# Keystone XL Pipeline: What It Means and How It Works

![Refinery worker checking a pipeline for natural gas production](https://www.investopedia.com/thmb/EoAV67Y62z_x5gWbXMfffN1Rt4E=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/INV_TopNaturalGasETFs_GettyImages-1412547603-24debdabc41747fcaf1324d31b925672.jpg)

*— Smederevac / Getty Images*

The Keystone XL pipeline project is a controversial plan to construct a 1,700-mile oil conduit from the oil fields of Alberta, Canada to the refineries along the Texas Gulf Coast. The original Keystone pipeline project was abandoned in 2021 but the change in the U.S. presidency in 2025 appears to have reopened the possibility of its construction. Its resumption appears unlikely, however. The original developer has indicated no interest in restarting the project.  

President Donald Trump granted a permit for the construction of the pipeline in March 2019 during his first term and after years of debate. President Joe Biden then revoked the permit shortly after taking office in January 2021. President Trump rescinded Biden's revocation in a January 2025 order days after taking office for his second term.

### Key Takeaways

*   The Keystone pipeline was first proposed by TC Energy, formerly TransCanadian Corp., in 2005.
*   It was intended to transport new finds of hard-to-extract heavy oil from oil sands in Canada to U.S. refiners.
*   Keystone has been controversial for many years due to concerns about its local and global environmental impacts.
*   President Joe Biden revoked the construction permit for the Keystone XL pipeline on Jan. 20, 2021.
*   President Donald Trump rescinded Biden's revocation in a January 2025 order days after taking office for his second term.

## Understanding the Keystone XL Pipeline

The original Keystone pipeline was proposed by TransCanada Corp in a press release on Feb. 9, 2005.

The press release said, "TransCanada is in the business of connecting energy supplies to markets and we view this opportunity as another way of providing a valuable service to our customers. Converting one of our natural gas pipeline assets for oil transportation is an innovative, cost-competitive way to meet the need for pipeline expansions to accommodate anticipated growth in Canadian [crude oil](https://www.investopedia.com/terms/c/crude-oil.asp) production during the next decade."

The first phase of the pipeline went from Hardisty, Alberta to the junction at Steele City, NE then on to the Wood River Refinery in Roxana, IL and the Patoka Oil Terminal Hub north of Patoka, IL.

Section two ran from Steele City, NE south through Kansas to the oil hub and tank farm in Cushing, OK then further south to Nederland, TX to serve refineries in the Port Arthur, TX area.

The third phase was the Houston Lateral pipeline which would transport crude oil from the pipeline in Liberty County, TX to refineries and terminals in the Houston area.

President Barack Obama announced in November 2015 that his administration would not grant additional permits for the construction of this pipeline to further their commitment to fighting climate change. President Trump then signed an executive order during his first week in the Oval Office in 2019, clearing the way for the pipeline project.

The Republican party believed that the construction of the pipeline would create more jobs and provide a boost to the economy. President Biden rescinded the construction permit for the Keystone XL pipeline on Jan. 20, 2021 when he took office after TC Energy said it was stopping construction earlier the same day.

## How the Keystone Pipeline Works

The initial Keystone system transported diluted [bitumen](https://www.investopedia.com/terms/b/bitumen.asp) and synthetic crude oil from Alberta through Montana, South Dakota, Nebraska, Kansas, and Oklahoma to refineries located in Texas, Illinois, and Oklahoma. Canada has large reserves of oil locked in oil sands. This oil is considered heavy oil that requires a different refining process from other types of oil. The Keystone XL pipeline is estimated to be able to carry over 800,000 barrels of oil a day.

> **Important**
>
> The production of heavy oil releases particulate matter such as soot as well as chemicals including sulfides, hydrogen cyanide, and sulfur.

## Criticism of the Keystone Pipeline

The Keystone pipeline has been criticized by environmental groups, politicians, and residents of the states through which the pipeline passes. These groups have raised concerns about the proposed route's proximity to the Sandhill region of Nebraska and the Ogallala aquifer which provides a significant portion of the water used to water crops in the United States. The bitumen carried by the pipeline to the United States will likely result in higher greenhouse gas emissions.

