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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The Keystone XL crude-oil pipeline cleared an important hurdle last Friday when the U.S. State Department (Washington, D.C.) issued its Final Environmental Impact Statement (FEIS) on the project, finding that its construction was unlikely to affect global greenhouse gas (GHG) emissions. The release of the FEIS kicks off a 30-day public comment period as well as a concurrent 90-day period where Secretary of State John Kerry will consult with at least eight federal agencies to make a determination whether building Keystone XL is in the national interest.
Keystone XL is "unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transports costs and supply-demand scenarios," the FEIS found. The study acknowledged extracting Canadian oil sands for the pipeline would increase the production of GHGs. But in addressing a variety of scenarios across 11 volumes, the study also concluded that development of the oil sands was likely to occur regardless of whether Keystone XL was built.
In a press conference January 31, Kerri-Ann Jones, assistant secretary of state for oceans and international environmental and scientific affairs, said the FEIS was a technical document, not a decision document. The study would be one of several factors Kerry would weigh in making his decision. Over the next 90 days, Kerry will consult with at least eight other federal agencies: the departments of Energy, Defense, Transportation, Homeland Security, Justice, Interior, and Commerce, as well as the U.S. Environmental Protection Agency (EPA). There is no timetable for Kerry to make his decision whether Keystone XL is in the national interest.
Because that proposed pipeline would cross international borders, the U.S. State Department must verify that constructing it would be in the national interest. Last summer, in an omnibus energy policy speech at Georgetown University, President Obama said, "our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline's impact on our climate will be absolutely critical to determining whether this project is allowed to go forward." For more on that speech, see June 27, 2013, article -- President Obama Unveils Ambitious Climate Action Plan.
Keystone XL is a proposed $5.4 billion, 1,179-mile pipeline between Hardisty, Alberta and Steele City, Nebraska. The pipeline could transport up to 830,000 barrels of oil per day (BBL/d) from Alberta's oil sands and the Bakken shale to the MidContinent area, where it could be moved south to the Texas Gulf Coast. Most of the crude oil scheduled to move through Keystone XL would originate in Canada, but up to 100,000 BBL/d could come from the Bakken shale. If Kerry finds Keystone XL is in the national interest, and his decision is not overruled by President Obama, it will take at least two years to build the pipeline, according to TransCanada officials.
Click on icon to see a map of the existing Keystone pipeline, the Gulf Coast Project and the proposed Keystone XL pipeline.
"The environmental analysis of Keystone XL released today once again supports the science that this pipeline would have minimal impact on the environment," Russ Girling, president and chief executive officer of TransCanada Corporation (NYSE:TRP) (Calgary, Alberta), said in a statement January 31. "The next step is making a decision on a Presidential Permit for Keystone XL. I believe that this project continues to be in the national interest of the United States for two main reasons: supporting U.S. energy security and the thousands of jobs our multibillion-dollar-project will create."
Girling continued: "It was North American producers and refiners who asked TransCanada to build Keystone XL and connect their refineries with Canadian and U.S. oil fields. They need the oil from this pipeline system to create products we all rely on - fuel for our vehicles, heat and air conditioning for our homes, diesel for farm tractors and heavy equipment, and thousands of consumer products that are made from petroleum-based products."
Keystone XL is "not about energy versus the environment; it's about where Americans want to get their oil," the TransCanada executive added. "Keystone XL will displace heavy oil from places such as the Middle East and Venezuela, and of the top five regions the U.S. imports oil from, only Canada has substantial greenhouse gas regulations in place."
Keystone XL is strongly backed by the Canadian government, U.S, labor unions, business groups and Republican lawmakers on Capitol Hill. Democrats and environmental activists, a core demographic of the Democratic Party, fiercely oppose the project. For more on the project's allies and opponents, see October 19, 2011, article - Keystone Crude Oil Pipeline Expansion Draws Strong Support, Fierce Opposition.
Following the State Department's publication of a Draft Supplemental Environmental Impact Statement on Keystone XL last March, the agency received over 1.5 million public comments on the pipeline, 99% of which were form letters sponsored by non-governmental organizations (NGOs), the State Department said.
The State Department conducted a second EIS because the one from last March triggered a firestorm of controversy from opponents of the pipeline, including allegations that a consulting firm involved in that study had a conflict of interest.
The earlier EIS concluded that Keystone XL would have a limited impact on climate change because railroads or other pipelines were likely to transport the oil if the Keystone XL pipeline didn't. Since then, an industry analysis of Keystone XL's climate impact suggested it was, at worst, a wash given the large amount of heavy crude oil the U.S. already imports from Venezuela. So a spat over climate change has, for some, turned into an argument over energy security: Would the U.S. be better off continuing to import oil from politically unfriendly Venezuela, or from Canada, a political ally that is already our largest trading partner? For more on that issue, see November 20, 2013, article -- Analysts: If Keystone XL Pipeline Vetoed, U.S. Imports of Venezuelan Crude Likely to Rise.
