The Independent View: The XL Pipeline Mystery

The proposed Keystone XL ("eXport Limited") Pipeline (Phase IV), which would essentially duplicate the Phase I pipeline between Hardisty, Alberta, and Steele City, Nebraska, with a shorter route and a larger-diameter pipe. It would run through Baker, Montana, where American-produced light crude oil from the Williston Basin (Bakken formation) of Montana and North Dakota would be added to the Keystone's current throughput of synthetic crude oil (syncrude) and diluted bitumen (dilbit) from the oil sands of Canada.

I have written before about the pipeline and glad the President agrees with me.

President Barack Obama poured cold water once again on the alleged economic benefits of the Keystone XL oil pipeline on Friday — a theme he has sounded frequently in the past few months, increasing speculation that he will eventually kill the project.

Now the Mystery!

The pipeline crosses the Canadian boarder and needs the approval of the State Department. If congress passes a bill, it would need the President's approval. As the President says, under the current plan, it is Canadian oil flowing thru the pipeline.

But if it started in the U.S., only the State's Public Service Commissions ("PCS") would control if and where it is built. So it could have been built in the U.S. at any time. It could run from Baker, Montana, where American-produced light crude oil from the Williston Basin (Bakken formation) of Montana and North Dakota would flow thru to Wood River Refinery in Roxana, Illinois and Patoka Oil Terminal Hub (tank farm) north of Patoka, Illinois.

In Nebraska, the court battle over the pipeline is about where it will be located. An early route through the environmentally sensitive Sand Hills region was widely criticized. But after the pipeline company TransCanada changed the route, Republican Governor Dave Heineman approved it. But only the Public Service Commission can handle the administrative process that goes with a specific route and its acceptance or rejection.

And finally, the CEO of TransCanada concedes there will be only 9,000 temporary construction jobs and 50 permanent jobs from the Keystone XL Pipeline.

So the pipeline should be the U.S. pipeline to keep our gas prices low.