Keystone XL Approval Brings High Risk, Few Jobs to Nebraska

As many expected, last week's Keystone oil spill in South Dakota did not convince state regulators in nearby Nebraska to stop the Keystone XL leg of the pipeline. On Monday, the Nebraska Public Service Commission gave the thumbs-up for construction of the controversial project. Developed by TransCanada, Keystone XL will bring tar sands oil from Canada down to the Nebraska-Kansas border. Existing pipelines will then convey the oil to the Cushing oil and gas hub in Oklahoma, and on down to Gulf Coast refineries.

If you caught that thing about Gulf coast refineries, you're on to something. The oil will not be processed or distributed within states along its route. According to one official estimate, Keystone XL will bring a total of just 39 permanent jobs to the four states (Montana, South Dakota, Kansas and Nebraska) through which it passes. Even if Nebraska somehow gets all 39 jobs, that's a high price to pay for a proven risk.

A short history of leaks on the Keystone Pipeline

Last week's Keystone pipeline leak in South Dakota enabled an estimated 210,000 gallons of oil to seep into the ground, and it is not the first time that state has weathered such an episode.

In April 2016 pipeline owner TransCanada reported a leak of 187 gallons on Keystone in South Dakota, a figure that was eventually revised up to almost 17,000 gallons.

According to Inside Climate News, the 2016 leak was one of "dozens" recorded since the pipeline was commissioned in 2010. In its first year alone, there were 35 leaks along its route in Canada and the US.

Somewhat ominously, the April 2016 leak was not caught by the pipeline's leak detection system. It went unchecked until a passer-by noticed something amiss. The leak detection experts cited by Inside Climate News indicate that even with advanced detection technology, some leaks are too small to set off alarms, and in remote areas a small leak could add up to big numbers.

Nationally, the nation's network of oil and gas pipelines experienced 5,682 "serious" episodes from 1997 to 2016. In past years the numbers often dipped below 300 per year, but since 2013 the annual number of episodes has ranged from 301 to 330.

South Dakota is not pleased

The Nebraska Public Service Commission was not rattled by the latest leak, but South Dakota regulators sure were.

On Tuesday, Reuters reported that the South Dakota Public Service Commission is concerned because  the spill is already the third to hit the state since 2010. The Keystone pipeline has an anticipated lifespan of up to 100 years, and the episodes could become even more frequent as it ages.

According to Reuters, South Dakota could suspend or even cancel the pipeline's permit if a forensic analysis reveals that TransCanada violated its conditions.

Don't hold your breath for the results of the analysis. If preliminary findings are not definitive a more comprehensive study will be in order, and that could take months.

Meanwhile, over in Nebraska

Interestingly, Nebraska regulators may have had an eye on the South Dakota spill after all. Although they approved the Keystone XL pipeline on Monday as expected, they did not approve the preferred route that TransCanada had mapped out.

Here's the nut of the problem, as described by the Lincoln Journal Star:

[The alternate route] would impact about 40 new landowners, many of them in Madison and Seward counties, who aren't along the preferred route and don't have the original Keystone pipe cutting through their land already.

In other words, TransCanda could be bogged down in court for years while property issues are hashed out, among other legal issues that are sure to arise along the new route.

Meanwhile, the oil clock is ticking. Every nation on Earth is beginning to take definitive steps to wean their economies away from fossil fuels. That includes the US, which is tapping into its massive wind energy resources even though the Trump administration has pulled the nation out of the Paris Agreement on climate change.

If the Keystone XL pipeline makes economic sense for TransCanada today, that won't be the case for much longer.

Pipeline good, wind better -- much better

Do read the full Journal Star article for many more details (here's that link again). It provides a simple explanation why regulators ignored the South Dakota leak: a 2011 state law prohibits the Nebraska Public Service Commission from considering such risks.

As for the benefits, the Journal Star provides this citation:

"...we also are very cognizant of the benefits to Nebraska, especially to the counties along the route. With economic concerns abounding, tax revenues from a project such as this can help ease burdened landowners, counties, school districts, and subdivisions by raising the potential of future property tax relief via expansion of the local tax base."

That's all well and good, but a newly approved wind power project in Nebraska demonstrates how limited those pipeline benefits are, compared to renewable energy projects.

The new Rattlesnake Creek wind farm will involve payouts to local property owners in addition to pouring new tax revenues into local coffers.

The new wind farm will also offer about 16 permanent jobs after construction, which is probably more than the state will get from Keystone XL.

The real kicker is the new businesses that will stake out ground in Nebraska on account of access to clean power.

Facebook has already pledged to soak up the lion's share of electricity from the new wind farm, which will go to power a new data center.

Facebook is currently in the process of hiring its first wave of 18 permanent staff at the new data center, and it anticipates a total of 100 permanent positions once the facility is fully operational.

Image: South Dakota oil spill via TransCanada/Facebook.