Is the Keystone XL Pipeline Dead Too?
Considering the devaluation of oil and the even less valuable oil from oil sands why build the pipeline to transport it? If investors still go ahead with this upon approval from Feds and states I'll be surprised but hopeful that they see a better future for oil.
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Replies to This Discussion
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Permalink Reply by Joseph-Ohio on
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A mis-interpretation on this end too.
I'm reading you now Jim.
Thanks for taking the time to straighten me out.
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Permalink Reply by Jim Litwinowicz on
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That was just one kink...... :-)
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Permalink Reply by Joseph-Ohio on
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Still - for a real 'no-brainer' - it's taking a long time to get done - waaaaay too long IMHO.
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Permalink Reply by Barry D on
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Joseph,
Thank the President and his Democrat allies. They have always been against oil and gas development, always will be.
Energy from fossil fuels keeps our country strong.
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Permalink Reply by Barry D on
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Oil and Gas related projects are planned on a long term basis. The drop in oil prices is short term. Economically the rpoject still makes sense in the long run.
Further, this has now become a political issue. I foresee the Republicans daring Democrats to stand in the way; and with the help of Democrats they will shove this down the President's throat (metaphorically speaking). He can threaten a veto all he wants, I believe the Senate will have the votes to override the veto.
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Permalink Reply by Thomas Malcolm Pendergast on
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FIY:
BP has already converted their Whiting refinery to run on Canadian Oil Sands feedstock, Husky is in the process of doing so in Lima and their joint venture with BP at the Toledo refinery. And Northern Tier's refinery in St. Paul Park, MN also is running on Canadian Oil Sands.
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Permalink Reply by Philip Brutz on
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The Keystone XL pipeline was touted as a model for energy independence and a source of jobs when TransCanada Corp. announced plans to build the 1,700-mile pipeline six years ago.
But the crude-oil pipeline’s political and regulatory snarls since then have emboldened resistance to at least 10 other pipeline projects across North America. Using Keystone XL as a template, national environmental groups are joining with local activists in a strategy aimed at prolonging government reviews of proposed pipeline routes and their environmental impact.
As a result, six oil and natural-gas pipeline projects in North America costing a proposed $15 billion or more and stretching more than 3,400 miles have been delayed, a tally by The Wall Street Journal shows. At least four other projects with a total investment of $25 billion and more than 5,100 miles in length are facing opposition but haven’t been delayed yet.
The snags could paralyze some projects for years, increase the costs of those that win approval and kill some projects, though that hasn’t happened yet. Kinder Morgan Inc. is delaying the $4.8 billion, 617-mile expansion of its Trans Mountain pipeline for at least six months while the Houston company works on changes to the route that executives hope will face less opposition than the original proposal.
ENLARGEThe new stretch of pipeline would help carry nearly a million barrels a day of crude from Alberta’s oil sands to British Columbia’s Pacific Coast. Kinder Morgan hopes to begin operating the pipeline in 2018.
“There is a new normal of conversation and debate that is occurring around pipeline infrastructure projects,” said Ian Anderson, president of Kinder Morgan’s business segment in Canada. Trans Mountain’s last expansion, completed in 2008, drew “little or no opposition or media scrutiny,” he added.
Delays are adding to the push to move oil by rail, said Robert Johnston, chief executive of Eurasia Group, an independent political-analysis firm. Oil-carrying trains are considered less safe than pipelines by many analysts and government officials. Oil shipments by rail have increased nearly threefold since 2008.
Pipeline foes got a boost from last month’s defeat in the Senate of legislation that would have approved Keystone XL, which aims to move as much as 830,000 barrels of oil a day from Alberta to refineries along the U.S. Gulf Coast. The project’s review hinges on the Obama administration.
The Nebraska Supreme Court is expected to rule soon on whether to uphold a state law allowing the pipeline to go through the state. A court ruling against the law could delay evaluation of Keystone XL’s route in Nebraska by a year or more.
ENLARGEA containment area at a Kinder Morgan petroleum-storage facility in Burnaby, British Columbia. The company is delaying the $4.8 billion, 617-mile expansion of its Trans Mountain pipeline for at least six months while working on changes to the route that could face less opposition than the original proposal. REUTERSLocal activists who oppose pipeline projects want to keep them out of environmentally sensitive areas. National groups are fighting pipelines as part of a broader effort to reduce the use of fossil fuels. In some parts of the U.S. and Canada, the strategies unite groups that never worked together before.
