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Page added on February 7, 2014
Canada can’t wait to start pumping. The United States can
MINUTES after America’s State Department declared on January 31st that a proposed cross-border oil-pipeline would have little environmental impact, Canada’s ruling Conservatives posted an online ad bluntly directing Barack Obama to “approve Keystone XL now”. It is not the first time that Canada has dropped the diplomatic niceties when pressing Mr Obama to approve the Keystone pipeline, which would carry crude from Alberta’s tar sands to refineries on the Texas coast. Stephen Harper, Canada’s prime minister, has previously threatened to sell the oil to Asia, called approval a “no-brainer” and insisted he “would not take no for an answer”. But Mr Obama seems to be in no rush.
Developing the tar sands and exporting its oil is a priority for Mr Harper, whose political roots lie in energy-rich Alberta. The pipeline, which would carry up to 730,000 barrels a day (b/d) of Alberta crude and an additional 100,000 b/d of Bakken crude from Montana and North Dakota, was first proposed in 2008. The southern part of the proposed network, within the United States, went into operation last month. But the northern bit, which crosses the border, has been held up by court challenges and environmental reviews. Greens, who want tar-sands production curtailed, remind Mr Obama of his 2008 promise to “free [America] from the tyranny of oil once and for all”. The pipeline’s backers promise that it would bring jobs and investment.
Despite its title, the State Department’s “Final Supplemental Environmental Impact Statement” is not the last word on the matter. The public has 30 days to comment and America’s federal agencies have 90 days to weigh in before Mr Obama will be called on to make a decision. With congressional elections due in November, he may prefer to take his time. A White House spokesman said after the report’s publication that the president would not be hurried into making up his mind.
The report supplied ammunition to both sides of the debate. Producing and using a barrel of Albertan oil emits 17% more greenhouse gas than the average barrel refined in the United States, it said. But building the pipeline would not have much impact on climate change, because without it Alberta crude would probably still be produced and shipped to market, through other pipelines or by rail. Unless the price of oil dropped below $75 a barrel (it is now about $97), tar-sands producers could absorb the cost of rail transport, the report said. Rail freight had risen to 180,000 b/d in Canada by the end of last year, from almost nothing in 2011.
Last July Mr Obama said that Canada could do more to lower its carbon emissions. Yet Mr Harper, who has accused the American president of “punting” the Keystone decision, did some punting of his own, saying just before Christmas that he hoped new emissions regulations for Canada’s oil and gas sector, first promised in 2006, would be passed within two years.
Canada had a bigger stick to wave at the United States before the surge in hydraulic fracturing (“fracking”) led to predictions of American energy self-sufficiency by 2035. Mexico, which has begun to liberalise energy, also looms as a potential rival. Mr Harper and the oil industry must hope that they can secure Keystone’s approval before the well of interest dries up.
18 Comments on "Canada can’t wait to start pumping. The United States can"
Davy, Hermann, MO on Fri, 7th Feb 2014 12:55 pm
This whole “Key” stoner pipeline is much more complicated than the environmental issues. It is just as much about economics, systematic risk, and greed. Environmentally, yea, tar sands are among the worst but worse than coal? At least with electricity we have multiple options. Liquid fuels we don’t have many effective options. If we are going to prevent a hard landing we will need “every liquid fuel supply possibility within reason” the place is already up and running. The basic startup Capex, which will soon be in short supply, has been expended. I might add any growth with tar sands may be difficult if Capex suffers from a financial crisis. If we can lets cap and trade or something. Shut some coal out of the equation to compensate for the tar sand carbon. Economically there are winners and losers. The type of oil works well with gulf refineries. We may see a bottleneck of supply with all the tight oil coming to market “if it is not allowed to be exported” and more tar sand supply being added. This pipeline is the cheapest option for Canada. Train transport is soon to be maxed out. Pipelines east west are much more expensive and environmentally difficult. Greed is a big factor. Should Canada increase tar sand production or should it be more balanced with the environmental destruction. The price of oil in the US is already under pressure from tight oil supplies. Oil companies want higher prices and need lower supply. The US needs stable supply in a dangerous world. You can bash any of these points from your point of view but all these issues and more are part of the complex equation. Besides when the crash comes the issue will be mute anyway. No multibillion dollar projects will get of the drawing board.
rockman on Fri, 7th Feb 2014 3:00 pm
“But Mr Obama seems to be in no rush”. Of course he’s in no rush. Why should he be: Canada is exporting more oil to the US today than at any time in history, all under his watch. And that capability is constantly expanding WITHOUT the border crossing section of KXL. A few weeks ago the southern leg of KXL began delivering oil sands production directly to Texas refineries. And the POTUS can rightly take some credit for this improvement of oil sands economics since he long ago publicly supported this section of KXL.
It still amazes that anyone thinks the oil sands won’t continue to be developed as long as oil prices stay elevated. Many tens of $billions have already been spent on expanding the transport infrastructure. Many of the planned projects are relatively cheap since they are just expanding capabilities of existing transport systems. Even if the POTUS approved the border crossing section tomorrow the schedule for the initial flow of the northern leg of KXL is still two years away. Today Canada exports 3 million bopd to the US. The expansion of the transport system, none of which requires POTUS approval, is underway and will add at least 1.1 million bopd long before the rest of the KXL system is complete.
