TAR SANDS IMBROGLIO—Exporting Energy Security: Keystone XL Exposed

Oil Change International, September 2011

The oil market is fundamentally global. The only way to reduce dependence on foreign oil is to reduce dependence on all oil.

OVERVIEW

TransCanada’s proposed Keystone XL pipeline is a $7 billion project to bring heavy, sour crude oil from tar sands production in Alberta, Canada to Port Arthur, Texas for refining. It has sparked an ongoing struggle as advocates and opponents of the project make their case in various ways to the Obama Administration.

Among the most oft repeated talking points by industry and their allies is the idea that Keystone XL is necessary for American energy security, and that its construction will help wean America of its dependence on Mideast oil. But the idea that Keystone XL will decrease America’s dependence on foreign oil is demonstrably false.
To issue a presidential permit to the proposed Keystone XL pipeline, the Obama Administration’s State Department must find that the pipeline serves the national interest. This report demonstrates compellingly why it does not. On August 25, 2011, Robert Jones, a spokesperson for TransCanada declared: “The U.S. has a decision to make, [d]o they want to import oil from Canada or get conflict oil from OPEC nations?”

On the surface this notion has a clear, if facile, appeal. But an understanding of the changing realities of the oil market in the United States and globally, and a close scrutiny of the oil companies that stand to profit from the pipeline, reveal a completely different story. In fact:

1. The Keystone XL pipeline is an export pipeline. The Gulf Coast refiners at the end of the pipeline’s route are focused on expanding exports, and the nature of the tar sands crude Keystone XL delivers enhances their capacity to do so.

2. Valero, the top beneficiary of the Keystone XL pipeline, has recently explicitly detailed an export strategy to its investors. The nation’s top refiner has locked in at least 20 percent of the pipeline’s capacity, and, because its refinery in Port Arthur is within a Foreign Trade Zone, the company will accomplish its export strategy tax free.

3. The oil market has changed markedly in the last several years, with U.S. demand decreasing, and U.S. production increasing for the first time in 40 years. Higher fuel economy standards and slow economic growth have led to a decline in U.S. gasoline demand, while technological advances have opened up new sources in the United States. Increasingly, U.S. refiners are turning to export.

The oil market is fundamentally global. The only way to reduce dependence on foreign oil is to reduce dependence on all oil.
These facts reveal the important truth that the Keystone XL pipeline would not in fact enhance U.S. energy security at all. The construction of Keystone XL will not lessen U.S. dependence on foreign oil—rather, it will feed the growing trend of exporting refined products out of the United States, thereby doing nothing to enhance energy security or to stabilize oil prices or gasoline prices at the pump. If completed, it will successfully achieve a long-term objective of Canadian tar sands producers—to gain access to export markets.

The oil market is fundamentally global. The only way to truly reduce our dependence on foreign oil is to reduce our dependence on all oil.

This report looks at data from the U.S. Energy Information Administration (EIA), corporate disclosures to investors, and oil market analyst reports. This information should form the basis of the Obama Administration’s deliberations on the Keystone XL pipeline. An honest assessment of the Keystone XL project will show that the oil will be exported and will not benefit U.S. consumers or any reasonable definition of the nation’s interest.

Download: Exporting Energy Security: Keystone XL Exposed (PDF, 1.69 M)

Read More: Business, Economy, Energy, Environment, Security, Sustainability, Tax, Trade, Transportation, Canada, United States, Americas, Asia, Global, Middle East

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Tar Sands Pipelines Are Even Worse Than You Think

No. 2 in a series about this enormously important issue—
PG

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< Executive Director, The Sierra Club


The irony is sharp enough to hurt. Americans are driving less and using less gas when we do drive. U.S. carbon pollution is down. Just about every car dealership in America is offering affordable, practical high gas mileage or zero gas mileage cars. Automakers are making them and the sales numbers show that Americans are buying them. Meanwhile, the Obama administration and automakers are poised to do even better with new standards that will double mileage again and slash pollution from our cars and trucks.
America is on the road to moving beyond oil, but the oil industry hasn’t gotten the message, and there’s no better evidence than its obsession with tar sands.

