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Anthony Swift’s Blog

TransCanada's southern Keystone XL tar sands pipeline isn't designed to support domestic oil industry

Anthony Swift

Posted March 22, 2012

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President Obama has recently singled out the southern route of TransCanada’s Keystone XL tar sands pipeline as a means of getting domestic crude from the Midwest to Gulf Coast refineries. Here’s the problem – the Keystone XL pipeline is designed to move costly Canadian tar sands, not domestic crude, to the Gulf Coast. Not only are 90% of TransCanada’s contracts to move Canadian crude, but Keystone XL only contains two spots where only limited quantities of domestic crude can be put on board. Keystone XL is a pipeline for Big Oil companies producing tar sands in Canada, where the United States will receive very little benefit. President Obama should not provide special benefits to a company that seeks to build a tar sands pipeline benefiting Canadian tar sands producers. If getting domestic crude to the market is the problem, the Canadian Keystone XL tar sands pipeline is not the answer.

The Keystone XL tar sands pipeline simply is not designed to move significant volumes of domestic crude.  The 900,000 barrel per day (bpd) pipeline only has two comparatively small on-ramps in the United States. The first, in Montana, includes an on-ramp for a maximum of 100,000 bpd of crude. The second in Cushing, Oklahoma, allows a maximum of 150,000 bpd – and oil going into the southern segment from Cushing could easily be tar sands as well as domestic crude. That means that at most, little more than a quarter of the oil on Keystone XL would be from domestic producers.

While the southern route of Keystone XL is being touted as a means to move domestic crude to market, it is also designed to move primarily Canadian tar sands. From Cushing, the southern route of Keystone XL is connected to two pipelines – the 150,000 bpd on ramp in Cushing (that can carry tar sands and domestic crude) and TransCanada’s 590,000 bpd Keystone I tar sands pipeline (which has no on-ramps for domestic oil). Keystone XL’s design prevents it from being used as a pipeline primarily for domestic production.

In reality, Keystone XL is part of a larger strategy to maximize the profits of large multinational oil companies at the expense of smaller domestic oil producers. Even as domestic production is increasing, major pipeline projects like Keystone XL are bypassing domestic crude piling up in the field, allowing Canadian tar sands to ‘skip ahead in the line’ in order to access the highest prices and the most lucrative global markets in the Gulf Coast.

Meanwhile, U.S. refiners in the Gulf Coast are gearing up to process Canadian tar sands crude instead of domestic light crude. The price that a producer gets for its oil, heavy or light, is related to how much refinery capacity there is to process that particular kind of crude compared to the overall supply of that oil. In the inland United States in places like Bakken, Texas, New Mexico and Oklahoma, primarily small to intermediate size domestic companies produce high value light crude. The Canadian tar sands, which are being produced primarily by large multinational integrated oil companies,  produce very low quality, heavy bitumen. As U.S. refineries reconfigure their operations to process heavy Canadian tar sands, they have less space to process light domestic crudes. While more heavy crude capacity increases the price for tar sands producers, it lowers the price for domestic companies producing light crude.

 It is possible to build a pipeline to move domestic crude to Gulf Coast refineries, but that is not what Keystone XL is designed to do. Keystone XL is designed to take Canadian crude through America’s heartland on its way to the Gulf Coast where it can be refined and exported. While that may help big multinational oil companies producing Canadian tar sands, it’s going to hurt smaller companies producing light crude in the United States. If moving domestic oil to market is really the goal, the President should consider pipeline infrastructure projects that are designed to do so, without the safety risks of tar sands.

Ultimately however, the U.S. economy, national security and the environment would be best served by measures that reduce our long term reliance on oil. Over the next twenty years, the United States could reduce its oil consumption by 5.7 million barrels a day by adopting an Oil Savings Plan promoting technologies that exist today. These would save U.S. consumers could save over $200 billion a year while putting American back to work manufacturing solutions to high gas prices and unstable oil markets.

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BSMar 22 2012 01:53 PM

Very little benefit?

The ability of refineries to export refined products means thousands of jobs. And by using Canadian oil to do that rather than oil imported from other continents, less energy is consumed in the transportation of this oil, which is good for the environment (but offset by tar sands production being "dirtier").

Seems like a good idea to me.

Of course, if we don't like exporting refined products, we could shut down refineries. Not only would that put people out of work, but the reduction in global refining capacity would, of course, result in higher prices for refined products. Which of course, is really what the NRDC wants to support it's radical environmental agenda.

