Pipelines map

It will create jobs.

That's about all that can be said for sure about the employment potential of the controversial Keystone XL pipeline.

But how many jobs? For how long? And what and where will they be?

With those questions, things get more complicated in a hurry. And because the line would cross nine western South Dakota counties, the number of jobs likely to be created is a national issue gone local.

First, it could be 20,000. That is the basic estimate of direct jobs created during the projected two-year construction period offered by a consulting company hired by TransCanada Corp., the Canadian pipeline entity hoping to build the 1,661-mile pipeline.

Then, there's the 100,000 estimate. That's the number of spin-off jobs that the project would create, in the calculation of the TransCanada-funded study.

And there's the 250,000 number. That is the number of permanent jobs to be created in the United States because of an expanded supply of oil brought by Keystone XL, according to that same research.

Critics take issue with all of those numbers, arguing that the estimates are inflated, that most jobs will be temporary and that environmental complications caused by the pipeline will reduce the benefits, including the job impacts.

"That's just a complete work of fiction," said Matt McGovern, a Sioux Falls lawyer who has worked for opponents of the project. "I think they're exaggerating, and they're using those inflated job estimates to sell the project. Independent studies show that it's much, much lower than what TransCanada claims."

TransCanada officials stand behind the job estimates, arguing they are the experts in pipeline construction and what it takes to build them, as well as the spinoff impacts. The basic 20,000 estimate for jobs created directly by the pipeline work includes 13,000 associated with actual construction and 7,000 in manufacturing," company spokesman Shawn Howard said.

"We have been building and operating pipelines for more than 60 years. We know how many people it will take to build projects like this," Howard said in an email. "When we build budgets or project proposals, we need to be accurate. If we weren't, we would lose credibility with the markets, investors and governments."

On the issue of spinoff jobs and an eventual employment surge tied to the flow of more oil across the states, Howard deferred to the lead researcher, Ray Perryman. He is the founder and president of The Perryman Group, an economic analysis firm based in Waco, Texas.

"Dr. Perryman has his own method of calculating economic benefits, taxes and indirect jobs that projects like KXL can help create," Howard said. "We do know that he was deliberately conservative in terms of the numbers he used for budgets to project indirect jobs."

TransCanada issued a news release earlier this month explaining all of the support jobs created for the pipeline construction. Those would include such needs as fuel and concrete, coating materials, welding supplies, reclamation materials, crushed rock, sediment barriers, valve and pigging assemblies, road and bridge construction materials, waste facilities and fencing.

Howard said TransCanada already has agreements in place with major labor unions for the project, detailing how many workers will be needed and for how long. The now-operating Keystone pipeline crossing eastern South Dakota is an important reference point for that, he said.

"They worked with us on the construction of the first Keystone line, which is about two-thirds of the length that Keystone XL will be. We signed checks for 9,000 workers on that project," Howard said. "Again, we know how many people it takes to build a project like Keystone XL."

The U.S. State Department has used 5,000 to 6,000 as a job estimate when referring to Keystone XL. And that number has been picked up by opponents as another example of differing job estimates.

Howard said that is more of a question of interpretation than differing numbers. The numbers used by the State Department are limited to the actual construction workforce, or the maximum number of construction workers on the project at one time, he said.

"We believe that the peak construction workforce will be about 6,500, in keeping with the 6,000 figure referred to by DOS," Howard said.

It also roughly matches the company's projection of 13,000 construction jobs, sort of. The research by Perryman uses "person years of employment" for job counts. That means one person employed for a year.

So if it takes two years to build Keystone XL, that means 6,500 jobs for two years. Presumably, that formula applies to the 7,000 jobs in manufacturing.

McGovern and others point to a study by the Global Labor Institute at Cornell University, which the institute says was based on a realistic look at data provided to the U.S. Department of State by TransCanada. The Cornell research predicts the overall project would be 5,060 to 9,250 "person years of employment" for on-site construction and inspection. Divided by two years for pipeline construction, that makes the job estimate 2,500 to 4,650, the Cornell research concludes.

Beyond that, only 10 percent to 15 percent of the jobs would be local hires, Cornell said. That, too, is based on TransCanada data and is consistent with the jobs associated with constructing the Keystone Pipeline that crosses eastern South Dakota.

Of the 2,580 workers on that pipeline, 282 (11 percent) were state residents. Almost all of those jobs were temporary. And the remaining, permanent workforce for Keystone in eastern South Dakota is tiny -- perhaps as small as a half-dozen employees.

Keystone XL would be a bigger project for West River, since the 314 miles of pipe that cross the state will be almost 100 miles more than crossed East River. The labor force is expected to be similar, however, with TransCanada projecting about 5,100 person years of employment, or about 2,550 jobs for two years.

Again, 85 percent to 90 percent of those jobs are expected to be for nonresident workers, many of them labor-union employees experienced in that type of work.

Housing those workers would be more of a challenge in western South Dakota, where towns of any size and housing options are limited. Two worker camps housing about 600 people each are planned, one for the Winner area and the other near Union Center.

The numbers game is confusing at the state level, too.

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A Sept. 29, 2011, news release from TransCanada that says the pipeline work in the nine counties it would cross in South Dakota would create "over 5,100 person years of employment" in the state. Later in the same news release, it says the South Dakota work would create "3,050 construction jobs."

Again, few of those jobs would be here for long.

The economic jolt that even the short-term jobs would give matters, however. And it matters especially in a state and particularly in a nation where unemployment remains a major issue. That means national politics have come into play, further adding to the conclusion.

Sen. John Thune and Rep. Kristi Noem, both South Dakota Republicans, tend to use the TransCanada job estimates and talking points in debating the issue.

"I think the best numbers we have to work with come from Keystone," Noem said during a recent news conference.

And Republicans see Keystone and the jobs issue as a way to attack the Obama Administration for delaying a final decision on the line. GOP congressional members, including Noem and Thune, are pushing for congressional authority to determine the pipeline's fate, rather than leaving it up to the administration.

Sen. Tim Johnson, D-S.D., takes a more challenging approach to the TransCanada job-creation estimates. He recently told the editorial board of the Sioux Falls Argus Leader that he thought TransCanada's projections were inflated.

The addition of high-stakes politics further complicates a jobs picture already confused by complicated differences in employment terms and highly emotional conflicting interests.

McGovern argues that TransCanada is trying to take advantage of that charged environment to promote a questionable project with questionable jobs estimates.

"It has become a total political football," he said. "With the unemployment crisis we've been facing, they're trying to take advantage of that. And I think it's unfair."

Howard said the company is simply trying to build a pipeline that will be good for Canada and the United States. And it is projecting jobs based on experience, not emotions or illusions, he said.

"The opponents of KXL do not have experience in pipeline construction, planning or operation," Howard said. "They do not have the experience or insight into what it takes to build projects like this."

Contact Kevin Woster at 394-8413 or kevin.woster@rapidcityjournal.com.

 

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