Keystone XL Pipeline Project thread

[DINGO Joe]

The left getting infected by knee-jerk bourgeois environmentalism is unfortunate. This pipeline is significantly safer than the alternative (delivering the oil by rail) anyway.

And having it sent via pipeline to be refined in the U.S. is much safer (and would contribute less GHGs) than the alternative--ship it via oil tanker to China.

Meh, it would be replacing Colombian then Venezuelan and then Mexican oil, which would be shipped to China.  Really, North America is about 4 years away from being unable to absorb all of it's oil production so somebody's oil is getting shipped.  There's no guarantee that the Canadian oil won't get loaded up on tankers and shipped out to China.

[DINGO Joe]

Solar is damn cheap at 74 cents a watt.

In what universe do we measure energy costs by the watt?

A universe in which we are measure the cost to accomplish a particular peak load.  Given the inability of solar to provide 24/7 power, the capital costs per Kwh will be higher because a solar plant will have fewer hours to recoup the investment.  However, in many areas, peak load occurs due to heavy AC use.  Since the conditions which cause the heaviest AC use also happen to be excellent ones for solar power, it is quite conceivable that solar would be useful as part of the mix, tho obviously as base load generating system it is still pricey.

The cleanest, cheapest,  most efficient setup would be solar displacing peaker NG plants and NG combined cycle plants replacing coal baseload plants.

[DINGO Joe]

The economic impact of the Keystone for the US would be about nil.  Canada wants the pipeline in hopes of getting a higher price for their oil.  Currently, Canada's inability to get their oil into the global market means it fetches a heavily discounted price compared to Brent or Gulf oils like Louisiana Light or Mars.  Many Midwestern and Rocky Mountain refineries have taken advantage of this and provide cheaper products with higher margins than other regions in the US. 


One other thing about tar sands oil, it has to be diluted to flow through pipelines, which requires natural gasoline to be piped up to Canada and combined with the tar oil to flow it back down (and then separated at the refinery.  It actually is arguable that it's cheaper and more efficient the ship tar sands by train, if (and it's a big if) there are enough specialized heated rail cars to ship the oil.  Tar sands goes to a Memphis area refinery this way.

[DINGO Joe]

The supposed theory of Keystone is to make us less reliant on foreign oil--or since Canada actually is a foreign country, then less reliant on unstable countries foreign oil.  So, why are Sen Murkowski and the API trying to get the ban on exporting crude oil from the US (to places other than Canada) lifted?

http://www.bloomberg.com/news/2014-01-08/calls-to-drop-1970s-era-u-s-oil-export-ban-stir-fight.html

[DINGO Joe]

The supposed theory of Keystone is to make us less reliant on foreign oil--or since Canada actually is a foreign country, then less reliant on unstable countries foreign oil.  So, why are Sen Murkowski and the API trying to get the ban on exporting crude oil from the US (to places other than Canada) lifted?

http://www.bloomberg.com/news/2014-01-08/calls-to-drop-1970s-era-u-s-oil-export-ban-stir-fight.html

Exporting oil to other countries would make them more dependent on us, not the other way around.

Well, several Central and South American countries are currently reliant on the US for finished crude products.   If the US were to export crude, they might find it cheaper to build their own refineries and just import crude.  Either way, if the US were to export crude, it would makes US slighty more likely to increase imports of Persian Gulf oil, not less.

A little more background

http://www.bloomberg.com/news/2014-01-08/unforseen-u-s-oil-boom-upends-world-markets-as-drilling-spreads.html

[DINGO Joe]

The left getting infected by knee-jerk bourgeois environmentalism is unfortunate. This pipeline is significantly safer than the alternative (delivering the oil by rail) anyway.

While I would in general agree with this statement, the fact that tar sands oil has to be diluted with a liquid called natural gasoline, which has to be piped up to Canada plus the fact that tar sands oil is not very flammable, as opposed to Bakken crude, means that tar sands may be more cost effective to rail, especially as more heated rail cars are built.  To me, the best solution would be for Bakken to be piped and tar sands railed, but the refiners on the gulf coast have ample supplies of light oil from the Eagle Ford while East and West coast refiners are the ones who can use it.  Gulf Coast refiners could retool to handle more light crude, but they're making too much money right now to stop and spend money on retooling.