BSMar 22 2012 01:56 PM

An agenda, I might add, that is so far removed from reality, that the NRDC can't even defend their arguments when some random guy like googles something, accidentally winds up here, and decides to stay and point out all the false information being broadcast.

BSMar 22 2012 01:58 PM

Typo.... "random guy like googles " = "random guy like me googles "

BSMar 22 2012 02:00 PM

Occasionally, you do say things I agree with, such as:

"Ultimately however, the U.S. economy, national security and the environment would be best served by measures that reduce our long term reliance on oil."

The only issue I have with this is that it is going to take longer than most idealists think it will. And if we follow the radical agendas of special interests like the NRDC, we'll wind up ruining our economy in the meantime.

John LiffeeMar 22 2012 02:40 PM

"random guy like me googles"

Had to laugh at this, BS. I'm pretty sure you once said you're a career oilman. You seem to have made a nearly full-time job out of attempting to drown guys like Swift with industry talking points. Why don't you come out from behind your anonymous handle, tell us your real name, and admit that you're either a PR flack for an oil-industry player or that at very least you're doing this with the knowledge and support of your employer?

Personally, I don't believe a word you say. You affect the persona of an "independent voice," but your clear agenda, whether you're man enough to admit it or not, is to lock in a cash cow that will line your pockets and those of your friends.

Meanwhile, we are in the midst of the planet's sixth "great extinction event," the first to be entirely attributable to the impact of humanity. We burn through the Tar Sands, as you are working so hard to ensure, and we'll have lofted a second Saudi Arabia's worth of greenhouse gases into the atmosphere — and sealed a deal making humanity responsible for the worst calamity ever to befall life on Earth. You will be judged for that; we all will.

Rod WuetherickMar 22 2012 03:34 PM

I liked your group and support it but not for the reasons you might think.

It is important when we who work towards heightening social awareness, etc. are ourselves aware of everything we can possibly be in regards to what we are against or promoting in the public.

Before I go on please understand that I’m fully for reduction in our use of fossil fuels, safer use, better environmental policy, etc. Also understand that my views towards energy companies are in terms of practicality, environmental, community, commerce, national security, etc.

I thought that you might be interested in one Canadians perspective.

The facts first: Canada is second only to Saudi Arabia in proven oil reserves, The Alberta Tar sands; all 77 thousand square kilometers of potential environmental devastation, represents 97% of those proven world reserves.

The U.S is the number one consumer of oil in the world consuming around 19 million barrels of oil a day with 5% of the world’s population. The U.S has now passed the dreaded 50% where you folks must import more than 9-10 million barrels of oil a day to keep up with your domestic, commercial, and military consumption – which incidentally uses the same number of barrels of oil a day as the nation of Sweden (328,000 barrels a day).

In terms of domestic consumption we both use roughly 30% of that in agricultural production.

As a Canadian I want to respectfully disagree with what I think is inaccurate information you are giving to your readers.

Canada ships 98% of our energy production to, guess who? That’s right the U.S.

From my perspective as a Canadian I think it is foolish of our government to rapidly develop the oil sands for two reasons;

1) it is as it stands it is the second largest proven world reserve of the gooey stuff that unfortunately, as it stands now runs most industrialized nations. Canada should be taking part in helping the world ease off its dependence of fossil fuels by developing the tar sands at a slower rate. Allowing them to improve extraction technology, and more time to accurately establish environmental damage and of course full reclamation and restoration of original habitat.

2) The world is now consuming around 90 million barrels of oil a day. It makes sense to me as a Canadian that we should insist that our government negotiate a better deal in terms of royalties from the oil sands which now stand at a lowly 13%, a realistic return to Canadian citizens would be more like a 40-50% royalty rate. Our government(s) shouldn’t subsidize the price of fuel through this either as this would of course, cause a trade war and would not induce the desired reduced consumption. We should allow the price of oil to rise to curb consumption, increase our government’s royalty rates and put that money into alternate energy projects. This would create longer terms sustainable jobs in renewable energies and I think that environmentalists should at least consider the safety of the very small nuclear reactors that are not the monolithic massive terra watt behemoths of yesteryear. We could get rid of these as new technologies became available. It would certainly help us rapidly switch our fleet of vehicles over to full electric. Thus allowing standardized charging stations – and probably removable pack technology where you pull in, they pull out one or two sleeves of power cells and return them with fully charged ones, etc.

We use 70% of our domestic oil with just our food production, trucks, trains, airplanes, and of course many just driving to and from from work.

