a second Keystone pipeline to Nebraska.

The reason this second pipeline is necessary is because TransCanada, the company responsible for the construction of the pipeline, wants to further increase Canada’s output of oil. Canada has the third largest oil reserves in the world and the United States is their biggest customer. Their supply can not keep up with demand. Adding another pipeline would increase oil supply and profits. A pipelines was chosen to transport the oil because they are the cheapest and safest means to do so. The Keystone XL portion of the pipeline would add about 830,000 barrels of oils per day to the 570,000 barrels a day already moving through the pipeline.

It’s important to note that these type of pipelines are nothing new. There are currently over 10 oil and gas pipelines that travel from Canada to the United States. The construction of these pipelines usually go unnoticed. So what makes Keystone XL special?

A big reason the Keystone XL pipeline has been a national story is because nearly ever since its initial proposal there has been a cloud of uncertainty surrounding its approval. There has been many delays throughout the process. The delays include, a presidential election, environmental impact assessments, opposition in the Nebraskan courts, 2 votes in the House and Senate, and a presidential veto. Combine this with the controversial topics of the oil industry and the environment and you have the ingredients for a national saga.

Nebraska has played an important role throughout this whole process. In mid 2011, then Governor Dave Heineman sent a letter to President Obama asking for a new route that avoids the Sand Hills and the high water tables in the Ogallala Aquifer. A few months later Obama announced that there would be no decision on the pipeline until after the 2012 election. During this delay, TransCanada proposed a new route and a 10-month review by the Nebraska Department of Environmental Quality was undertaken. Based on the finding from the state’s report, Gov. Heineman gave his blessing to the new route.

The Sand Hills and the Ogallala Aquifer have been a major hurdle for the Keystone XL pipeline, and for good reason. The Ogallala Aquifer is a ground water storage reservoir that stretches 174,000 square miles underneath parts of 8 states. Both the thickest and most extensive areas are in Nebraska. The aquifer system supplies drinking water to 82% of the 2.3 million people who live within its boundaries and yields about 30% of the groundwater used for irrigation in the United States.

The way the aquifer replenishes its water is by absorbing rain and snow through the ground. The Nebraska Sandhills play an important role in this process. The Nebraska Sandhills is located in north central Nebraska and is a fragile ecosystem that overlays the Ogallala Aquifer. The Sandhills helps replenish the aquifer because the type of soil in the Sandhills acts as a sponge for the precipitation that falls throughout the year. Damage to this ecosystem could have large consequences for the underlying aquifer.

The first Keystone XL pipeline route went straight through the Sandhills and the Ogallala Aquifer. The revised route misses the Sandhills but still goes through the north-east corner of the Ogallala Aquifer.

Even with the revised route, opponents of the pipeline are still concerned about the ecosystems along the route and the water supply underneath the pipeline. They fear the construction process and potential oil leaks might cause long lasting harm to this important water supply. The biggest concerns is with the type of oil that is being transported.

The oil that is extracted from the Tar Sands of Canada are not a conventional source of petroleum. Tar Sands consist of sand, clay, water, and bitumen. The bitumen is extracted and used to create an array of oil products. Bitumen is both heavier, thicker and denser than light crude oil. Bitumen is denser than water and will sink if the two are mixed. This makes a Tar Sands oil leak over a body of water a lot harder to clean up. For less dense oils, cleanup crews wait for the oil to float to the top of the water and extract the oil. This technique could not be used for the dense oil from the Tar Sands. The bitumen would sink and it would take much longer and be a lot tougher to clean up. This would in turn raise the chances of water contamination.

There are many people nervous of a potential large scale contamination of the Ogallala Aquifer. This fear isn’t without merit. The current Keystone Pipeline has already sprung some leaks. In April of 2016, a defective weld caused a leak of nearly 17,000 gallons in South Dakota. It’s hard to imagine this would be the last of its kind.

TransCanada is monitoring the pipeline at all times and will shut down the pipeline if anything major occurs. The State of Nebraska has also required an extra 57 Special Conditions to which TransCanada has agreed would further ensure pipeline integrity and safety. However, the Keystone XL pipeline covers 1,179 miles. A major question moving forward would be how accurate are their monitoring systems and how quickly can they respond?

Regardless, President Trump removed the last federal roadblock in early 2017 by giving his approval for the Keystone XL pipeline. With all the national hurdles removed, it’s up to Nebraska to decide the fate of the pipeline.

Governor Ricketts and around 2/3 of Nebraska’s State Senators want the Keystone XL pipeline built. They argue that the economic benefit would be significant and the environmental concerns are overblown. Many point to a 2013 report by the Nebraska Department of Environmental Quality. The report concluded that the pipeline will be bring in an estimated $418 million in economic benefits to the state and would support up to 5,000 temporary jobs. The project would also generate $16.5 million in sales taxes from pipeline construction materials.

As for the environmental concerns, the report states “impacts on aquifers from a release should be localized and Keystone would be responsible for any cleanup”. It goes on to state that “the proposed Nebraska Reroute avoids many areas of fragile soils in Northern Nebraska.” The State Department under Obama has also concluded that the pipeline would not have any significant impact on the climate.

So what’s holding Nebraska back from approving the Keystone XL pipeline?

The initial delays to the Keystone XL pipeline were due to flaws with the initial pipeline route. New routes were requested and environmental studies were needed to make sure it was safe. Once Governor Heineman gave his OK, the law that that allowed him to approve the route became embroiled in a constitutional challenge. There were a group of landowners who refused to allow TransCanada use of their land. This dispute eventually found itself in the Nebraska Supreme Court so the constitutionality of the law could be decided.

Due to the long delays associated with a legal battle, TransCanada withdrew from the land proceeding and changed its approach. It filled a application with the Nebraska Public Service Commission (PSC). The Nebraska PSC responsibilities include regulating public utilities such as railroads, telephone companies, grain warehouses and major oil pipelines. In late 2011, the Major Oil Pipeline Siting Act was passed giving the PSC the power to “ensure that a major oil pipeline is not constructed within Nebraska without receiving the approval of the commission”. This law was certainly approved with the Keystone XL pipeline in mind.

With Gov. Ricketts in favor of the Keystone XL pipeline, the 5 publicly elected officials on the PSC will be the last remaining government entity to pass judgement on the pipeline. The PSC gave itself a self imposed deadline and must have a decision by Nov. 23rd, 2017. The PSC is holding public hearings about the pipeline up until the deadline.

If the PSC approves the pipeline, the Nebraska State Government will use its eminent domain authority to claim the lands along the pipeline route. In the eyes of the law, landowners will have no choice but to give up their land. However, the story won't end there. Legal challenges are expected and mass protests are already being planned along the pipeline route.

It’s hard to say whether the pipeline will be approved. The Nebraska Public Service Commission have kept tight lips on which way they are leaning. TransCanada has recently admitted that the pipeline might not ever happen. Low oil prices have made the pipeline less economically viable. Nonetheless, TransCanada will assess the market and make a final decision after the PSC ruling in November. If the PSC vote no on the pipeline, TransCanada could very well call it quits. If they vote yes, expect the controversy to continue.