National groups provide access to money and tactical knowledge, while local groups can deliver on-the-ground pipeline opponents, including farmers, ranchers and tribal leaders.
The groups coordinate their moves in regular conference calls and at meetings in Washington, D.C., and elsewhere.
In Minnesota, Richard Smith, executive director of the local group Friends of the Headwaters, has often turned to nationwide organizer 350.org and a Nebraska group that has been the driving force in Keystone XL’s delays. Mr. Smith is fighting a $2.6 billion, 610-mile pipeline proposed by Enbridge Inc.
The Minnesota Public Utilities Commission voted in September to study six alternatives to the route proposed by Enbridge, based in Toronto. That will delay the project by a year.
Mr. Smith said he isn’t anti-pipeline but wants the Sandpiper project to avoid vulnerable waterways in Minnesota. “If the state looks at all of this and decides there is no need for this pipeline, then we’ve achieved that goal, too,” he said. “But first our goal is to keep it out of Minnesota lake country.”
Anti-Keystone group Bold Nebraska has been teaching classes on pipeline-delay tactics to activists in Minnesota, Iowa and Western Canada. A PowerPoint presentation used by Bold Nebraska founder Jane Kleeb said: “Strike a balance between national, regional and local interests with a focus on LOCAL.”
The opposition and delays are making proposed projects more expensive. The 1,169-mile stretch of the Keystone XL still being reviewed by the Obama administration will cost about $10 billion, or roughly twice the original estimate, according to TransCanada President and Chief Executive Russ Girling. A southern leg of the project isn’t subject to the same review process.
Mr. Girling said in an interview that TransCanada company will no longer pursue certain planning, engineering and regulatory steps at the same time because of the opposition. It could take eight years from the project’s initial planning to the start of operations, compared with four years for the first Keystone pipeline, he added.
Keystone XL’s struggles have complicated plans for TransCanada’s proposed Energy East pipeline, which would carry as much as 1.1 million barrels of oil a day nearly 3,000 miles across Canada to the country’s east coast. TransCanada has asked companies with long-term contracts to ship oil through the pipeline to share in the financial burden of getting permits and ordering equipment if those companies want to accelerate the review process.
Enbridge is grappling with delays on four pipeline projects worth nearly $10 billion combined. “We used to think about risks in the energy business primarily related to how we are going to get more supply,” said Al Monaco, the company’s president and CEO, during a speech to the Economic Club of Canada in Calgary. “The reality is that today in North America, it’s not about that. It’s about how we get our product to market.”
Resistance to new pipelines and the expansion of existing ones doesn’t seem to be slowing growth in oil output. Since Keystone XL was proposed, Canada’s oil production has increased 39% to an average of 3.8 million barrels a day, according to Canada’s National Energy Board.
In the same period, U.S. oil production has surged 74% to 8.8 million barrels a day, while natural-gas production climbed 21% to 2.7 trillion cubic feet in August, according to the U.S. Energy Information Administration. The U.S. is now the world’s largest natural-gas producer and is on track to become the biggest oil producer next year.
The U.S. has nearly 200,000 miles of liquid-carrying pipelines, including crude oil and refined oil products, up 9.3% in the past five years, according to an October report from the Association of Oil Pipe Lines.
—Chester Dawson contributed to this article.
Write to Amy Harder at amy.harder@wsj.com
Corrections & Amplifications
Natural-gas production climbed 21% to 2.7 trillion cubic feet in August, according to the U.S. Energy Information Administration. An earlier version of this article incorrectly said 2.7 million cubic feet.
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Permalink Reply by Philip Brutz on
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http://www.usatoday.com/story/money/business/2014/11/13/crude-keyst...
Lower crude prices challenge Keystone pipeline
Rick Jervis, USA TODAYBackers of the Keystone XL pipeline became emboldened recently by the prospect of a Republican-led Congress finally pushing the project through.
But can dropping crude prices punch a hole in the controversial project?
