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Oil and Financial Industry Quotes Highlight Keystone XL as Essential Tar Sands Lynchpin

Josh Mogerman

Posted January 31, 2014 in Curbing Pollution, Moving Beyond Oil, Solving Global Warming

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It has been a pretty frustrating day on the Keystone XL tar sands pipeline front. Lots of reporters seem to have been working off of the State Department's briefing that took place this morning, rather than reading the actual Supplemental Environmental Impact Statement that came out late afternoon today. There's an array of issues that the first wave of stories seem to be getting wrong--and we will deconstruct some of that stuff later. But the issue of Keystone XL being the lynchpin that determines whether unsustainable plans to triple production of the dirtiest oil on the planet continues to get short shrift. Simply put, if the President says no to this project, the tar sands industry will be forced to take their foot off the pedal, which in turn means easing off one of the fastest growing sources of carbon pollution in North America.

But don't take my word for it. The industry is pretty open about this issue when it suits their needs. And there are some interesting statements from the financial world too. This is hardly comprehensive, but here are a few recent examples:

 

Russ Girling, CEO, TransCanada. An article quoting him indicates, “If Canada fails to develop its oilsands now — and fails to build the pipelines to move it to market — the opportunity could vanish for decades, two industry executives warned Wednesday.” The article further indicates that Girling “pointed to the Mackenzie Valley gas pipeline, which took six years to get regulatory approval. By that time, natural gas prices had fallen and the project was shelved.” Girling was quoted as saying: “This is exactly the same thing. When markets come up, you have to take advantage of them … If you miss an opportunity, you may lose it for decades and decades to come.” 

Oilsands development is now or never, industry executives sayThe Star,January 15 2014

 

 “If there were no more pipeline expansions, I would have to slow down.”

– Brian Ferguson, CEO of Cenovus Energy Inc (Canadian oil company planning to triple its tar sands production)

Oil industry rebuts ‘trash-talking’ celebrity criticsThe Globe and Mail, January 15 2014.

 

“In order for crude oil production to grow, the North American pipeline network must be expanded through initiative, such as the Keystone XL Pipeline project.”

-- Joe Oliver, Canadian Natural Resources Minister

Canadian officials admit pipeline would increase oil sands productionGreenwire [subscription required] August 26 2013.

 

Steve Tungesvik, President and CEO of Statoil, said that he and other companies are “reluctant” in invest in tar sands in Alberta due to the current uncertainty about export pipelines. He says that activity has decreased “because people want to have some answers.” Statoil is not alone; Suncor Energy Inc. and Cenovus Energy Inc. also recently created more conservative financial strategies to develop the tar sands.

-- Statoil may pick East Coast over Alberta for new expansions, Financial Post, December 16 2013

 

[Tar sands expansion] “is contingent on the construction of major new pipelines to enable the crude to be exported to Asia and the United States” and specifically cites the Keystone XL proposal as critical to allowing these expansion efforts.

-- The International Energy Agency

IEA confirms tar sands pipelines are key to production growth from my colleague Anthony Swifts blog (with cites)


“Approval of the Keystone XL pipeline could lead (depending on assumptions about how much of the oil would otherwise make it to market) to an increase in global GHG emissions four times as big as prior analyses have concluded and potentially counteract some of the flagship emission reduction policies of the U.S. government.”

-- The Stockholm Environmental Institute

Greenhouse gas emissions implications of the Keystone XL pipelineStockholm Environmental Institute, December 2013.

 

“Approval of the northern leg of the Keystone XL pipeline, which will transport oil from Alberta to Cushing, remains the most significant catalyst for improving takeaway bottlenecks, in our view.”

-- Barclays Bank, pg. 35

Global 2014 E&P Spending Outlook, December 9 2013

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Comments

Michael BerndtsonFeb 2 2014 02:09 PM

So NRDC Illinois is cool with the already 1.5 million barrels per day flowing from Alberta? The 500,000 barrels per day flowing to midwest/Illinois refineries? The additional 600,000 barrels per day that will flow from Flanagan, IL to Cushing, OK and the late 2014/early 2015 800,000 barrels per day that will flow from Illinois to the Gulf? This is already from existing permitted pipeline US/Canada border crossings. Keystones is just more of a straight shot.

Keystone XL north completed or not isn't really impacting those not incorporated as TransCanada, yet. At least until 2020. And who knows, maybe President Ted Cruz will OK Keystone North and force taxpayers to have a second one built out of repurposed solar panels and windmills just out of spite.

Suncor, the major producer in Alberta, isn't sweating too hard. Imperial Oil (Exxon dba Esso Canada) seems cool about future prospects.

Josh MogermanFeb 2 2014 02:23 PM

Michael, as always, thanks for reading and taking the time to comment. But I honestly haven't a clue what you are getting at...? I think you know that NRDC has been deeply engaged on a variety of tar sands issues well beyond the KXL fight, including protracted winning legal fights with BP's Whiting, IN refinery and the current pushback against petcoke piling on the SE Side of Chicago (which in turn further dirties the power sector as an even worse coal substitute).

We are not OK with the current footprint of the tar sands industry. And we are less OK with the 800k/bpd expansion that KXL represents---or the unsustainable tripling of production the industry plans, which KXL acts as a spearhead in pushing.

Michael BerndtsonFeb 2 2014 02:39 PM

I almost forgot about rail. Here's a story that I'm sure will make Chicago's own Pritzker Family gleeful, as they sell off the final portion of Robert Pritzker's Marmon Group (owner of Union Tank Car and other industrials and major lessor of oil tank cars here and in Canada) to Berkshire Hathaway in the March or so. Maybe that one granddaughter can put some more money into Lotus Foundation to promote eco-pragmatism. What the hell is eco-pragmatism? It's not one of those Breakthrough Institute environmental capitalism game changing thought experiments is it? Man, we're screwed.

http://www.ogfj.com/articles/2013/02/crude-loves-rocking-rail--the-year-of-the-tank-car-.html

Woody PfisterFeb 2 2014 04:51 PM

Pres Obama will dither on the Keystone for another 3 years, the Pres. Cruz will finally approve it. However, by then, the Chinese Communists will own the oil.

Michael BerndtsonFeb 3 2014 09:09 AM

Josh, as as always, your replies are appreciated. Here's what I'm getting at. My gut feeling is that Keystone XL has become a MacGuffin. (Alfred Hitchcock's use of a spurious plot lines to throw off the movie viewer.) My public-data-look-up feeling says that tar sands (or oil sands or diluted bitumen) flow freely through Illinois either in pipes or over rails. All of this is being uncontested. And after mid 2014 a lot more will be flowing through Illinois. And all this seems to be happening with or without Keystone XL northern half being built.

NRDC has become the voice of environmental protection here in Illinois and seemingly the peoples extraordinary agent. You guys are on NPR/WBEZ (i.e. "the climate is changing") and PBS/WTTW. And that's great.

Focusing specifically on pipelines buried beneath Illinois' prime topsoil, carrying diluted bitumen from Alberta tar sands fields to refineries here and points south - Is NRDC in Illinois on top of this issue?

Josh MogermanFeb 3 2014 12:35 PM

MB--

So, first off...your comment couldn't make a media guy smile any wider. Thanks for the kind words!

As for existing pipes in IL... We are watching closely. But the reason KXL has caught fire is that it is a new project with very clear regulatory and decisional hooks that could prevent its development. Those tools are not there for existing pipelines.

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