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Anthony Swift’s Blog

Deeply flawed Keystone XL tar sands pipeline bill approved by House Committee

Anthony Swift

Posted February 8, 2012 in Moving Beyond Oil, Solving Global Warming, U.S. Law and Policy

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The House Energy and Commerce Committee approved a deeply flawed bill that would use Congressional authority to permit TransCanada’s Keystone XL tar sands pipeline. The bill, H.R. 3548, would force the Federal Energy Regulatory Commission (FERC) to grant a permit for Keystone XL before the entire route for the pipeline through Nebraska has been determined. The sponsor of the bill, Lee Terry, claims that his legislation is simply a way to give the Keystone XL decision to experts at an independent agency. That rationale evaporated when experts at FERC told Terry that his bill doesn’t actually give the agency any authority and even if it did, no agency could arrive at a defensible decision within 30 days. Yesterday the House Energy and Commerce made it clear that it is not concerned with arriving at a defensible decision on Keystone XL.

The approval of H.R. 3548 by the Energy and Commerce Committee is just another instance of political theatrics by proponents Keystone XL. It started when Congress attached a rider forcing President Obama to make a decision on the pipeline within 60 days, before a new route for Keystone XL in Nebraska had even been proposed, let alone reviewed. The Obama administration declined to approve a project on an arbitrary timetable which prevented federal experts from doing environmental review and determining whether the project was actually in the U.S. national interest. FERC, an independent agency outside of either Presidential or Congressional oversight, has offered tacit approval of the President’s approach. In his Congressional testimony, FERC’s Director of Energy Projects Jeffery Wright agreed that Congress’s arbitrary political deadline does not permit policymakers “to arrive at a defensible decision” on Keystone XL. 

The problem with the criticism that the environmental review process for Keystone XL has already taken too long is that TransCanada is responsible for much of the delay. TransCanada impeded its own environmental review by providing federal investigators with inaccurate information. Federal investigators didn’t do environmental assessments on alternative routes through Nebraska because TransCanada told them that routes other than the one through Nebraska’s sensitive Sandhills would be economically infeasible (pg. 4-49, Final EIS of Keystone XL). We now know that’s not the case – but their bluff delayed the environmental review of alternative routes for their project.

Several amendments to H.R. 3548 were proposed and voted down in the markup:

  • Representative Markey offered an amendment would have prevented most of the tar sands on the pipeline from being exported after arriving on the Gulf Coast. TransCanada has forecast that its pipeline will raise U.S. oil prices by $2 billion to $4 billion a year as it brings oil from the Midwest were it can be processed and exported internationally.
  •  Rep. Mike Doyle offered an amendment that challenged TransCanada to certify its claim that the majority of the steel in Keystone XL was made in the U.S. or Canada. The Congressman accused TransCanada of misleading the American public that the pipeline would be built with American steel, saying “I don’t believe there’s a lick of US or Canada steel in this pipeline. But I would love to be proved wrong.”  
  • Rep. Eshoo proposed an amendment that would require that the Pipeline and Hazardous Safety Materials Administration (PHMSA) complete its review of the risks associated with diluted bitumen pipelines before allowing TransCanada to build one.
  • Rep. Rush proposed an amendment which would have prohibited TransCanada from using eminent domain powers to seize land along the route of Keystone XL.
  • Rep. Dingell offered an amendment which would have restarted the environmental review and national interest determination for Keystone XL.

What’s next? House leadership has signaled its intention to attach a Keystone XL bill to what the American people consider must-pass legislation. That likely means either the extension of the payroll tax cut or the transportation bill. These bills have three things in common: 1) without unrelated riders, they have ostensible bipartisan support; 2) they offer substantial benefits to the American people throughout the country; and 3) they have absolutely nothing to do with Keystone XL. There are precious few areas where Congress has a chance of passing something that helps the country – and House leadership is poised to scuttle those with an unrelated Keystone XL rider.

President Obama put the public’s safety and the nation’s lands and water above the interests of Big Oil when he rejected the pipeline. The House Energy and Commerce Committee have responded with a bill that would make middle America the middle man for Canadian crude on its way to foreign markets.

