Released January 24, 2012 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--President Obama's denial last week of a permit for the Keystone XL crude oil pipeline is creating problems for some proposed crude-oil pipelines, and opportunities for others. The Keystone XL project shot down by the president would have run 1,700 miles from Hardisty, Alberta, to Cushing, Oklahoma, and on to refineries in Texas. Developed by TransCanada Corporation (NYSE:TRP) (Calgary, Alberta), Keystone XL is a $7 billion project to transport up to 700,000 barrels per day (BBL/d) of oil sands crude oil to the U.S.
Click on the map to see the proposed routes for the Keystone XL pipeline, as well as the existing Keystone pipeline.
In supporting the State Department's decision to deny a permit to Keystone XL, the president blamed Congress, which last December gave the administration 60 days to make a final decision on the pipeline's application. The project has been under environmental review for more than three years. Congress attached the requirement to the "must-pass" bill, which extends unemployment benefits and payroll tax reduction.
The "rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline's impact, especially the health and safety of the American people, as well as our environment," Obama said on January 18. This denial "is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people."
In addition to bringing more crude oil into the U.S. from its largest oil trading partner, Keystone XL would have reduced the crude-oil bottleneck at Cushing, Oklahoma, which has a lack of outbound pipeline capacity. Some analysts have characterized the oil terminals in Cushing as a "roach motel--oil goes there and can't get out."
Another proposed crude-oil pipeline, Northern Gateway, would seem to be a logical beneficiary of the Obama administration's decision. That project, valued at approximately $5 billion, would stretch about 2,000 miles from the oil sands fields of Alberta to export terminals in British Columbia, where it would be shipped to Asian markets. But that proposed pipeline, being developed by Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta), has run into the same kind of political and environmental opposition that stymied Keystone XL in the U.S. An additional complication is that a number of First Nation tribes have opposed Northern Gateway. Canada's consensus-style of politics gives great weight to the views of First Nation tribes on environmental, spiritual and ancestral matters.
After the Obama decision, Enbridge CEO Pat Daniel reportedly told an investment conference, "To have (Keystone XL) turned down for the reasons being indicated is horrible for our industry, and it's a horrible precedent. It's bad in terms of future approvals. It only will embolden those opposed to Gateway and other new project developments."
Canadian regulators have received requests from more than 4,000 people who want to speak about Northern Gateway. Late last year, when those requests began pouring in, Canadian regulators extended Northern gateway's public-comment period 12 months, to yearend 2013.
Indeed, 350.org, a group that mobilized more than 1,200 climate activists to be arrested in front of the White House, is now mobilizing voters in Canada and U.S. swing states. Daniel Kessler, a 350.org spokesman, wrote in an e-mail cited by the Washington Post that the group would "build an army so strong that it will not allow a national politician to set foot in a swing state without being met by hundreds of climate activists demanding that politicians 'Make Polluters Pay' and end taxpayer subsidies to fossil fuel companies." He said the group planned to fight Enbridge's Northern Gateway proposal and push television networks to ask presidential candidates "about the climate crisis."
The Canadian government has already said it considers Northern Gateway to be in the national interest. It labeled some of the line's opponents "foreign-funded radicals," a designation with which Daniel said he agrees. "There are some people opposed (to Northern Gateway) who are quite radical in their views," he said. "Some have said, 'We don't care whether it gets approved or not; we're going to blockade it.' I consider that a radical point of view."
Meanwhile, TransCanada, the Keystone XL developer, said it will not only file a new permit application, but also might build a series of domestic crude oil pipelines to achieve some of its goals without having to gain State Department approval, according to The Washington Post. In an article titled, "Keystone XL Oil Pipeline Battle Has Only Just Begun," the Post reported that TransCanada is considering building one crude oil pipeline from the Bakken Shale in North Dakota to Cushing, and another from Cushing to Texas. And TransCanada said the Bakken-to-Cushing pipeline would be configured so that it could connect with a cross-border pipeline from Alberta--if that ever gets approved.
TransCanada spokesman Terry Cunha kept the company's options open: "There are a lot of options that are being looked at right now," he told the Post. "At the end of the day, we're interested in building a pipeline that will move additional crude oil into the U.S. Gulf Coast."
Oil industry experts, including Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Transmission and Terminals industries, have said that there are several ways for Alberta's oil sands crude to get into the U.S. For more on that, see the January 11, 2012, article and podcast - Delays in Pipeline Projects Won't Halt Development of Canadian Oil Sands, a "Navigating the Currents of Change" Webcast. Development of Canada's massive oil sands resource continues at a rapid pace. For more information, see December 28, 2011, article - Development of Alberta's $192 Billion Oil Sands Projects Continues to Intensify.