[DINGO Joe]

The left getting infected by knee-jerk bourgeois environmentalism is unfortunate. This pipeline is significantly safer than the alternative (delivering the oil by rail) anyway.

While I would in general agree with this statement, the fact that tar sands oil has to be diluted with a liquid called natural gasoline, which has to be piped up to Canada plus the fact that tar sands oil is not very flammable, as opposed to Bakken crude, means that tar sands may be more cost effective to rail, especially as more heated rail cars are built.  To me, the best solution would be for Bakken to be piped and tar sands railed, but the refiners on the gulf coast have ample supplies of light oil from the Eagle Ford while East and West coast refiners are the ones who can use it.  Gulf Coast refiners could retool to handle more light crude, but they're making too much money right now to stop and spend money on retooling.

What that suggests is that it might be reasonable to semi-refine the oil at the tar sands.  However, the practicalities and politics of greenhouse gases might have an effect.  I could see where two-stage refining might cause increased emissions, plus it certainly looks better for Canada if the emissions from refining took place in a foreign country.

They do that to an extent, as there is a product called Syncrude that is produced in Canada, but they've maxed out the refining in the area and there is no advantage to doing refining away from end users or export capacity.  Keystone is really all about Canada getting a better price for their tar sands, either from gulf coast refiners or loading it up and shipping it to Asia via Houston.  Remember, there are laws against the US exporting crude oil, but not Canada via the US.  As for the emissions angle, I really don't have any knowledge of that, except that it is more energy intensive to refine heavy or mixed oils than light oils, but also refiners are always most efficient refining oil that they are configured for.

[DINGO Joe]

How do Canadians feel about the Keystone XL Pipeline?

They're getting $20 less a barrel than they think they should be getting, how do you think they feel about it?  By they I mean the producers.  People in BC aren't crazy about building pipelines through there, hence delays many hoops to jump through over there.  As for Eastern Canada, I doubt they care much.

[DINGO Joe]

Here's a slightly better map




The route has been changed to avoid potentially sensitive areas.  Really, there was never a threat to Ogallala.  The primary contention has been that Tar Sands oil is high carbon intensive even compare to other oil, so many environmentalists want to make it as difficult as possible to get the oil to market and thus limit it's use.  The counter argument is that it would displace Venezuelan oil which is even worse.    Whether it displaces Venezuelan oil or not or whether it all gets exported is a legitimate question. And if it's going to get exported why don't the Canucks build their own damn pipeline?

Steele City, as shown on this map is an important location because it hooks up with a pipeline to the Midwest/Mississippi River, but the Midwest is getting all the Canadian oil it can handles as is.  It's all about the Gulf Coast.

[DINGO Joe]

November numbers are out from the EIA

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTNTUS2&f=M

Net imports down to 5.334 million barrels per day, the lowest since 1990 and Dec will be the lowest since 1986.  Excluding imports from Canada and Mexico, our net imports were 2.4 million, I'll go out on a limb and say that number hits zero in Dec of 2015.

[DINGO Joe]

What means this word significant?

[DINGO Joe]

Don't know what the Gulf Coast will ever do for oil without Keystone

http://www.eia.gov/todayinenergy/detail.cfm?id=15891

[DINGO Joe]

Bloomberg article about the problems Harper's had getting the other pipeline built--from Alberta to the Pacific.

http://www.bloomberg.com/news/2014-05-02/how-canada-s-flirtation-with-a-china-oil-market-soured.html

[DINGO Joe]

Turns out, there is too much Canadian crude coming to the Gulf coast:

http://www.platts.com/latest-news/oil/houston/repsol-to-buy-re-exported-canadian-crude-loading-21590180

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Well, ain't that a kick in the XL.  Certainly, knowledgeable people thought this could/would happen with the XL, but this is a bit of a shocker.

[DINGO Joe]

Turns out, there is too much Canadian crude coming to the Gulf coast:

http://www.platts.com/latest-news/oil/houston/repsol-to-buy-re-exported-canadian-crude-loading-21590180

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Well, ain't that a kick in the XL.  Certainly, knowledgeable people thought this could/would happen with the XL, but this is a bit of a shocker.