The cost of benchmark West Texas Intermediate oil dropped to $74.42 a barrel on Thursday — a 25% drop from the triple-digit highs it reached this summer. Federal analysts have warned that producers in the Canadian oil sands — slated to be a top consumer of the pipeline — will need oil prices to stay between $65 and $75 a barrel to make production there economically feasible.
"Assuming prices fell in this range, higher transportation costs could have a substantial impact on oil sands production levels — possibly in excess of the capacity of the proposed project," said a U.S. State Department report on the pipeline released in January.
The 1,179-mile pipeline extension would carry tar sand oil from Canada to Nebraska, then be transported to refineries in Texas. It could carry some 830,000 barrels each day. President Obama has said he'll approve the project only if it doesn't "significantly exacerbate" the problem of carbon pollution. His administration is still studying the project.
But some members of Congress, led by Sen. Mary Landrieu, D-La., are moving ahead with efforts to immediately authorize Canadian firm TransCanada to build the pipeline. Lawmakers could vote on the issue as early as next week.
"We're in this interesting place where we have this push by Congress for the project at a time when the marketplace is telling us we don't need this new oil," said Anthony Swift, a staff attorney for the National Resources Defense Council, who has opposed the project. "The reality is tar sands crude only makes sense in the world of expensive oil. That's not the world we're likely to be in in the near or immediate future."
Needed or not, the sands-oil reserves in Alberta in Western Canada will likely continue producing crude into the foreseeable future, said Dinara Millington, vice president of research at Canadian Energy Research Institute, a Calgary-based independent, not-for-profit research group.
The break-even price to develop new greenfield projects at the reserves is at around $85 per barrel, so current crude prices could deter new projects, she said. But existing producers can continue pumping oil there at relatively low costs, Millington said. The oil-sands produce around 2.1 million barrels a day.
Also, conventional producers farther west in British Columbia and Saskatchewan will also be able to use the pipeline, bolstering its demand, she said.
"There's enough demand and supply fundamentals to make the economic case for the pipeline to be built," Millington said.
Customers to the pipeline have long-term contracts in place — some as high as 25 years — and its construction or use will not be impacted by the rise and fall of crude prices, Shawn Howard, a TransCanada spokesman, said in an email. He points out that customers did not shy away from the project when crude hit lows of $33 and $37 a barrel in 2009.
"Interest from customers to ship and receive oil through both Keystone XL remains strong and we continue to have a waiting list if space on Keystone XL becomes available," Howard said.
Still, the fact that crude is relatively cheap and there's more of it today than in recent years should shelve the project altogether, Swift said.
"We are in a dramatically different environment than we were in when Keystone was proposed in 2008," he said. "We don't need to consider paying that (environmental) cost."
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Permalink Reply by Joseph-Ohio on
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How temporary is 'the fact that crude is relatively cheap' ?
That's a question that bears more than a passing thought IMHO.
Could be it won't be this way for long since the market glut is aggravated by OPEC.
So the Einsteins say forget about it do they ?
Forgetting about it sounds like a big mistake to me.
Any reserve is important and should not be abandoned IMHO once again.
Also I don't think it very smart to slap Canada, an important ally, in the face myself.
To abandon such an asset to our economy would be short sighted' myopic, stupidity - AGAIN.
Better to slap OPEC and middle east oil in the face the way I see it.
Finally only IMHO
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Permalink Reply by Dan on
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With the advent of ISIS our relationship with OPEC nations most likely has become much warmer these days. OPEC is a vast reserve of oil and now they have decided not to limit it to the world and they are criticized the same as when they limit production. The Russian currency is worth 1/2 as much and they raised their interest rate to 17% soon to cause vast business failures there and rapid inflation and Russian bank failure. It appears OPEC has our back in a round of economic warfare and it looks like someone is getting a a$$ whooping this round.
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Permalink Reply by Joseph-Ohio on
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Sorry, but my memory won't let me trust OPEC or pity / have any great sympathy for Russia's / the Middle East's / the NWO economic circumstances.
My sympathy / loyalty / security / economic considerations (now and future) are all busy / tied up considering our own and that of our staunch allies in Canada.
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Permalink Reply by Joseph-Ohio on
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'.... OPEC is a vast reserve of oil and now they have decided not to limit it to the world.....'
Seems to me that Shale oil development is the only reason they did.
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