Delays in the Keystone XL and Northern Gateway projects should improve the near-term prospects of several other proposed crude oil pipelines geared to getting crude oil out of Cushing and to Gulf Coast refiners. These pipeline projects include:
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Click on the map to see the proposed routes for the Keystone XL pipeline, as well as the existing Keystone pipeline.In supporting the State Department's decision to deny a permit to Keystone XL, the president blamed Congress, which last December gave the administration 60 days to make a final decision on the pipeline's application. The project has been under environmental review for more than three years. Congress attached the requirement to the "must-pass" bill, which extends unemployment benefits and payroll tax reduction.
The "rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline's impact, especially the health and safety of the American people, as well as our environment," Obama said on January 18. This denial "is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people."
Another proposed crude-oil pipeline, Northern Gateway, would seem to be a logical beneficiary of the Obama administration's decision. That project, valued at approximately $5 billion, would stretch about 2,000 miles from the oil sands fields of Alberta to export terminals in British Columbia, where it would be shipped to Asian markets. But that proposed pipeline, being developed by Enbridge Incorporated (NYSE:ENB) (Calgary, Alberta), has run into the same kind of political and environmental opposition that stymied Keystone XL in the U.S. An additional complication is that a number of First Nation tribes have opposed Northern Gateway. Canada's consensus-style of politics gives great weight to the views of First Nation tribes on environmental, spiritual and ancestral matters.
After the Obama decision, Enbridge CEO Pat Daniel reportedly told an investment conference, "To have (Keystone XL) turned down for the reasons being indicated is horrible for our industry, and it's a horrible precedent. It's bad in terms of future approvals. It only will embolden those opposed to Gateway and other new project developments."
Canadian regulators have received requests from more than 4,000 people who want to speak about Northern Gateway. Late last year, when those requests began pouring in, Canadian regulators extended Northern gateway's public-comment period 12 months, to yearend 2013.
Indeed, 350.org, a group that mobilized more than 1,200 climate activists to be arrested in front of the White House, is now mobilizing voters in Canada and U.S. swing states. Daniel Kessler, a 350.org spokesman, wrote in an e-mail cited by the Washington Post that the group would "build an army so strong that it will not allow a national politician to set foot in a swing state without being met by hundreds of climate activists demanding that politicians 'Make Polluters Pay' and end taxpayer subsidies to fossil fuel companies." He said the group planned to fight Enbridge's Northern Gateway proposal and push television networks to ask presidential candidates "about the climate crisis."
The Canadian government has already said it considers Northern Gateway to be in the national interest. It labeled some of the line's opponents "foreign-funded radicals," a designation with which Daniel said he agrees. "There are some people opposed (to Northern Gateway) who are quite radical in their views," he said. "Some have said, 'We don't care whether it gets approved or not; we're going to blockade it.' I consider that a radical point of view."
Meanwhile, TransCanada, the Keystone XL developer, said it will not only file a new permit application, but also might build a series of domestic crude oil pipelines to achieve some of its goals without having to gain State Department approval, according to The Washington Post. In an article titled, "Keystone XL Oil Pipeline Battle Has Only Just Begun," the Post reported that TransCanada is considering building one crude oil pipeline from the Bakken Shale in North Dakota to Cushing, and another from Cushing to Texas. And TransCanada said the Bakken-to-Cushing pipeline would be configured so that it could connect with a cross-border pipeline from Alberta--if that ever gets approved.
TransCanada spokesman Terry Cunha kept the company's options open: "There are a lot of options that are being looked at right now," he told the Post. "At the end of the day, we're interested in building a pipeline that will move additional crude oil into the U.S. Gulf Coast."
Oil industry experts, including Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Transmission and Terminals industries, have said that there are several ways for Alberta's oil sands crude to get into the U.S. For more on that, see the January 11, 2012, article and podcast - Delays in Pipeline Projects Won't Halt Development of Canadian Oil Sands, a "Navigating the Currents of Change" Webcast. Development of Canada's massive oil sands resource continues at a rapid pace. For more information, see December 28, 2011, article - Development of Alberta's $192 Billion Oil Sands Projects Continues to Intensify.
Delays in the Keystone XL and Northern Gateway projects should improve the near-term prospects of several other proposed crude oil pipelines geared to getting crude oil out of Cushing and to Gulf Coast refiners. These pipeline projects include:
- The Atoka Grassroot Crude Oil Pipeline, a 165-mile pipeline that will run from Cushing to Rockdale, Texas. As proposed, this $250 million pipeline will be capable of transporting up to 400,000 BBL/d out of Cushing. That project is scheduled to kick off next month and be operating by March 2013.
- The Yale Flanagan-to-Cushing Grassroot Pipeline, a $240 million portion of a larger $2 billion pipeline project, this project will add 85 miles of 30-inch pipe between Cushing and the Kansas/Oklahoma border. This project, being developed by Enbridge, is scheduled to kick off in mid-2013 and become operational in mid-2014.
- The Sherman Wrangler Grassroot Crude Oil Pipeline, being developed by Enbridge, will span 281 miles in Texas, from Sherman to Houston. This project, valued at $310 million, can transport up to 800,000 BBL/d of crude oil. This project is part of the larger Wrangler project. The Sherman portion is scheduled to kick off late this year and become operational in late 2013.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