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Comments

BSFeb 8 2012 03:21 PM

Anthony--Didn't you commit to responding to my various comments on your past articles?

With respect to this article, it's hard to argue that the Republicans are handling this issue very well. What they're doing doesn't make sense to me, either.

Anthony SwiftFeb 8 2012 03:40 PM

Hi BS: Yes I did and I sincerely apologize for the delay. I will get a response out very soon!

Anthony SwiftFeb 8 2012 03:45 PM

And I'm glad we can agree on the poor handling of the issue at very least.

Though I have to credit Rep. Bass of NH (R), who broke ranks on the issue and voted against the measure.

BSFeb 8 2012 04:54 PM

It is a bit of a circus.... If we're going to do it, we need to do it right.

barbaraFeb 8 2012 08:23 PM

havn't we learned from the last two disasters (valdez, the gulf, etc)

Is there anyway we can "fire" these republican congress-people?

Seriously - how much damage may be done - but then again some people might enjoy eating fish laden with oil!

BSFeb 8 2012 08:26 PM

Have we learned from Valdez? Are you kidding? We have double-hulled tankers, many more safety measures, and have you heard of such an incident since?

Same goes for the Gulf spill, only less time has passed.

DougWFeb 9 2012 04:03 PM

Its funny how the anti Keystone cherry pick parts of the TransCanada docs and don't use others.

They use the "its going to be exported" when they know that only 500K net product is exported and the US has only become an exporter in the last couple of years. And that keystone wouold just displace imports from other places not increase the amount of imports or exports. Unless the US shutdowns a 500K refinery it will continue to export 500K of product. Imagine the US actually exporting something rather than importing stuff from China.

DougwFeb 9 2012 04:11 PM

From Transcanada- just bleow the section where it states that producers will get higher prices, which doesn't mean consumers will pay higher prices ( maybe yes maybe no)

"Based on the PGI forecast of heavy oil supply growth, it is projected that, without the Keystone XL Pipeline, heavy crude oil pipeline capacity from Western Canada will be fully utilized by 2014. Using the supply forecast in the CAPP interim update of
December 2008, PGI concludes that capacity for heavy crude oil will be fully utilized by 2015"

Now if you use Transcanadas words that the Midwest will pay more then you should believe that Canada will fill the pipeline with more bitumen.

BSFeb 9 2012 05:29 PM

Doug, you got me thinking....

TransCanada was planning to build Keystone XL back in 2008 before we had any idea we'd become a net exporter of refined products. So the idea that this was planned as an export pipeline makes no sense at all.

DougWFeb 9 2012 05:51 PM

Of course it was never a export from US pipeline. It was and is a export from Canada pipeline to US gulf Coast pipeline. In 2008 the US was still a big importer of refined product.

http://www.econbrowser.com/archives/2011/12/us_net_exports.html

TransCanada doesn't care what refiners do with it after they refine it. They are delivering the product to the biggest market in the world. The USGC has a refining capacity of 4 mill barrels a day. twice the capacity of Canada total. Its too bad that the issue has been confused because one of the buyers is a big exporter. The purpose of the pipeline is to displace heavy oil coming from Venezuela. If it not built then the tankers from Venezuela will still keep on coming. When Keystone is built oil from Venezuela will have to be sold at a discount to world price to compete with Canadian Extra heavy ( bitumen).

DougwFeb 9 2012 06:01 PM

If the US wants to keep on importing oil from Venezuela then go ahead. Its also heavy which the GC refineries can take. Some of it is produced with steam injection just like the oil sands oil so as far as a carbon content its probably about the same.

