NEBRASKA LEGISLATURE
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Sen. Steve Erdman

Sen. Steve Erdman

District 47

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Straight Talk From Steve…

April 3rd, 2017

 

Last week President Donald Trump signed an order to allow TransCanada to build the rest of the Keystone XL Pipeline. The Keystone XL pipeline is an issue which has created a lot of controversy in our State, so today I would like to address some of the most important questions surrounding the pipeline and clarify why this pipeline will be good for our State.

What will flow through the Keystone XL pipeline? Some people are confused about what will be flowing flow through the KXL pipeline. First, oil flowing through the pipeline will not be 100% Canadian crude oil. Crude oil from Montana will enter the pipeline at Baker, Montana and crude oil from Nebraska will also enter the pipeline at Steele City, Nebraska. This will be good for oil producers in our State.

Second, crude oil, especially the kind from the Canadian tar sands, cannot flow through the pipeline in its raw form. So, the crude oil is mixed with Bitumen in order to form a product known as Dilbit. Bitumen is diluted with one or more petroleum products, usually natural gas, in order to liquefy it for transport through the pipeline. The crude oil of the KXL pipeline will be the same kind of crude oil which currently flows through the Platte pipeline, which runs east and west through Nebraska near the Platte River.

Where will the KXL pipeline go? Crude oil from the KXL pipeline will be transported to refineries in Oklahoma, Louisiana, and Texas. At no point will the KXL pipeline run through the water table of the Ogallala Aquifer. Instead, the pipeline will travel over the Ogallala Aquifer. If the pipeline were ever to spring a leak over the Ogallala Aquifer, the viscosity of the Dilbit would cause it to stop seeping into the ground once it reached soil with a ground temperature of 50 degrees F or below. Last year the Canadian government produced a study which showed that diluted Bitumen floats. So, even if the oil ever reached the water table of the Ogallala Aquifer, we now know that it would float on top of the aquifer.

Who owns the Canadian tar sands? Answer: the Canadians. However, Koch Industries is the largest foreign investor in the Canadian tar sands. Koch Industries is an American company run by the Koch Bros., who hold the lease on 2,000,000 acres of Canadian tar sands. Conoco Philips and Shell Oil follow behind the Koch Bros. as the next largest foreign investors. China is considered a small player in the industry because they hold the lease on only 5% of the Canadian tar sands.

TransCanada has agreed to 57 special conditions for building the Keystone XL pipeline. So, what are some of these conditions? A few that I would like to highlight are these six: 1) the pipeline must be able to withstand a 65 ton excavator from breaking through it; 2) the pipeline must have a cover of four feet of topsoil, except in rocky areas, where it must have three feet of topsoil; 3) the pipeline has to be inspected every two weeks; 4) all pressure rated fittings and components (including flanges valves, gaskets, pressure vessels and pumps) must be rated for pressure ratings commensurate with the Maxwell operating pressure of the pipeline; 5) TransCanada must limit mainline pipeline overpressure protection to a maximum of 110% of operating pressure during surges; and 6) Pipeline markers must be installed and maintained for line of sight markings, except in agricultural fields.

How much property tax will be paid after the Keystone XL pipeline depreciates for income tax purposes? The KXL pipeline is said to depreciate in 15 years. Beginning in year 16, property taxes will continue to be assessed on the KXL pipeline according to centrally assessed standards. For example, the Platte pipeline, which was completed in 1953, and runs through Cheyenne County, pays an estimated $42,000 per year in property taxes.

Will lands in Nebraska be seized by eminent domain? TransCanada is not using eminent domain to seize our precious farmland. The KXL pipeline will be just like any other water, sewer or utility line crossing someone’s property. The landowner shall always retain ownership of the property, and once construction is complete, they will continue to possess economic right to the surface. The landowner shall always be able to use the land for agricultural activities. Easements and agreements will only provide for the right to access the pipeline during construction and for maintenance.

Will the KXL pipeline be safe for the environment? The Keystone XL pipeline will be one of the safest pipelines in the United States. The Platte pipeline has been in existence since 1953 and has never had a spill. The Platte pipeline pumps the same product as will the Keystone XL pipeline. The United States Department of Transportation has determined that transporting oil via a pipeline is 451 times safer than transporting it by rail or by truck. So, the KXL pipeline will provide us with the safest way to move all of this oil.

Finally, will the Keystone XL pipeline be good for all Nebraskans? Once constructed the KXL pipeline will free up space in the Platte pipeline so oil in Western Nebraska can be pumped through the Platte pipeline, making our oil production more competitive. It is very expensive to transport oil by rail or by truck. The KXL pipeline will help us reduce these costs. The construction of this pipeline will come at a time when our State needs increased revenue due to a downturn in the economy. The Keystone XL pipeline will give us some relief by paying property taxes to those counties through which it passes.

Sen. Steve Erdman

District 47
Room #1529
P.O. Box 94604
Lincoln, NE 68509
Phone: (402) 471-2616
Email: serdman@leg.ne.gov
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