Pipelines have traditionally transported most of the crude oil in North America, and at lower costs compared to railcars. But rails have garnered a large and growing slice of the crude-oil transport market in recent years, mainly because the greater flexibility and shorter lead times they offer shippers outweigh the added costs of transporting crude by rail. For more on this issue, see May 7, 2013, article - Crude-by-Rail Surges, Dominating Outbound Transportation from Williston Basin. But safety concerns over transporting crude oil by rail have surged following high-profile accidents of crude-filled railcars. For more on that issue, see January 28, 2014, article - U.S. Crude Railcar Derailments Up Dramatically in 2013, but Safety Levels Still on Track.
"There is North American demand sufficient to absorb all of the crude oil that can be extracted from Canada's oil sands," said Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "If the Keystone XL pipeline is not built, Canada will find another way to export its oil, either through Eastern Canadian or Western Canadian water-borne export terminals."
Indeed, TransCanada plans to reverse the flows on an existing crude-oil pipeline, Energy East, to ship crude from the western part of the country to the eastern part. For more on that, see September 11, 2013, article - Market Says 'Oui' to TransCanada's Energy East Crude-Oil Pipeline. One of TransCanada's competitors, Enbridge Incorporated (NYSE:ENB) (Alberta, Calgary), wants to build an export-oriented pipeline, Northern Gateway, to take crude oil from Alberta to an export terminal in British Columbia. For more on that project, which has aroused considerable local opposition, see January 3, 2013, article - Northern Gateway Pipeline Eyes Mid-2014 Decision from Canadian Government.
Across the U.S. and Canada, Oil & Gas producers, pipeline companies and terminals firms have scheduled about $118 billion of projects to begin this year, according to Industrial Info's North American Project Database. Industrial Info does not expect all of those projects to begin according to schedule, but clearly there is an enormous amount of potential investment across the continent.
Click on the icon to see planned capital spending for North American crude oil and natural gas production, pipelines and terminals projects scheduled to kick off this year.
View Plant Profile - 1083783 1081665 1083866 1071029 1081306 1080449 1083849
View Project Report - 8001651 33001340 56001495 32000279 34000908 47000438 55000488 300044587
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, 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.
Keystone XL is "unlikely to significantly impact the rate of extraction in the oil sands or the continued demand for heavy crude oil at refineries in the United States based on expected oil prices, oil-sands supply costs, transports costs and supply-demand scenarios," the FEIS found. The study acknowledged extracting Canadian oil sands for the pipeline would increase the production of GHGs. But in addressing a variety of scenarios across 11 volumes, the study also concluded that development of the oil sands was likely to occur regardless of whether Keystone XL was built.
In a press conference January 31, Kerri-Ann Jones, assistant secretary of state for oceans and international environmental and scientific affairs, said the FEIS was a technical document, not a decision document. The study would be one of several factors Kerry would weigh in making his decision. Over the next 90 days, Kerry will consult with at least eight other federal agencies: the departments of Energy, Defense, Transportation, Homeland Security, Justice, Interior, and Commerce, as well as the U.S. Environmental Protection Agency (EPA). There is no timetable for Kerry to make his decision whether Keystone XL is in the national interest.
Because that proposed pipeline would cross international borders, the U.S. State Department must verify that constructing it would be in the national interest. Last summer, in an omnibus energy policy speech at Georgetown University, President Obama said, "our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline's impact on our climate will be absolutely critical to determining whether this project is allowed to go forward." For more on that speech, see June 27, 2013, article -- President Obama Unveils Ambitious Climate Action Plan.
Keystone XL is a proposed $5.4 billion, 1,179-mile pipeline between Hardisty, Alberta and Steele City, Nebraska. The pipeline could transport up to 830,000 barrels of oil per day (BBL/d) from Alberta's oil sands and the Bakken shale to the MidContinent area, where it could be moved south to the Texas Gulf Coast. Most of the crude oil scheduled to move through Keystone XL would originate in Canada, but up to 100,000 BBL/d could come from the Bakken shale. If Kerry finds Keystone XL is in the national interest, and his decision is not overruled by President Obama, it will take at least two years to build the pipeline, according to TransCanada officials.
