President Obama should reject the Keystone XL pipeline.
Canadian Alberta Oil Sands production is set to double by 2020, and the oil companies must find new markets for this oil. The key enabler to transport all this excess oil into new markets is a company called TransCanada, a Canadian pipeline company. Keystone XL pipeline is a project proposed by TransCanada with 1,179 mile (1,897 km), 36-inch diameter crude oil pipeline beginning in Hardisty, Alberta, Canada and extending south through American Midwest to Steele City, Nebraska, US. The oil sands have nearly 2 trillion barrels of oil in place, but Alberta has limited refineries and is landlocked. The Keystone XL pipeline is expected to transport the excess heavy oil to the refineries in the coast of the Gulf of Mexico into a lighter variety. This benefits Canada because, the lighter variety oil would demand a higher price per barrel, have access to world markets by sea in addition to being available in larger quantities for America’s growing needs. The current Keystone pipelines export a certain amount of oil. Previously unprecedented production of oil is creating an unprecedented bottleneck in Cushing, Oklahoma, which means that there is excess supply and hence, a discount in the selling prices of this oil. Canadian oil companies want to overcome this situation and meet the following goals: get excess oil supply to the market, get best possible price, and limit market risks. They have three options to do this. First, transport the oil to the pacific coast and refine it in Asia. They can use Alberta’s northern gateway pipeline to transport the oil. The key challenges in this scenario are increased tanker traffic and hence increased likelihood of a spill, and environmental challenges because the oil would pass through environmentally sensitive areas. Second, set up refineries in Alberta. The key challenges of this situation are: Alberta has no coastline, which means it would be difficult and expensive to...
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