The thing is that the world is running out of easy oil. Oman has had to invest in steam injection projects to keep up its production. I person I know is working on a 60,000 barrel steam project in Kuwait. Pretty soon a good % will be dirty oil. Bakersfield CA is the father of steam injection. The US invented "dirty oil"

Doug WFeb 9 2012 06:11 PM

posted this somewhere else=

People in the States don't understand the basics. Canada via Keystone wants to access the gulf coast refinery market to feed those refineries. Its a big market. So rather than tankers coming in from Saudi and South America etc the pipeline will feed those refineries. We'd need XL2 to completely feed those refineries. Yes because demand in the US is low those refineries export product. But that is going to happen you get oil from Saudi or Canada or your friend Chaze. Its not Canadian oil to US OR China its Canadian oil to both. The US imports 8 to 9 million barrels a day. Canada only produces 3 million a day. So we have a long way to go to fill the US. But Canada has the second highest reserves in the world and at current production has 100 of years of production. One company has billions of barrles of reserves so at current production would last 750 years!! Yes of course they want to increase production to10 mill by 2020. AS for dirty oil, well it does take big plants and energy to produce it but its the same type of oil that comes out of Bakersfield CA. On the jobs front. The investment in the plants to fill the pipeline is massive. to fill that pipeline 700,000 barrels per day, 20 plants at $1 billion each have to be built. So an investment depending on the mix of mines and in situ steam $20-30 billion Each of those plants will buy at least 10% -20% of equipment from States. One company I deal with in Tulsa is selling 20 boilers a year to the Oil Sands , thats 100 million a year and could increase to 150 million. Thats a lot of work for welders in Tulsa and that is just one company. We could use 5000 construction workers from the States for the oil sands for the next 20 years as we don't have enough. On the jobs front the pipeline it self is peanuts.

BSFeb 9 2012 09:26 PM

Doug--All great comments.

DougwFeb 10 2012 11:23 AM

This is a reasonable analysis

Michael Levi, a senior fellow for energy and the environment at the Council on Foreign Relations, has written a must-read list of myths about the (temporarily) defunct Keystone XL. Levi takes aim at climate change scaremongering with the same delight with which he debunks job creation and energy independence fairytales. Here’s a synopsis:

1. The pipeline would have been catastrophic for global climate change. Verdict: false.

2. The pipeline would have reduced U.S. reliance on oil from the Middle East. Verdict: pipe dream.

3. The pipeline would have created hundreds of thousands of American jobs. Verdict: gross exaggeration.

4. The pipeline would have set back the green economy. Verdict: umm… not true.

5. If we don’t build the pipeline and buy their oil, Canada will sell it to China. Verdict: so what?*

*hem, this, of course, from an American point of view.

http://www.cfr.org/energyenvironment/five-myths-keystone-xl-pipeline/p27099

my view- and this is not on Keystone XL but what will happen over next 10-20 years as oil sands ram up

1. Canada is going to add maybe at most 2 mil barrels a day production every 10 years maybe 3 mil but not more than that. Compared to consumption in the US really that’s nothing. Compared to the world its nothing. And the extra carbon with oil sands oil on a to wheels basis is not that much and many other world sources are going to be from unconventional sources. Easy oil is gone.
2. True, price will be a world price and that will be set by world market, even if Canada’s production goes from 3 to 6 mil by 2020 and to 10 by 2030 it is not a game changer on world price. Others declines will be more than that. Cheap oil is gone
3. The pipeline it self no big deal on jobs, but the oil sands as a project over the next 20 years will produce significant job benefits to US.
4. see 2, green will depend on gov’t policy and price of oil.
5. so what, we’d like to see it to you but agree so what.

Security- there is long term something to that but not price security – supply security is increased . When the US in consuming lets say 20 by 2020 and importing 8 maybe 7. If everything it imports for domestic needs come from Canada, if there is a war type supply issue then the US is secure and can fight its war if it needs to. But then again its not price security as the US consumption will no longer set world price.

dougwFeb 10 2012 03:49 PM

Correction

1. Canada is going to add maybe at most 1 mil barrels a day production every 10 years maybe 2 mil but not more than that. Compared to consumption in the US really that’s nothing. Compared to the world its nothing. And the extra carbon with oil sands oil on a to wheels basis is not that much and many other world sources are going to be from unconventional sources. Easy oil is gone.

Oil sands topping out at 6 mil is more realistic. Not enough capital to go faster than that not that most would want to.

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