Click on icon to see a map of the existing Keystone pipeline, the Gulf Coast Project and the proposed Keystone XL pipeline."The environmental analysis of Keystone XL released today once again supports the science that this pipeline would have minimal impact on the environment," Russ Girling, president and chief executive officer of TransCanada Corporation (NYSE:TRP) (Calgary, Alberta), said in a statement January 31. "The next step is making a decision on a Presidential Permit for Keystone XL. I believe that this project continues to be in the national interest of the United States for two main reasons: supporting U.S. energy security and the thousands of jobs our multibillion-dollar-project will create."
Girling continued: "It was North American producers and refiners who asked TransCanada to build Keystone XL and connect their refineries with Canadian and U.S. oil fields. They need the oil from this pipeline system to create products we all rely on - fuel for our vehicles, heat and air conditioning for our homes, diesel for farm tractors and heavy equipment, and thousands of consumer products that are made from petroleum-based products."
Keystone XL is "not about energy versus the environment; it's about where Americans want to get their oil," the TransCanada executive added. "Keystone XL will displace heavy oil from places such as the Middle East and Venezuela, and of the top five regions the U.S. imports oil from, only Canada has substantial greenhouse gas regulations in place."
Keystone XL is strongly backed by the Canadian government, U.S, labor unions, business groups and Republican lawmakers on Capitol Hill. Democrats and environmental activists, a core demographic of the Democratic Party, fiercely oppose the project. For more on the project's allies and opponents, see October 19, 2011, article - Keystone Crude Oil Pipeline Expansion Draws Strong Support, Fierce Opposition.
Following the State Department's publication of a Draft Supplemental Environmental Impact Statement on Keystone XL last March, the agency received over 1.5 million public comments on the pipeline, 99% of which were form letters sponsored by non-governmental organizations (NGOs), the State Department said.
The State Department conducted a second EIS because the one from last March triggered a firestorm of controversy from opponents of the pipeline, including allegations that a consulting firm involved in that study had a conflict of interest.
The earlier EIS concluded that Keystone XL would have a limited impact on climate change because railroads or other pipelines were likely to transport the oil if the Keystone XL pipeline didn't. Since then, an industry analysis of Keystone XL's climate impact suggested it was, at worst, a wash given the large amount of heavy crude oil the U.S. already imports from Venezuela. So a spat over climate change has, for some, turned into an argument over energy security: Would the U.S. be better off continuing to import oil from politically unfriendly Venezuela, or from Canada, a political ally that is already our largest trading partner? For more on that issue, see November 20, 2013, article -- Analysts: If Keystone XL Pipeline Vetoed, U.S. Imports of Venezuelan Crude Likely to Rise.
Pipelines have traditionally transported most of the crude oil in North America, and at lower costs compared to railcars. But rails have garnered a large and growing slice of the crude-oil transport market in recent years, mainly because the greater flexibility and shorter lead times they offer shippers outweigh the added costs of transporting crude by rail. For more on this issue, see May 7, 2013, article - Crude-by-Rail Surges, Dominating Outbound Transportation from Williston Basin. But safety concerns over transporting crude oil by rail have surged following high-profile accidents of crude-filled railcars. For more on that issue, see January 28, 2014, article - U.S. Crude Railcar Derailments Up Dramatically in 2013, but Safety Levels Still on Track.
"There is North American demand sufficient to absorb all of the crude oil that can be extracted from Canada's oil sands," said Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries. "If the Keystone XL pipeline is not built, Canada will find another way to export its oil, either through Eastern Canadian or Western Canadian water-borne export terminals."
Indeed, TransCanada plans to reverse the flows on an existing crude-oil pipeline, Energy East, to ship crude from the western part of the country to the eastern part. For more on that, see September 11, 2013, article - Market Says 'Oui' to TransCanada's Energy East Crude-Oil Pipeline. One of TransCanada's competitors, Enbridge Incorporated (NYSE:ENB) (Alberta, Calgary), wants to build an export-oriented pipeline, Northern Gateway, to take crude oil from Alberta to an export terminal in British Columbia. For more on that project, which has aroused considerable local opposition, see January 3, 2013, article - Northern Gateway Pipeline Eyes Mid-2014 Decision from Canadian Government.
Across the U.S. and Canada, Oil & Gas producers, pipeline companies and terminals firms have scheduled about $118 billion of projects to begin this year, according to Industrial Info's North American Project Database. Industrial Info does not expect all of those projects to begin according to schedule, but clearly there is an enormous amount of potential investment across the continent.
Click on the icon to see planned capital spending for North American crude oil and natural gas production, pipelines and terminals projects scheduled to kick off this year.View Plant Profile - 1083783 1081665 1083866 1071029 1081306 1080449 1083849
View Project Report - 8001651 33001340 56001495 32000279 34000908 47000438 55000488 300044587
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, 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.
