Fossil fuels, you know the drill.
They are the main drivers of the global economy.
In the most fundamental way possible,
hydrocarbons and their use
has undoubtedly improved human welfare enormously.
And at the same time,
they're the primary cause of global warming
that's dangerously altering the Earth's climate.
The expansion and development
of new oil reserves is inconsistent
with a safe climate in the future.
The tension between economic
and environmental priorities couldn't be clearer
than in the fight for and against pipelines.
Biden's decision to revoke a permit
for Keystone XL will certainly be a topic of discussion.
It marks the end of a saga spanning more
than 12 years over the pipeline meant
to carry Canadian crude to the United States.
Pipelines have come to symbolize this battle
in society between oil and gas development,
and a switch to controlling climate change
towards developing other alternative renewable sources
of energy.
Pipeline industry is kind of a barometer
of where things are going.
Has gone from alive to dead, to alive, to dead again.
It seems likely that the days
of these $5 billion plus 1,000 mile
long projects are over.
This is the story
of the billion dollar business built
on the back of fossil fuels
and how it too may go the way of the dinosaurs.
There's no doubt that oil
and gas made the world what it is today.
Once reliant on foreign oil predominantly
in the Middle East,
the US became closer to its perennial quest
for energy independence within the last decade
with advances in fracking.
About 10 years ago is the start
of what we consider the shale revolution.
And that's when we combined hydraulic fracturing
and horizontal drilling,
and we just unleashed this record amount
of US oil and gas supply.
The shale revolution has had its own ups
and downs, but regardless of fluctuations
in supply and demand,
we always need to move this stuff around.
To support this massive growth in oil and gas production,
you need this suitably large underground network
of pipelines to move those products
to export terminals, to power plants,
to refineries, and petrochemical facilities.
These are not small ventures.
They're thousands of miles long
just for one pipeline alone.
They cost billions of dollars.
They require massive permitting at the federal level.
And so it was that the shale revolution led
to a pipeline boom.
But that boom ultimately triggered an explosion
of lawsuits broadly led by environmentalists.
No project embodies the Herculean nature and divisiveness
of this business better than the Keystone XL pipeline.
The Keystone XL pipeline is like a diagonal line
from the middle of Alberta down to Houston, Texas.
It cuts through the US states of Montana,
South Dakota, Nebraska, Kansas,
Oklahoma, and Texas.
A project of this scale faces varying permitting systems
from state to state,
as well as multiple run-ins
with a host of conflicting interest groups.
The Keystone XL pipeline embodied a lot
of the elements that pipeline opponents hated
so much about the industry.
It was massive, you know, more than a thousand miles long.
It carried oil from the Alberta oil sands
which a lot of folks called tar sands
because it's a particularly heavy grade of crude.
It went through private land, indigenous land.
It wasn't even carrying American oil and gas.
So, I think a lot of folks saw it as something
that represented everything they hated
about the fossil fuel extraction industries.
This is environmental activist Anthony Swift
from the Natural Resources Defense Council,
and suffice it to say, he's not a fan of oil pipelines.
Keystone XL was a 830,000 barrel a day tar sands pipeline
that would've expanded the dirtiest source of oil
in the world for decades to come,
a scenario that would've been inconsistent
with a safe climate.
And in addition to that,
it would've had devastating impacts
to indigenous communities in Alberta and communities
along the route who rely
on water sources threatened by the pipeline.
Proposed in 2005,
the $5.2 billion project pressed forward
with relative ease and with the cooperation
of the US government under the Bush administration.
This is Dennis McConaghy,
a former executive at TC Energy,
the pipeline company behind Keystone.
As you could imagine,
he has some strong opinions about the industry,
environmentalists, and the Biden administration.
The regulatory process under the Bush administration
for base Keystone went very easily.
It was all done within almost two years.
The United States needed heavy oil.
We had it to sell and we were the pipeline conduit
that was gonna create this system
that would create the greatest transportation economy
for Canadian oil sands producers.
So, rather than sending it out on trains, trucks,
this high-volume, direct link was going
to give us the greatest transportation economy.
This project became resisted by, what I'll say,
basically the North American environmental movement.
You know, the reality is,
there is no conceivable way
that we can continue to use the same amount
of oil we're using today
without creating catastrophic climate impacts.
The reign of oil has to come
to a close if we're going to have a safe climate.
And fortunately, we have the replacements
and alternatives available today.
Environmental groups did win some victories
under the Obama administration,
especially when it came to the pipeline battlefront.
In 2014, Obama vetoed a bill
in favor of moving the pipeline forward.
Then the following year,
after six years of consideration,
he decided to reject the project's permit outright.
Because Keystone XL was going
to cross the Canadian-US border,
it needed special approval from the State Department,
which is not something that pipelines that just go
from one state to another are required here in the US.
That gives the White House more power
than it would normally
to either approve or kill a pipeline project.
The State Department has decided
that the Keystone XL pipeline
would not serve the national interests of the United States.
Let me just say that life has a way of surprising us.
What a great honor to be able to introduce
for the first time ever, anywhere,
the 45th president of the United States of America,
Donald J. Trump.
Trump, giving them a permit in early 2017.
Keystone pipeline.
Legal interventions caused that permit
to have to be reissued back in 2019.
And it took that length of time
before TransCanada and its shippers,
who had to be reassembled commercially,
started to construct the project in 2020.
The pendulum, once again,
swung in the other direction when,
shortly after his inauguration,
President Biden halted the pipeline's Phase IV construction,
which was to cut over 500 miles
and run straight through a national landmark area
in Nebraska called the Sand Hills.
I'm visiting you from Oyen, Alberta,
and until a few days ago, this was kind of ground zero
for construction of the Keystone XL pipeline.
That all pretty much came to a halt a few days ago.