The U.S, 70% of your entire military apparatus uses fossil fuel to mobilize. It is of vital national interest for the U.S (and Canada) that you’re military and ours, however unfortunate that sounds, have a continued supply of fossil based fuel. It is the world that we currently live in – it saddens me as well.

Anyways I just wanted to point out that things are not quite as simple as you make them.

I wrote an article on my blog about all of this.


BSMar 22 2012 03:41 PM

Unless my employer is monitoring my activity, they have no idea I am doing this.

You don't have to believe what I say. I post data for much of what I say, and the rest can be independently verified.

You talk about me like you think I'm some big executive who's income will go up if my company has some huge success. Nothing could be farther from the truth.

And I'm actually a strong believer in conservation (i.e. using less energy), and my job actually involves doing just that. I've probably prevented more greenhouse gas emissions than anyone from the NRDC.

With respect to global warming, the earth's temperature has not warmed for the last 12 years or so, and sea level rise has been minimal. The IPCC's predictions from 1990 were WAY off. I've been asking NRDC to explain all that, and so far, I've gotten nothing.

MLSMar 22 2012 09:39 PM

I heard that the US Military is gung ho on alternative fuels mainly because, unlike its political leaders in the past, it 'gets' climate change and the adaptations it will force upon us.

djbMar 24 2012 12:11 PM

I like reading the various blogs/comments about our energy problems but, the actual data/truth does not seem to be very well defined. I am inclined to believe that the Keystone XL pipeline will only benefit Canada, that the USA will not gain financially, nor will they be able to reduce the present cost of gasoline. Research into new technology seems to be dependent on government funding instead of public sources such as those 1%ers who have all the money.
As a result, we are deadlocked and will not see very much progress in this area. No matter what kind of facility is required to distribute the new form of energy, it must be done safely and efficiently. If the new source does not make life better, healthier or less expensive, then what makes this energy form attractive?

eddie radilloMar 24 2012 02:33 PM

The Pipeline Hazardous Materials Safety Administration (PHMSA) is conducting three important studies in accordance with the Job Creation Act signed into Law, 3 January, 2012. These studies will deal directly with our safety and well being. Transcanada’s plan to build their pipeline through our counties in Texas and we must make sure they abide with the findings of these studies. Please make note of the following information concerning the first two studies .On the 27th and 28th of March, (PHMSA) will be streaming live workshops on – Improving Pipeline Leak Detection System Effectiveness and Understanding the Application of Automatic/Report control valves available on this link:
For most of us who cannot watch the live webcast, it will be recorded and available about 7 days later to view on your schedule. The workshops’ agenda is at this link:
The third study on Diluted Bitumen (Tarsands) has been contracted by DOT to the Academy of Sciences, Engineering and Research Board. The results of this study should be available sometime Summer of 2013. Each one of these studies is mandated by both houses of Congress and must be briefed to them upon completion. We must especially make sure that we tell our representatives that Transcanada should only allow domestic crude to be shipped through this pipeline, if approved, and not diluted bitumen until the study of diluted bitumen is finished and dictates what equipment should be used in its transportation. Our safety, our water, and our future generations are depending on us to make sure of this. Contact your county officials and your state representatives. Make them accountable. Let them know you expect them to put your SAFETY first.

BSMar 25 2012 10:33 AM


I agree, safety (people and the land/water) always comes first. However, there are many crude oils shipped in the US that have higher sulfur and higher acidity than Canadian crude. There's really nothing special about it from that standpoint.

BSMar 25 2012 10:41 AM


The US military's interest in alternative fuels has more to do with the availability of fossil fuels. The latest resurgence of the US oil industry, and all the new recoverable reserves around the world have diminished that interest.

However, the military is also interested in climate change and the effects it would supposedly have on its duties, and I believe they have also taken major steps to do their part to conserve, etc., which is always a good thing.

PemaleBaconApr 12 2012 09:16 PM

I love this article because it shows exactly what is wrong with the ass backwards U.S. way of thinking. Every activity that the U.S. government and industry does has to benefit the U.S. economy proportionately more than the Canadian economy...according to every half ass American journalist that pretends to know something about this topic. I ask, from an Albertan, Canadians perspective, you open your eyes and being to recognize that this world is not based on every man for themselves. Your neoliberal or neoconservative individualism (its all the same in theory) will get you no where as the world economy is now a global system that depends on global coordination to be successful. If you can't even cooperate with your biggest and most potentially economically beneficial partner, who can you cooperate with?

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