Posts Tagged ‘Keystone Pipeline’

Last week I noted that much of the oil & gas industry is waiting to see what President Trump will do. While consensus was that he would likely scale back regulations, the question was how fast and how consistent he’ll be. Today—essentially the second work day of the Trump administration—gave the initial answer, as President Trump signed executive actions to advance Keystone XL and Dakota Access oil pipelines. While this does not provide the permits required to build these pipelines, it essentially paves their way for approval.

Keystone Pipeline Route

Keystone Pipeline Route

If you aren’t familiar with the Keystone pipeline system, it allows for the transportation of oil & gas production between Alberta, Canada to several refineries and distribution centers in the U.S. (including Illinois, Oklahoma, and Texas). Despite protests over the XL phase of the Keystone system, many people don’t know is that the first three phases of this pipeline are already in place (phase one since 2010). The proposed XL phase of the system—which essentially duplicates the first three phases with shorter routes, while adding in oil & gas production from Montana/North Dakota—became a battleground over climate change and the value of fossil fuels in today’s world. Given the way politics works, it also became a dividing issue between democrats and republicans. Former President Obama rejected the Keystone XL phase in 2015 while President Trump, when campaigning in 2016, insisted he would approve it.

While many in the oil & gas industry view Keystone XL as key to growing U.S. prominence in the market while reducing dependency on foreign oil, the big complaint over the Keystone XL pipeline was in the environmental danger of routing over the Sandhills in Nebraska:

Boiling sands are areas where sandy soil is so thin that groundwater can bubble up through it to the surface. In Nebraska, they are found in the Sand Hills, an ecologically sensitive region of grass-covered dunes underlain by a giant freshwater aquifer, called the Ogallala, that sustains agricultural production down the centre of America.

In addition to the unforeseen environmental consequences, others argue that the route threatens the water supply of the nearby Standing Rock Sioux tribe.

The Dakota Access pipeline—an 1,172-mile-long, underground pipeline beginning in the rich Bakken oilfields of North Dakota and ending near Patoka, Illinois—has also seen protests and push-back. Although mostly completed, the current route does not have approval. Given today’s executive orders, both the Dakota Access pipeline and the Keystone XL pipeline are closer to approval than they’ve been in years.

President Trump insisted on that both projects are “subject to terms and conditions to be negotiated by us.” While it is uncertain what this means regarding environmental impact, President Trump has already given some insight about what this means for U.S. jobs, believing that U.S. pipeline should be constructed in the U.S., thereby “putting a lot of steel workers back to work.” He also believes Keystone XL will add 28,000 construction jobs. There is expected push-back from democrats and environmentalists, but without current political maneuverability, those roadblocks may be a thing of the past.

EDIT: Revised White House stance on U.S. steel: http://www.ogj.com/articles/2017/03/white-house-keystone-xl-will-not-use-us-produced-steel.html

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Colin McKay Miller is the VP of Marketing for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home), industrial water purification (biofilm removal), and reduced water pumping costs.

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for coal, biosolids, sugar beets, dairy waste, etc.) and safe movement of materials (including potash and soda ash).

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Vortex Tools looks at President Obama’s decision today to reject the Keystone XL oil sands pipeline project and what this means for environmentalists and the oil and gas industry. The short answer: Everything went as expected and nothing has changed.

With President Obama rejecting the Keystone XL pipeline project, let’s take a look at how we got here:

For years, TransCanada Corp. has tried to get the Keystone XL pipeline built. Since the proposed 1,980-mile-long pipeline would move heavy Canadian crude oil from Alberta’s oil sands through Nebraska and to the U.S. Gulf Coast, this required a permit from the State Department (to cross the U.S.-Canada border). In November 2011, President Obama delayed his final decision until after the 2012 election, citing the need for more review.

Okay, let’s hit the pause button here: If it isn’t obvious, President Obama’s main reason for delaying making a decision until after his reelection year was (mostly) to avoid alienating voters. This isn’t a tactic specific to any politician or party; it’s standard fare with any hot-button issue where you’re going to lose voters no matter what you do (especially in this case where the unions are for the project and environmentalists are opposed — splitting two key Democratic voting groups). Though I understand the tactic, it’s one more reminder that the skeleton of political integrity has long since been pecked clean by vultures.

Protests against the Keystone XL Pipeline

Thus proponents of the pipeline (with their supporters in a Republican-led Congress) forced President Obama to make a decision via GOP provisions in December’s payroll tax cut extension deal. That decision was made today, and, as expected, President Obama rejected the pipeline deal based on the “arbitrary” deadline, not the merits of the project itself. It’s that annoying circular logic where the President cites being forced to decide too fast as the reason for the rejection and Congress cites his inability to decide as the reason for forcing his hand. In the end, the average voter just sees the circular nature of politicians having their heads bent around and shoved up you-know-where.

Both sides released statements where they could score points: House Speaker John Boehner (R-Ohio) said, “President Obama is destroying tens of thousands of American jobs and shipping American energy security to the Chinese. (He’s) selling out American jobs for politics.” TransCanada Corp predicted 13,000 jobs from constructing the estimated $13 billion pipeline, 7,000 manufacturing jobs and “the 118,000 spin-off jobs Keystone XL will create through increased business for local goods and service providers.” Since the pipeline would go through Nebraska, naturally a large chunk of those jobs would benefit that state.

(Score one point for job growth in a poor economy.)

President Obama said, “In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security – including the potential development of an oil pipeline from Cushing, Oklahoma to the Gulf of Mexico – even as we set higher efficiency standards for cars and trucks and invest in alternatives like biofuels and natural gas. And we will do so in a way that benefits American workers and businesses without risking the health and safety of the American people and the environment.” One of the main concerns with the Keystone XL project is how to avoid the scenic and sensitive Sand Hills area.

(Score one point for environmentalism while maintaining the potential for job growth.)

Unlike Republicans backing the oil and gas industry and Democrats backing environmentalists, there are actually some things that are debatable in this project:

  • Since it’s presently difficult to transport, Canadian crude is, on average $25/barrel less than most oil in U.S. markets. If you increase the ease of its availability and transportation via a pipeline, the value of Canadian crude oil could easily go up by $3/barrel, bringing up the price of gasoline by 7 cents/gallon. Meanwhile, others argue that the overall increased availability will benefit the U.S.
  • Many label the Keystone XL pipeline as an export line (for Europe and Latin America), arguing this Canadian crude oil doesn’t benefit the U.S. (and its dependency on foreign oil) nearly as much as it should.
  • When you’re talking about projected jobs and costs, both of those numbers are highly subject to change (especially those 118,000 spin-off jobs that make up the meat of the job growth).
  • Environmental impact is tough to predict, but another 500,000 barrels/day chugging down the landscape will continue to be sternly opposed by environmentalists.

Alas, these issues are buried beneath all the minutiae of what will affect the  next election.

So what’s changed then? Nothing really. Oil stocks and Canadian crude values will likely take a hit in the coming days, both sides will continue to try to find ways to bring up the issue in the next election cycle, and the decision will inevitably be made based on the party in charge and the voting groups they appease. Sounds like every political issue ever.

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Colin McKay Miller is the Marketing Manager for the SpiroFlo Holdings group of companies:

SpiroFlo for residential hot water savings (delivered 35% faster with up to a 5% volume savings on every hot water outlet in the home) and industrial water purification (biofilm removal).

Vortex Tools for extending the life of oil and gas wells (recovering up to 10 times more NGLs, reducing flowback startup times, replacing VRUs, eliminating paraffin and freezing in winter, etc.).

Ecotech for cost-effective non-thermal drying (for biosolids, sugar beets, etc.) 

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