Canadian Association of Petroleum Producers Comes to Defense of Keystone XL Pipeline

Following an OP Ed Piece in the NY Times by Thomas L Friedman extolling the virtues of not building the Keystone XL Pipeline, Canadian Association of Petroleum Producers Vice President Greg Stringham valiantly rushed to the defense of the pipeline. And he stayed solidly with the company line that the Canadian tar sands oil was intended for US consumption despite the fact that once refined in the gulf coast, the resulting fuels are most likely headed overseas. Here’s Mr. Stringham’s letter to the editor of the NYT:

Letter Oil Sands Emissions

To the Editor:

Contrary to “No to Keystone. Yes to Crazy,” by Thomas L. Friedman (column, March 10), Keystone XL will have no impact on global greenhouse gas emissions because oil sands crude will replace current American imports of similar heavy oil from Venezuela and Mexico.

Oil sands operations account for just 0.16 percent of global greenhouse gas emissions. If all operations shut down tomorrow, the impact on greenhouse gas emissions would be infinitesimal. Even so, industry reduced oil sands emissions per barrel by 26 percent since 1990 and continues to seek reductions through technology and innovation.

The Alberta government implemented oil sands greenhouse gas regulations in 2007, including a carbon price. Of the top five oil suppliers to the United States — Canada, Mexico, Nigeria, Saudi Arabia and Venezuela — only Canada has such regulations in place.

Keystone XL is not about greenhouse gas emissions or how much oil the United States chooses to use; it is about where the United States gets that oil.

Vice President, Canadian Association of Petroleum Producers
Calgary, Alberta, March 14, 2013

The US State Department and the Keystone XL Pipeline

Earlier this week the US State Department released their environmental impact study of the Keystone XL Pipeline. Essentially they found no environmental risks that were unmanageable and made no decisions on whether building the pipeline would be beneficial to the economy and energy needs of the United States.

They made a number of obvious statements…like building the pipeline would have no effect on US demand for crude oil…and that failure to complete the pipeline would not prevent continued exploitation of the Canadian oil sands. They did note that developing and refining oil sands crude does create more green house emissions than other crude oil sources. None of this is particularly surprising.

But one paragraph caught my eye and it seems to be self contradictory:

The president faces equally strong pressure from industry (to complete the pipeline ~ ed.), the Canadian government, most Republicans and some Democrats in Congress, local officials and union leaders, who say the project will create thousands of jobs and provide a secure source of oil that will replace crude from Venezuela, Saudi Arabia and other potentially hostile suppliers.

If the oil sands will be developed without Keystone XL, why the pressure on the president to build it? Obviously other options aren’t going to be equally profitable despite having to build a 1,700 mile pipeline.

And it will replace crude oil from potentially hostile suppliers? Then why pipe it half way across the continent? Why end the pipeline on the gulf coast if your intention is to use the oil domestically. Wouldn’t it be better to refine the oil in place and ship the refined products directly to their end users?

Or if it’s about jobs, build a new state of the art refinery in the upper Great Plains or upper Midwest that is specifically designed to refine tar sands crude? We get construction jobs in building the shortened pipeline and a new refinery. We get new refinery jobs in middle America. We get refined petroleum products in the mid-west far from the majority of our other sources of crude oil. That could reduce the risk of leaks in our existing petroleum pipeline infrastructure.

And we don’t have to buy rights of way across the country, threaten aquifers anywhere, and we can build a refinery where we need it most.

That seems like a win win…

So why does the oil need to get to refineries on the gulf? Because petroleum is a world market commodity. Prices are set in the world market. And it’s much easier to ship petroleum products from a port refinery that from say…South Dakota!