Andrew Boerema

A new crude oil pipeline plans to travel through South Dakota. Will the benefits of the project be overshadowed by its risks?

The pipeline will be a part of a 2,148-mile project named Keystone being planned by TransCanada, a North American energy company based in Calgary, Alberta. It is aimed at transporting crude oil from Canadian fields to refineries in the United States at a rate of 435,000 barrels per day by late 2009. Its planned route will take the pipeline across Saskatchewan and Manitoba, through North Dakota, South Dakota, Nebraska, Kansas and Missouri to refineries in Patoka, Ill., and Cushing, Okla.

However, it has some landowners wondering how they will benefit from having a crude oil pipeline running under their land.

“What we need to do is stop relying on non-renewable energy sources,” said Ashley Wells, a freshman psychology major. “Until we can move away from that, the pitfalls will always outweigh the benefits in the long run.”

A number of factors have been called into question with respect to the route currently planned for the pipeline. One of the most serious of these concerns is the James Aquifer system. The pipeline will run through an area of the aquifer that is very shallow, increasing the risks of water table contamination in the event of a leak from the pipeline. In most other locations along the route, the water table is protected from surface runoff by a layer of material that does not allow oil to easily pass. A spill even in areas protected by this layer of material would cause harm to the local environment, particularly because nearly the entire route travels through farmland.

“The question is, why isn’t this tar sand crude oil being refined in Canada and the jobs it will create, retained there and refined fuel shipped by pipe?” testified Curt Hohn in front of the Public Utilities Commission in late 2007. Hohn is the General Manager of WEB Water Development Association, Inc., and has particular interest in the project as it travels through the area to which his company provides water for the state. “The answer is, because tar sands is the bottom of the oil barrel and contains chemicals, toxins and elements that once removed from the crude oil are difficult to handle and dispose of.”

Despite the risks, a number of South Dakota politicians have supported the project because of the possible economic gain through taxation and possible opportunities for a future oil refinery along the route. According to TransCanada, they will pay $6.4 million in annual taxes on the pipeline the first year it is built as well as sales and excise tax from the construction.

For the PUC’s part, they are constrained by federal statutes covering interstate projects such as the Keystone Project. John J. Smith, counsel for the PUC, explained in a phone interview that the PUC’s authority only reaches as far as making sure TransCanada meets the requirements set down by the state statutes governing such projects. The only power they have is to try and set fair conditions for the project. Any other terms and agreements are largely between the landowners and TransCanada itself.

This is where many involved parties see the problem. Unconfirmed reports have been cited in various PUC testimonies of TransCanada representatives pushing landowners forcefully towards signing agreements. One report states that from the first communication, TransCanada has mentioned the possibility of condemning the land in question through eminent domain.