Keystone’s ‘dilbit’ problem


“Dilbit” — drop the word in casual conversation and listeners might think you’re talking about the comic strip engineer who can’t get a date. But dilbit actually stands for “diluted bitumen,” a heretofore obscure oil industry term that may soon be trending on your search engine as controversy deepens over the Keystone XL pipeline, a project to carry oil from the Alberta tar sands to refineries in Texas that has become the nation’s most contentious battle between conservative fossil fuel backers and liberal environmentalists.

Dilbit became a big deal last week when a Texas judge granted a restraining order against pipeline builder TransCanada, halting construction for two weeks on land belonging to retired paramedic and chemist Michael Bishop. The judge found that Bishop had presented sufficient evidence that TransCanada had misstated its intentions in permit applications and legal documents: Keystone has long maintained that it will transport crude oil, but in reality it’s out to move dilbit. There’s a difference.

Bitumen is a tarry substance derived from oil sands that forms a sticky solid at room temperature; moving it through a pipeline requires pressure and dilution, usually using benzene, a carcinogen. Environmentalists claim bitumen is more corrosive than crude oil and poses more risks to pipelines, though engineers tend to disagree; meanwhile, there is no question that it behaves differently in the environment. For one thing, crude oil tends to float on water, whereas bitumen usually sinks. This has created a serious environmental problem in Michigan, where a 2010 spill on the Kalamazoo River sent hundreds of thousands of gallons of bitumen to the bottom; ongoing cleanup has cost more than $800 million, making it the most expensive onshore pipeline spill in U.S. history.


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At the heart of Bishop’s case is the fact that although TransCanada considers bitumen and crude oil to be essentially the same, the IRS disagrees. In fact, it exempts companies that transport bitumen derived from tar sands from an 8-cents-a-barrel tax levied on transporters of crude. TransCanada can’t reasonably claim this tax exemption while pretending it’s moving crude oil. More important, we’d like to see the State Department, which is conducting an environmental study of the northern portion of the Keystone XL route, include some analysis of any heightened risks posed by transporting dilbit.

Keystone XL has gotten a bad rap from environmentalists, and not always for the right reasons. Extracting fuel from tar sands is destructive because of the greenhouse gases emitted during the process, but blocking the pipeline won’t stop that from happening — if Canada can’t sell its fuel to the U.S., it will simply find another market, such as China. Nonetheless, there are reasons to worry that the environmental and engineering risks of this project haven’t been adequately vetted.