What's the problem?

The argument for XL was that it was going to give us energy independence, or if you acknowledge that Canada is technically a foreign country, then energy security.  However, if Canadian crude is just going to be exported when it reaches the Gulf coast then it provides neither, it's just a means for Canada to export their crude when they been unsuccessful in creating routes to their own coasts.

[DINGO Joe]

One of the attacks against Obama was that if the Keystone wasn't built then Canada would just sell the oil to our competitor/enemy China.  Well they haven't been able to, due to their own logistical/environmental issues,  but the Keystone would enable them.  By the original line of logic, building Keystone actually plays right into the Chinese hand, making it easier to get their hands on Canadian oil.

The US still has laws against exporting our unrefined oil to anyone but Canada.  The reasoning behind that law had to do with scarcity/energy security plus the idea that refining does add US jobs to the process and there is a certain sense that shipping out raw materials without any processing is a mark of a third world or colonial economy.  Others see it as free trade.

There are efforts by oil companies and Senator Murkowski to get the ban on exporting unrefined US oil lifted.

 Right now, refiners and US consumers in the Midwest and Rockies and now in the Gulf Coast (minus Florida) all benefit from the glut of oil in Canada/US which makes oil in these regions cheaper than the global market.   If a free market was created and the infrastructure to move all the oil about was in place, there would almost certainly be a decline in US refining jobs and an increase in gasoline prices of roughly 20 cents/gallon  in the regions mentioned above.  Conversely, there would be a increase in jobs building the Keystone (which would disappear after it's built) and loading tankers, though the tanker jobs are all foreign, plus oil companies would get a higher price for their oil.  Overall, I would expect a modest net loss of US jobs and a substantial profit hit to US refiners who have been making big bank on the current situation.

[DINGO Joe]

What's wrong with Canada exporting oil? It means more jobs at refineries and ports.

Doesn't mean refining jobs because we're talking about shipping out unrefined crude and the tanker jobs would all be foreign.  There would be the one US guy flipping the on/off switch. 

As I laid out in the post above, the current situation almost certainly creates more US jobs and benefits to certain regions of the US and US refiners than open free trade would.  You're welcome to do research and make a counter argument.

[DINGO Joe]

The guy that finished 2nd in the Nebraska R-Senate primary was actually critical of the XL and didn't want it if the oil is just going to exported:

Dinsdale, a bank owner who has never held office, had been a relatively distant third in a field of five, but he’s surging in the polls with his everyman persona. (He somehow is an “everyman” even though he loaned his campaign $1 million out of his pocket.) And he’s got an issue with Keystone XL.

When asked about the Keystone pipeline, Mr. Dinsdale said, “I wouldn’t want to live in Steele City,” a town 30 miles away that would be a connecting point for the pipeline between Canada and Oklahoma. He said he would only support the project if the oil shipped to Texas was not exported.

“I want it to stay in this country. Otherwise, I’m not for that pipeline,” he said. “I’m for it if it stays in North America, if that’s where it’s used.”

http://blogs.platts.com/2014/05/13/canada-oil-exports-keystonexl/#more-16838

[DINGO Joe]

Uhh, something Obama goes to the left on, I disagree with him.

why?

I believe it can provide many jobs, especially if we provide construction jobs around the area, as well as with some modifications with the bill, we can get the profits of the oil for american people. Also, it's better to get oil from Canada then the middle-east and Arabian states.

We weren't doing that anyway. Our OPEC purchases were from Ecuador and Venezuela.

No, we do take in oil from the ME, though a fair amount goes to the West Coast.  More importantly, Saudi Arabia is half-owner of a the largest refinery in the US.  Venezuela, Mexico and even Brazil have ownership stakes in US refineries.  Predates the shale boom when importers were looking for ways to protect their market share.  Now, they want part of the lucrative export market of finished products being sold from the US (low NG and NGL prices mean low refining costs).

Weekly imports of oil

You may also note that we get quite a bit of Canadian oil even without the Keystone.