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U.S. Department of Energy questions the core arguments in support of the Keystone XL pipeline

Liz Barratt-Brown

Posted July 26, 2010

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Today, DOE posted its comments on the State Department Draft Environmental Impact Statement (DEIS) on the Keystone XL pipeline. The Keystone XL pipeline would carry up to 900,000 barrels per day of raw tarry bitumen in a high pressure pipe from Alberta, Canada, to the Gulf coast, approximately equal to the amount we are currently importing. The action follows similar action by EPA last week. We have been encouraging agencies to make their comments public in an effort to make the process more transparent and open to the public so this is a welcome development indeed. But even more welcome is that DOE, in a series of pointed questions, has asked State to “clarify or qualify” numerous statements made in support of the pipeline – statements that go to the heart of the need for the pipeline and even more fundamentally to the benefits of increased U.S. dependence on tar sands oil in the U.S. oil supply – what I call “sacred cow” arguments put forward by tar sands proponents. Here they are:

  1. DOE questions at the outset the statement that global and domestic oil supplies are unlikely to decrease substantially over the next 30 years, pointing out that the reports of the EIA (which is a branch of the DOE), upon which that statement is based, are not forecasts but reference cases that assume that technology, demographic trends and other factors – under current laws and regulations – do not change. “Outlooks produced by the EIA are not forecasts and do not imply a probabilistic assessment of the future.”
  2. DOE states that suppliers of crude oil from Canada already have access to two existing pipelines and that “in addition, the recently approved Alberta Clipper and Keystone pipelines will ensure that there is enough pipeline capacity from Canada to the U.S. for some years.” They also write: “Recognizing that Canadian producers have four pipelines available for exporting WCSB to the U.S., it would be helpful to clarify or qualify the following two statements” that (a) without Keystone XL, there is no ready conduit for this oil, and (b) that the U.S. would remain dependent on unstable sources of oil from “the Mideast, Africa, Mexico, and South America.”  
  3. DOE states that the pipeline will not shield the U.S. from global price shocks stating “The Keystone XL pipeline would also not eliminate U.S. demand in the international market or its exposure to price shocks propagating through that market, which affect the prices charged for supply from Alberta producers as well.” DOE continues: “When the world experienced an oil price shock in 2008, Canada sold crude to the U.S. at a price linked to a global market price, not at below market rates.” I.e. the pipeline would not reduce the volatility or price of oil overall, nor would it regulate the price of the oil coming through the pipeline itself. Thus DOE asks State to clarify its statements that (a) Keystone XL will lower crude oil prices and price volatility to the Gulf coast refineries and that (b) without Keystone XL, crude oil prices will increase.
  4. DOE states that arguments that crude oil will go to Asia if Keystone XL is not built are not accurate because building a West Coast pipeline is not mutually exclusive with building Keystone XL. DOE says “it seems that issuance of a Presidential Permit for the Keystone XL pipeline will not foreclose an option others may be pursuing to establish a pipeline to the West” and asks for State to clarify its statement that if the pipeline is not built, much of the oil will be “exported to Japan, China and India.”

DOE asks many other important questions and points out many factual inconsistencies in assertions about amounts of oil currently imported, pipeline capacity and even if there are indeed contracts for the oil once the pipeline is built. In later blogs, we will go into more details about these and other agency comments.

For now, the DOE comments provide a powerful pairing with the EPA comments. The DOE comments raise fundamental and critical questions about the need for the pipeline and about the impact of the pipeline on oil price, supply and access. If these questions can’t be answered convincingly, it should be very hard to make the case that the tradeoffs in increased greenhouse gas pollution and the risks to communities surrounding tar sands operations – whether in Canada, along the pipeline path, or in the shadow of the refineries – are justified.  

Bravo DOE for asking these tough questions. Now it is up to the State Department to respond

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