Much of the opposition directed against the planned Phase 4 of TransCanada's Keystone XL crude-oil pipeline stems from the increased chances of significant leaks occurring at any one of the ecologically sensitive regions that the pipeline would traverse. The pipeline is intended to periodically transport corrosive and abrasive un-upgraded bitumen that's simply been made less viscous and more free flowing by heating and/or diluting with natural-gas condensates such as benzene (a carcinogen) and naphtha. This diluted bitumen or dilbit is heavier compared to conventional and synthetic crude oils and, upon getting spilled, will likely sink to the bottom of a river or a lake.
There are sectors in the Canadian and US body politic that are not fundamentally opposed to oil-sands development and the pipelining of Albertan tar-sands oil to various parts of North America. These groups advocate a centrist and cautious approach that gives due consideration to environmental safeguards and looks closely at the probabilities and possible consequences of spills. Instead of standing in total opposition to oil-sands development, middle-ground advocates would rather require mining, oil, and pipeline companies to spend more monies on improving mining practices and on increasing the robustness and leak resistance of oil and gas pipelines.
Meanwhile, opposition against Enbridge's construction of the Northern Gateway pipeline system and Kinder Morgan's expansion of its Edmonton-Burnaby system is underpinned not only by the same environmental concerns besetting the Keystone XL, but also by skepticism towards the proffered sustainability of utilizing tar-sands oil and on whether exporting Canadian petroleum to markets outside North America would in fact result into a “net benefit” for the majority of Canadians in the first place.
The majority of Canadians and Americans would probably be very pleased if fuel prices at the gas stations would go down a little bit, much as they were pleased at having had lower heating bills after the previous winter partly because of the depressed gas prices. Low prices for transport fuels and utilities reduce prices for services and other commodities, which in turn generally increases consumer confidence towards spending more of their money, which in turn is good for manufacturers and service providers. But oil and pipeline corporations are of course majorly focused on maximizing returns on investments for their shareholders and, hence, are always on the lookout for markets that can provide the highest possible profit margins on their products. Mainly because of the increased demand for crude oil from cash-rich China and India, extracting tar-sands bitumen has become economically attractive. Oil producers are keen on capitalizing on this opportunity and have subsequently ramped up production rates in anticipation of increased exports to Asian or European markets. Compared to this export option, expanding the network of pipelines to distribute and market Western Canadian oil and gas to manufacturing and mining industries in Eastern Canada (that largely depend on oil imports) would not be as profitable for the oil and gas producers, speculators, and other market players.
Although retail prices of transport fuels remain high in both Canada and the US, more immediate investor priorities seem to favor the "diversification" of the markets for Canadian crude oil and gas exports. (But at least some Western Canadian crude might soon start flowing east for the benefit of Canadian industries and consumers.) Were it not for the opposition from the more environmentally minded Americans and Canadians, Canadian tar-sands crude would have been set for transport to Texas refineries, and from there to other parts of the world after conversion to diesel fuel or other refined petroleum products. With Phase 4 of the Keystone XL project currently put on indefinite hold because of dogged public pressure, the Northern Gateway proposal and the Kinder Morgan expansion have been touted as viable alternatives. But these proposals have also been met with stiff resistance based yet again on environmental-damage risks and community health-and-safety concerns.
But negative public opinion seems to be mainly directed against crude-oil pipelines and shipping and not towards natural-gas pipelines and shipping. Oil and pipeline companies have taken advantage of the relatively calmer waters surrounding natural gas development and have begun to look into exporting Canadian natural gas by way of British Columbia to Asian and other markets. Exporting natural gas though would probably increase extraction and upgrading costs for tar-sands oil. Also, Canada's natural gas resources might already be headed south. Finally, overall engineering requirements and costs for setting up natural-gas pipelines and liquefied natural gas (LNG) processing and port facilities, as well as the costs for shipping the gas itself (either as a cold-condensed liquid or as a highly compressed gas) are higher than corresponding transport and shipping costs for crude oil and other petroleum products such as propane and butane.
One possible option though for oil and pipeline companies is to manufacture and then transport liquefied dimethyl ether (LDE) instead of LNG or tar-sands oil. Mongolia recently announced a pipeline project that will transport dimethyl ether to China. Just as with liquefied petroleum gas (LPG), LDE can be transported on many types of crude oil pipes. LDE can also be carried on LPG ocean vessels without the need for extensive and expensive equipment modifications. Depending on the scale of production and the efficiency of the selected conversion processes, LDE would probably be only slightly more expensive per unit volume than LNG, at least initially. But the lower transport and handling costs of LDE and future economies of scale could probably offset the initially higher manufacturing price tag of LDE. LDE would also be less likely to attract the same negative publicity as with dilbit since dimethyl ether is neither toxic nor carcinogenic (unlike dilbit). LDE is not a greenhouse gas either (unlike methane, the major component of natural gas). Finally, LDE might also be suitable as a diluent or even as an extraction solvent for tar-sands bitumen (in lieu of petroleum condensates and gases such as benzene, naphtha, propane, and butane); and, with gasification and steam methane reforming, LDE might become economically derivable from tar-sands crude itself instead of just from natural gas, coal, and waste biomass.
If LDE could indeed be a suitable alternative to dilbit, syncrude, or natural gas, then maybe the oil companies, the Canadian federal government, and the financially solvent Asian buyers of Canadian crude oil and gas would be willing to invest in LDE infrastructure in Canada as a way of going around the dilbit-triggered environmental impasse.