The National Resource Defense Council (NRDC) filed lawsuits in 2017, 2019, and in July of 2020 to stop the construction of the pipeline. Tar [sands oil](https://www.investopedia.com/terms/o/oilsand.asp) is much thicker and more corrosive than typical crude oil and is more prone to leaks and spills through the pipeline, according to the NRDC. The group stated that the spill in October 2019 resulted in 378,000 gallons of oil spilling in North Dakota.

## When Did the Keystone Pipeline Operate?

The original Keystone pipeline operated from 2010 until 2021. The Keystone XL pipeline would effectively allow it to resume but the original developer has expressed no interest in breathing new life into the project.

## How Would the Keystone XL Pipeline Affect Climate Change?

The National Resources Defense Council (NRDA) reported in January 2025 that the U.S. State Department has indicated that tar sands oil emits carbon emissions at a rate 5% to 17% higher than what the U.S. Environmental Protection Agency initially stated at the beginning of the project.

The NRDA indicates that this would result in an additional 178.3 million metric tons of gas emissions per year and that that’s the equivalent of 38.5 million vehicles or 45.8 coal-fired power plants.

## What Is Bitumen?

Bitumen is typically referred to as asphalt, pitch, or tar and it does share some of the same characteristics. It's a petroleum-based hydrocarbon that can result from the distillation of crude oil.

## The Bottom Line

The Keystone pipeline was initially launched to transport heavy oil from the oil sands of Canada to U.S. refiners. It almost immediately hit a brick wall of protest due to its anticipated environmental effects. President Biden rescinded its construction permit in January 2021 and the pipeline shut down. President Trump then rescinded the revocation when he took office for his second term in January 2025.

Proponents of the pipeline say that it will increase the supply of oil to the United States and that oil coming from a friendly neighboring country will increase security. The pipeline's negative environmental impacts could be serious, however.

> **Article Sources**
>
> 1.  EnergyNow.com. "[Trump Order Offers a Chance to Revive Keystone XL Pipeline](https://energynow.com/2025/01/trump-order-offers-a-chance-to-revive-keystone-xl-pipeline/)."
>     
> 2.  National Resources Defense Council. "[Trump Energy EO and Keystone XL. 'The Industry and the World Have Moved On](https://www.nrdc.org/press-releases/trump-energy-eo-and-keystone-xl-industry-and-world-have-moved).'"
>     
> 3.  TransCanada. "[TransCanada Proposes Keystone Oil Pipeline Project](https://web.archive.org/web/20140222061622/http://www.transcanada.com/3174.html)."
>     
> 4.  TC Energy. "[Keystone Pipeline System](https://www.tcenergy.com/siteassets/pdfs/oils-and-liquids/keystone-shipper-info/transcanada-keystone-system-shipper-info-map.pdf)."
>     
> 5.  The White House. "[Statement by the President on the Keystone XL Pipeline](https://obamawhitehouse.archives.gov/the-press-office/2015/11/06/statement-president-keystone-xl-pipeline)."
>     
> 6.  U.S. Government Publishing Office. "[Memorandum on Construction of the Keystone XL Pipeline](https://www.govinfo.gov/content/pkg/DCPD-201700068/pdf/DCPD-201700068.pdf)." Pages 1-3.
>     
> 7.  United States Department of Agriculture. "[Ogallala Aquifer Initiative](https://www.nrcs.usda.gov/wps/portal/nrcs/detailfull/national/programs/initiatives/?cid=stelprdb1048809)."
>     
> 8.  Natural Resources Defense Council. "[What Is the Keystone XL Pipeline?](https://www.nrdc.org/stories/what-keystone-pipeline)"
>     
> 9.  Natural Resources Defense Council. "[Keystone XL Pipeline Lawsuits](https://www.nrdc.org/court-battles/keystone-xl-pipeline)."
>     
> 10.  Britannica. "[Bitumen](https://www.britannica.com/science/bitumen)."