State Department's New Keystone XL Pipeline Report Proves Battle to Stop Tar Sands Is Probably Already Lost

Categories: Biz

there will be tar sand.jpg
Peter Ryan
On Friday afternoon came the unheralded release of a pretty important preliminary analysis from the State Department regarding the proposed Keystone XL pipeline, a conduit for diluted bitumen mined in Alberta and destined for the Texas Gulf Coast petroleum refineries.

The takeaway, however, has to be depressing for the climate-change activists and environmentalists stumping for the pipeline's denial -- the southern half of which, by the way, is being laid through East Texas as we speak. They had hoped that by denying tar sands producers an outlet to Gulf Coast refiners, the crude glut in the Midwest would continue to drive prices down, depressing investment in this carbon-intensive form of hydrocarbon. This, it was posited by opponents, could reduce the amount of heavy crude refined by Valero and the other big players in the downstream oil biz. But will it?

The State Department's answer was deflating and succinct: Nope. Not really. While Keystone is held up, the market has already stepped in with alternative pipelines that don't require presidential approval, like the Seaway line that runs through East Texas. The railroads, meanwhile, see rail transport of oil as a massive industry growth sector. And though rail may not be as cheap as pipeline transportation, the State Department calculates that crude oil prices are high enough to justify the expense for tar sands producers.

"Approval or denial of any one crude oil transport project, including the proposed Project, remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the U.S," the report concludes.

That's basically the same conclusion we reached in a cover story about the fight to halt the Keystone's advance in January. Tar sands producers are smarting because of the discount their crude sells for in the Midwest, to the tune of billions in lost revenue. But there's so much Chinese money flowing into Canada's tar sands mines, and such a thirst for that heavy crude from Texas refiners who are designed specifically to process the stuff, that it will find its way to market, one way or another. The irony is that some of the alternative methods of transportation -- like rail or barge -- are more carbon intensive than the Keystone.

If pipeline opponents were hoping to read between the lines a clear rationale for its denial, they won't find it here. A final decision should come in September.

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scottindallas topcommenter

The Keystone Pipeline was really halted on environmental concerns regarding it's path through Nebraska.  It was routed through some sensitive aquifer recharge zones.  That process is complete and the line has been re-routed.  The fate of the pipeline was a fait accompli long ago.  Obama got to grandstand on the issue, appeasing green fools like you.  

What Phelps wrote is right, the pipeline is the "greenest" way to transport this crude.  The construction of the pipeline (the TX and OK section particularly) should help to erode the spread between WTI and Brent--which today is $19.98 more expensive.  This will make American (and I mean North American) crude rise to the international price.  We may or may not export a drop more oil, the ability for this oil to find international ports will put it in the international price market. 

everlastingphelps topcommenter

Oil is fungible.  The only way to kill this pipeline is to drive the prices down, which means other pipelines and forms of transport.  The really sad thing is that the other methods of transport aren't as efficient as this pipeline would be, meaning that more energy is consumed moving it, and more energy = more pollution. 

Once again, a "green" position based entirely in emotion and devoid of reason.


@everlastingphelps It isn't just about the efficiency of the material transport. Its the environment surrounding the pipeline itself. Nice try framing it as something else.

@everlastingphelps Except that the pipeline from Cushing to East Texas is an existing, old pipeline that has never carried this type of dense shit at the high temperature required. God be with those who live within it's path vicinity.

RTGolden1 topcommenter

@bifftannen @everlastingphelps Environmental arguments are at crossed purposes constantly.  There is a high demand for electricity, but no reliable 'green' way to generate it.  Environmentalists demand an end to carbon fuel use in electric generation, yet refuse to accept that electric service must suffer as a result.  They offer no suitable solutions (solar and wind can't generate the quantities that fossil fuels can with the reliability of fossil fuels) or suitable avenues of lowering electric demand.  Besides that other environmentalists have their own environmental beefs with solar and wind alternatives.

It is the same thing here.  The pipeline is the safest, least damaging environmental alternative to get this product to market.  And the product will go to market, environmental concerns be damned.  If they have to load tar sand into gunny sacks and carry it to market, they'll do that.  The only real, pressing environment concern with this pipeline, as scott mentioned was in the Nebraska Oglalla Aquifer recharge zone, which has been worked around.  There may be concerns about indiscriminate use of eminent domain, but that is a legal and fiscal battle, not an environmental one.  Want to stop the pipeline?  I'm all for it, let's go protest.  Railroad, barge and truck will at least provide more jobs than the pipeline for a longer period of time, despite the increased environmental damage they'll cause.  Burn, baby burn!!


but Brantley wrote " the southern half of which, by the way, is being laid through East Texas as we speak." so which is it?

@pak152 The Southern path of the pipeline is from Cushing, OK that continues through East Texas down to the Gulf Coast.. The Northern half would be from the Canadian border down to Cushing, OK. I'm going to guess that he is using Cushing, OK as the delineation between North and South since Oklahoma is known as the beginning of the Midwest.

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