This was something that was enormously controversial.
It had this kind of outsized impact on the way we talk
about our energy and climate in the US.
It was something that he promised to do and he did it.
I think it was seen as kind of an easy way
for Biden to quickly deliver on some
of his environmental promises
because, at the end of the day,
this was a pipeline that was not yet built.
It is a lot harder to go after something
that has 200 miles of steel already in the ground.
Biden's cancellation of the Keystone XL project was,
you know, an absolutely necessary decision.
It upheld the decision that President Obama made in 2016
after a thorough review
and it just shows that he's serious
about transitioning the US to clean energy
and really taking a leadership stance
on climate change globally.
But focusing their energy
on the pipelines is often seen
by people in the industry as misdirected activism.
This doesn't stop oil sands production.
It doesn't stop Canadians trying to find other ways
of getting that oil into the United States,
but it does reduce the economic value
of having lost the most efficient option
that you could've resorted.
When we think about the impact
that the Keystone XL pipeline would have had
on the oil market,
I think is when we start to see even opinions
in the energy industry divided.
There are signs that there is a shortage
of so-called takeaway capacity out of Alberta.
However, on the other side, it's not clear that we needed,
you know, a pipeline
that could shuttle 800,000 barrels a day plus out of Canada.
So, I think the impact and the fallout
from this decision is going to remain to be seen.
A major point that pro-pipeline advocates
emphasize is of course jobs.
And while it's true that killing a pipeline does result
in a loss of some work,
that might be a rather myopic definition of jobs.
As far as jobs, the industry has said
that it would've employed over 10,000 direct jobs.
Obviously, that would have a pretty big impact
on certain communities and in certain circles
where there are a lot of industrial workers.
I think it's important to remember
that these were not permanent positions.
These were mostly construction jobs
and pipeline development jobs on the ground.
That's a little bit more complicated picture
than I think the industry has made it sound.
There really are several different economic interests
who were impacted by this.
So, there are the people like TransCanada Energy
and their other partners in the pipeline,
notably the Alberta government, the province of Alberta.
You know, they stand to lose somewhere my guess would be
on the order of $4 billion.
All of that is kind of like the sunk cost of just trying
to do the project.
States that lose some of the economic benefits
that derive from the project,
such as property tax payments,
that literally would rank
in the billions for states like Montana,
South Dakota, Nebraska.
Those states would also have benefited
from the construction activity that would've occurred
in their states that's lost.
Tradesmen that had jobs working
on this pipeline that don't exist anymore.
The American refining interests
who were seeing value in running Canadian crude
from a security point of view or from the fact
that it just would work better than other sources,
whether those were from Venezuela or Mexico.
President Biden's American Jobs Plan
has earmarked $174 billion to win the EV market
and another $34 billion for solar, wind,
and other alternative energy solutions.
If this becomes a reality,
the laws of supply and demand may drastically shift away
from fossil fuels forever
Biden's Job Plan is a really important foundational step
in building an economy that's on the basis
of clean energy and supports the just transition
of workers from efforts to expand oil production,
contrary to our health and safety,
to projects that allow us to clean it up.
Demands could be nearing a peak.
Whether it be electrification of vehicles,
demand for oil will stop growing,
development of resources in the oil sands.
The oil here will keep being pumped out,
but there won't be as much need
to expand oil production in Canada.
The demand for new pipelines will be less.
Ultimately, with the complexity
of getting these pipelines built
and the political maelstroms around them,
the pipeline boom may very well turn into a bust.
Fossil fuels are a controversial topic today in the US.
If you are building a pipeline
that shuttles them from one place to another
and you're doing that by claiming eminent domain
so that you can take someone else's property,
you better be pretty sure
that you can do it without getting sued.
And that if you are sued,
you're successful because every month that goes
by where that project is delayed
or there is some other legal development that arises,
that's adding costs to your project
and that is the absolute opposite
of what these investors wanna see.
It's just been dramatic
how quickly these new projects had to basically stop
in the face of all of this environmental opposition.
You see companies like Williams
who tried to build not one, but two gas pipelines
in the Northeast and got shut down
by the state of New York both times.
Energy transfer with the Dakota Access Pipeline,
the Rover gas pipeline,
both of those encountered tremendous opposition
from environmental groups,
but even from regulators themselves, even in Texas,
which we never would've expected
to see very much opposition here.
Kinder Morgan had trouble getting
a natural gas pipeline built recently.
So, I think it's just becoming clear
that this is not an industry that's going
to be able to just grow and grow,
and grow like it used to be.
There's still people who think
that Keystone XL will be revived maybe
with a new administration.
It's a bit uncertain how much need there is
for the pipeline.
Will there be even the impetus to drive ahead?
It's a pretty clear win
for the environmental movement.
This is something that they have sought to kill
for over a decade now.
The American environmental movement won
because it attached itself to the democratic candidate,
that person won, he followed through on his commitment
that he would deny this project.
Biden's policy goals are set
by an international community that is aligned
at maintaining a safe climate.
And that means that projects
like Keystone XL are simply inconsistent consistent
with that goal.
And the environmental community is aligned
with the Biden administration's goal
of maintaining a safe climate
and that was what the president was elected
to achieve by the American people.
When we look at the pipeline industry as a whole,
I think it's a little bit more nuanced.
For some companies, Keystone XL being dead
actually might save them
from some more sweeping environmental regulations
that would've impacted their own projects.
At the end of the day,
I think the fate of the pipeline industry was sealed
before Keystone XL.
We're probably going to be consuming fewer
and fewer barrels of oil, less and less natural gas
as we progressed through the century.
I just don't think anybody, be it investors,
green groups, landowners,
they wanna see another $7, $10 billion pipeline.
And I think what that means is that, for the US,
we're done building these mega pipeline projects.