U.S. Chamber of Commerce - Institute of 21st Century Energy - Letter regarding the Keystone XL Pipeline

November 7, 2011

The Honorable Mike Flood
Speaker of the Legislature
Senator of Nebraska
District 19
State Capitol
P0 Box 94604
Lincoln NE 68509-4604

Dear Mr. Flood:

The Institute for 21st Century E:nergy (Energy Institute) is an affiliate of the United States Chamber of Commerce, the world’s largest business federation representing the interests of more than three million businesses and organizations of every size, sector and region. The Energy Institute believes that construction of TransCanada’s Keystone XL (IKXL pipeline project is in our nation’s best interest, and in the best interest of Nebraska.

As the world economy recovers from the financial crisis, demand and competition for petroleum and all forms of energy will increase in the U.S. and throughout the globe. In fact, the federal Energy Information Agency (ETA) has projected that the Unites States will need2l% more energy by 2035. The Department of State has said that the rising demand for crude oil in the U.S. cannot be entirely met by increased efficiency, conservation, or use of renewabies, and recognized that even as crude oil demand is increasing, domestic supplies of crude oil are declining.

Canada is an important and reliable trade partner and is by far the largest supplier of oil and natural gas to the United States, supplying 12 percent of U.S. petroleum consumption needs and 18 percent of U.S. petroleum imports. Stable, long-term energy supplies from Canada are critical to U.S. energy security at a time when global supplies are often found in geopolitically unstable regions of the world, and production from once-reliable sources is slowing.

According to the EnSys Energy Report (December 2010) conducted for the U.S. Department of Energy on Keystone XL pipeline project, increased U.S. refining of Canadian crudes could curb dependency on crude oils from other sources, notably the Middle East and Africa. Ensys also reports, “a combination of increased Canadian crude imports and reduced U.S. product demand could essentially eliminate Middle East crude imports longer term.”

The recently published June 2011 report by the Canadian Energy Research Institute (CERI) concluded that the number of U.S. jobs created or preserved as a result of increased oil sands development in Canada could be expected to grow from 80,000 in 2010 to 600,000 by 2035. In addition, CERI determined that as oil sands production increases in Canada, so will the demand for imported U.S. goods and services, adding an estimated $200 billion - $800 billion to the U.S. gross domestic product between 2010 and 2035.

The economic impact and long term benefits of the construction of the Keystone XL pipeline are significant. When completed, the Keystone XL pipeline will have the nominal capacity to deliver over 900,000 barrels per day of crude oil to U.S. refineries. The Keystone XL pipeline project will create more than 20,000 well paying construction jobs in 2011-2012. According to the State Department’s Final Environmental Impact Statement (FEIS), $349 million to $419 million in total wages would be generated by the project and an average of $140.5 million in annual property tax revenue will be generated for every state in which the pipeline is located.

The FEIS also highlights the benefits of Keystone XL pipeline for newly developed U.S. domestic energy resources, specifically identifying the Bakken area in Montana and North Dakota and the Cushing Hub in Oklahoma which will have improved distribution and access to new markets and refining centers in the South and Midwest when Keystone XL is completed. American industry and consumers will also see additional benefits from electrical transmission and distribution lines that will need to be built for the project according to the FEIS.

It is also extremely important to note that failure to issue a Presidential Permit for Keystone XL will increase our country’s growing energy insecurity and will not stymy the development of Canada’s oil sands. Canadian energy suppliers are beginning to look to markets other than the U.S. to sell their oil. Growing demand for crude and planned expansion in refining capacity in Asia, along with increased ownership by Chinese companies in oil sands production, greatly improves the likelihood that Canadian oil sands crude could go to non-US markets. Plans are already underway to increase access for Canadian crudes to markets in Asia, specifically to China. Rail transport is being improved and a new pipeline is being planned to transport crude oil from Alberta to western Canadian ports. As highlighted by the Ensys report, U.S. dependency on supplies from the Middle East and Africa could increase if Keystone XL is not constructed.

Regarding the proposed route for Keystone XL, the Department of State reviewed alternative routes for the pipeline and concluded in its Executive Summary of the FEIS, “None of the alternative designs or facility locations were considered safer or environmentally preferable to the proposed Project design.” Furthermore, “The Department of State did not find any of the major alternatives (routes) to be preferable to the proposed Project for the reasons presented in the final EIS and summarized above. As a result, the agency-preferred alternative is the proposed Project route with the variations and minor route realignments described in the ETS, and the proposed location of the Cushing tank farm.”

The Keystone XL pipeline has undergone more than three years of consideration and coordinated review by more than a dozen agencies. It is time to green light this shovel ready project which will enhance American energy security and create much needed jobs and investment, and should be approved by year’s end or
earlier.

The Institute for 21st Century Energy urges you to support the Keystone XL Pipeline project. Building the Keystone XL pipeline is critical to America’s energy and economic security and vital to creating jobs and putting Americans back to work.

Sincerely,
Karen A. Harbert

cc: Governor Dave Heineman
Senator Mike Johanns
Senator Ben Nelson
Representative Jeff Fortenberry
Representative Adrian Smith
Representative Lee Terry
Nebraska State Legislature