TransCanada Corporation (USA) (TRP), Exxon Mobil Corporation (XOM) – Everything You Need to Know About Keystone XL: The Debate

The assumptions in the Perryman study bring us to the other case for Keystone XL: greater energy security. Oil sands provide heavy oil, a necessary element to keep refiners running at optimal capacity. For oil refineries in the Gulf Coast — the target market for Keystone XL– the primary sources for this crude type are Mexico, Venezuela, and Saudi Arabia. The U.S. doesn’t have the best relationship with a couple of these countries, and the oil they deliver to us is more expensive than what we could get from Canada. So with a greater supply of heavy oil coming from Canada, we would be less dependent on these regions for our energy needs.

The decision
Both sides do present legitimate cases as to whether the pipeline will be built, but it looks as though the final decision will rest on the greenhouse gas emissions debate. With so much of the decision based on this metric, then how it is measured will certainly mean something. Just as many opponents have said, several types of oil sands are much more greenhouse gas intense, but in comparison with what?

Sources: IHS CERA, author’s calculations

There are some oil sands that are much more GHG intense than the average U.S. barrel consumer, but there are also some forms that are less GHG intense. In aggregate, oil sands are about 15% more greenhouse gas intense than the average barrel consumed in the United States. Also, some crudes that it could potentially replace (Middle Eastern heavy, partially upgraded Venezuela) are less GHG intense and would present a net benefit from what we do today.

Getting oil from the ground to your car takes many more steps than just production, so perhaps we need to look at the lifecycle GHG emissions for oil sands. Two ways to measure this metric are well-to-retail pump emissions and well-to-wheel emissions

The article Everything You Need to Know About Keystone XL: The Debate originally appeared on Fool.com and is written by Tyler Crowe.

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him on Twitter: @TylerCroweFool.The Motley Fool has no position in any of the stocks mentioned.

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