We don’t need tar-sands oil from Canada, yet Big Oil is determined to force it down our throats anyway — or at least force us to let them pipe through our nation so they can export it abroad. And now we’ve got some pretty shocking evidence of just how high a price we could end up paying for their greed.

In 2010, more than 30 miles of the Kalamazoo River was transformed into an environmental disaster zone by a cracked tar sands pipeline and a tar sands pipeline company that neglected to turn off its pumps. Since then, a monumental $700 million cleanup effort has removed more than a million gallons of tar sands crude, along with 17 million gallons of polluted water, and 190,000 cubic yards of contaminated soil and debris. Last week, after two years, the EPA officially reopened the affected section of the river.

Now, though, a just-released in-depth report from Inside Climate News today shows that this massive cleanup effort was in fact a debacle — a failure that reinforces the reputation of tar sands as the dirtiest oil on earth, exposes the weakness of regulatory oversight, and casts an ominous shadow across the thousands of rivers and streams that millions of Americans who live downstream of proposed tar sands pipelines depend on.

Tar sand spills prove even more toxic and difficult to clean up than typical oil spills. That’s because the heavy mixture of oil sand sinks in water, which means that tactics like skimming the surface can’t be used. Instead, remediators must try to recover the oil from the bottoms of rivers, reservoirs, or wherever it has spilled — a far more difficult task. Tar sands already contain high concentrations of heavy metals, and chemical diluents mixed in for transport are also known to be carcinogenic. EPA lab tests following a December 2011 oil leak in Colorado found concentrations of cancer-causing benzene as high as 2,000 parts per billion in the creek where the leak occurred — well above the 5 ppb national drinking water standard.

This would be bad enough if such spills were rare occurrences — but they’re not. In the past two months alone, three separate tar sands pipelines have reported spills in Canada. Enbridge Inc., whose pipe leaked into the Kalamazoo, reported a spill of 1,450 barrels of oil-sand crude in eastern Alberta just last week, while two other companies cited spills of 3,000 and 5,000 barrels respectively, the former into a reservoir used by a nearby small town.

And Canadian tar sands spills are not limited to Canada. Since May 2011, three major tar sands spills have occurred in North Dakota, Montana, and Colorado. The North Dakota spill was the twelfth from TransCanada’s Keystone I pipeline during its first year of operation.

Why are tar sands pipes so accident prone? To pass through the pipelines, tar sands must be brought to extreme temperatures and pressures. Add sand and powerful chemicals to this equation, and you’ve got a formula for corroding and rupturing steel pipes, leading to breaches that spill toxic goo into aquifers and rivers.

That would be bad enough if oil companies did a good job of maintaining and monitoring these pipeline systems — but they do not. All of the most significant spills over the last two years were discovered not by the oil companies, but by ordinary citizens. The new report documents how prior to the Michigan spill, Enbridge conducted an “integrity management assessment” with an ultrasonic in-line inspection device. The disastrous spill happened anyway. The same is true of other companies whose pipelines ruptured.

Given the environmental and health consequences of the Enbridge spill, as well as the millions of dollars still being spent to clean it up, Michigan Representative Fred Upton’s position on the subject is puzzling at best. After the Kalamazoo spill occurred in his district, he did cosponsor a bill that would hold companies accountable for reporting incidents. But since then, he’s come out in support of rebuilding the Enbridge pipeline and constructing even more pipelines, including Keystone XL. Given the inevitability of more spills, Upton is apparently willing to put the health and home of his constituents at risk, for dubious benefits. In a recent interview, Upton claims his constituents will be protected from gasoline price spikes “with the expansion and rebuilding to a number of refineries here.” It seems he’s forgotten that the Keystone XL pipeline will transport tar sands crude to refineries in Texas for export overseas, making it unlikely that anyone in his district will benefit.

Frequent tar sands spills and their devastating effects in places like Michigan make it clear that by continuing to develop tar sands we’re not taking a risk that we will poison our water and land — we’re ensuring it. And all for oil that we don’t really need.

Follow Michael Brune on Twitter: www.twitter.com/bruneski

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