The Keystone XL pipeline, bringing crude oil from the rich oil sands regions of Alberta, Canada, to U.S. Gulf Coast refineries was blocked by the Obama administration. It's a decision that means the loss of thousands of jobs. Reconsideration of the pipeline is now delayed until after the U.S. presidential election. Approval of the pipeline would have meant thousands of new jobs and added stability in oil prices and supply. Also, we would have realized direct benefits here in Utah.
In November of 2011, I represented Utah as part of a National Council of State Legislatures' tour of the oil sands developments, specifically, Alberta's Fort McMurray region. I returned home with several lasting impressions.
First, the U.S. and Canada have a special economic partnership and engage in $1.6 billion in two-way trade every day. In Utah, Canada is our third-largest trading partner with a combined $2.6 billion in 2010. Our supply chains are deeply integrated. It's no surprise then that the U.S. is Canada's largest market. More than 8 million U.S. jobs are dependent on trade with Canada.
Secondly, I came to understand that Canada is the largest supplier of crude oil and petroleum products to our country and the largest supplier of energy to the U.S. overall. Mexico is second in imports of crude oil and petroleum products followed by Saudi Arabia, Nigeria and Venezuela. Excluding Canada, the governments of these countries can be unstable, as we know. Add the problems of Iran's threats to block the Strait of Hormuz, where one-fifth of the world's oil supply flows, and it becomes clear why oil prices are highly volatile.
Given these facts and the fact that Canada has abundant resources (the third-largest oil reserves in the world after Saudi Arabia and Venezuela), growing production, political stability and high environmental standards, everything in our power should be done to ensure that the U.S. receives an uninterrupted and increased flow of crude oil and petroleum products. If additional markets for Canadian oil can't be found in the U.S., other markets will be sought, most notably China. The oil will flow somewhere.
Furthermore, there are several other pipelines already crossing the U.S./Canadian border and have been operating for years without many problems. The Keystone XL represents a new opportunity to deliver more Canadian crude to the U.S. Gulf Coast where the largest refining market in the world exists. These refineries are looking to replace declining supplies historically coming from Mexico and Venezuela.
In 2008, application was made to build the pipeline, a $20 billion endeavor promising a projected 13,000 in construction jobs and related manufacturing jobs. The Wall Street Journal reported that another 118,000 "spin-off" jobs could come during the two years of construction. These are probably optimistic projections of jobs, and estimates vary. But suffice it to say, it's a huge project.
So why should we care in Utah? The pipeline would cross through Montana's Bakken Oil Fields, South Dakota, Nebraska, Kansas, Oklahoma and conclude in Port Arthur, Texas. Doesn't affect Utah, right? Wrong.
While the bulk of the crude oil refined in Utah comes from Wyoming and the Uintah Basin, the best statistics I could gather indicate that 20 percent to 30 percent comes from Canada. Also, Keystone XL would intersect existing pipelines in Montana that carry crude to Wyoming and eventually Utah. The Canadian Research Council projects that Utah could be the recipient of 3,100 new jobs directly related to Canada's oil sands from 2011 to 2015.
Why has Keystone XL been called the most studied pipeline in history? Politics, pure and simple. Because it would cross an international border, the U.S. State Department took the lead. In its first environmental impact statement in April 2010, the State Department found that XL would meet industry standards and not significantly effect the environment. Furthermore, it reported, "without the pipeline the U.S. would not be able to benefit from cost-efficient Western Canadian oil and would remain dependent on unstable foreign oil supplies."
The pushback now comes because it's an election year and U.S. greens, an Obama constituency, loathe oil. While loathe isn't the word I would use, I too, am extremely concerned about our dependency on foreign oil since we can't unlock our own abundant resources right here in Utah because of federal land policy.
I'm big on renewables, big on conservation and big on reducing greenhouse emissions. I'm big, too, on a growing economy and family-sustaining jobs. We need energy and we need oil and projections are that oil demand won't decline until 2035 because increased demand will be concentrated on emerging countries, 57 percent from China alone.
It will take some time to transition to a lower carbon economy. In the meantime, the U.S. collectively, and Utah specifically, needs the Keystone XL pipeline. It should have been approved months ago and would have been if not for short-sighted politics.
Stephen G. Handy is a member of the Utah House of Representatives. He represents District 16, Layton.