“Last July Mr. Obama said that Canada could do more to lower its carbon emissions.” Truly comical: in 2012 the US produced 12X as much carbon emissions as Canada. And yes: Canada has a smaller population but the climate doesn’t give a rat’s ass what the per capita count is…it’s responding to the absolute amount. And today about 17% of those US carbon emissions from oil are coming from those “dirty” Canadian oils. The US burns about 9X as much oil as Canada. In fact, the US burns much more of the oil sands production then the Canadians do. In fact, the US burns about 40% more of the Canadian oil production (clean and “dirty”) than the Canadians do.
And so many sit back and swallow the MSM spin as if it’s painting a representative picture of the situation. Truly laughable IMHO.
Davy, Hermann, MO on Fri, 7th Feb 2014 3:45 pm
true rockman the issue is a circus
paulo1 on Fri, 7th Feb 2014 3:54 pm
Thanks Rockman…very well said. However, you forgot to add that domestic oil consumption costs Canadian consumers at least 30% more at the pumps than what US consumers spend. While our country is much more sparsely settled, (with most of the population residing within 100 km of the US/Canada border), those of us that do live elsewhere and produce the resources companies and consumers take for granted are also required to spend a disproportionate amount of their income on fuel and all things related to transportation….far higher than what the southern population and US consumer must spend. When northerners complain about the higher cost of living a common refrain is, “well, you choose to live there”.
Carrying this refrain of ‘choice’ forward, I would suggest that if US fuel consumers don’t wish to support the development and distribution of Canadian Oil/Tar sands resources, then promote the raising of fuel taxation to Canadian levels in order to discourage use. Furthermore, many more single-occupant cars could be reduced by fines and access restrictions. For every protester that drives and/or uses ff in their daily lives, (of course we all utilize the bounty of ff), it is time to accept that everyone is part of the problem and the issue is far greater than Keystone XL. In fact, Keystone is a diversionary red herring and a minor issue compared to the overall implications of our industrial lifestyle. Even the ‘Rainbow Warrior’ runs on petroleum, but I suppose that’s okay because the use of such is for the right cause. (sarc intended)
This rant must include the profligate use of water for domestic and agricultural use presently affected by the western drought. If you don’t want our oil, then don’t ask for our water (anymore), and don’t continue to purchase our excess hydro electricity. That way, we in Canada will be able to utilize that excess by reducing our electricity rates throughout the country thus resulting in a lower carbon footprint for Canadians as we substitute electric for ‘dirty energy’. This saving may also be enough for us to not even develop the oil sands. Wouldn’t that be great! Of course Californians and east coasters might not enjoy paying more for power. Make it simple, don’t buy any of our power. Canadians can use it themselves. It would save us the trouble of protesting.
Paulo
rockman on Fri, 7th Feb 2014 4:42 pm
Davy – I can’t open the regular forum posts so I don’t know how folks responded to the news yesterday. Big oil patch expo here in Houston the last two days. Not only did President Obama’s former Sec of Interior come out in full support of Keystone XL during his speech here he’s also all for frac’ng. The current Sec of Interior didn’t have much good to say about KXL before he took office. But the day after he was confirmed by congress he said he would not take part in the decision process. And now a group of D senators are joining the R’s in support of KXL. As I said yesterday it just speculation on my part but it seems like D power base is paving the road for the POTUS to approve KXL sooner than even I expected. I figured he would wait until after the midterm elections. But there are a lot of very colder voters out there right now. And the cyclic rise in gasoline prices is just a few months off.
Time will tell.
Paulo – Trust me: I fully appreciate how you boys have graciously taken on the role of our “51st state” and have shared your resource abundance. Today Canada is the largest oil producing “US state”…exceeding my beloved Texas by 50%.
“…a diversionary red herring”. Yes…a constant amazement how much Kool-Aid continues to be swallowed out there. Again how odd: an oil patch hand is constantly trying to lay out all the facts and supposed friends of the environment often argue that’s there’s nothing to worry about..the oil sands will soon implode and won’t be developed in the future.
Davy, Hermann, MO on Fri, 7th Feb 2014 4:52 pm
Paulo your point is important. These environmental folks that drive their car to the protest rally annoy me. I am not against environmentalist they are very important to the debate just if they would not be so hypocritical. Take a car to protest a part of the car culture????
Wow, Rock, O amazes me how he works an issue. He is sneaky for sure! A true political animal
rockman on Fri, 7th Feb 2014 5:02 pm
Some times one should state the obvious:”Canada can’t wait to start pumping”. In 2013 the Canadians “pumped” a little over 1 BILLION bbls of oil. Maybe it’s just me but that doesn’t strike me as very much waiting.
DC on Fri, 7th Feb 2014 6:51 pm
LOL, the ‘economist’. Well, ‘Canada’ has precious little to do with any of this. Whenever you hear the word ‘Canada wants X’, you may as well say, Amerika wants X. So its reality, its amerikan oil corporations that want to start pumping, not ‘Canada’. But nice spin…. And its true because there is no ‘Canadian’ oil industry’. Just foreign, mostly US corporations that dictate not just the Canadas energy industry, but the policy of the Gov’t itself. Corporate rule means exactly that. Rule by foreign corporations. You cannot tell where the ‘civil’ govt ends and the oil companies begin.Corporate dictates become synonymous with the official govts position.
In ALL countries where US\Western oil corporations control FF energy, Canada, Australia, UK, and so,mainly the ‘anglosphere’ nations-and some others, the situation is identical. Not only do these nations lack sovereign control over their energy, they also political control.
We have no trouble accepting the concept of no sovereign control over national currencies and policy anymore, some are less able to grasp the concept of no sovereign control over energy. In North America, the US has compelled Canada and Mexico to completely integrate its physical infrastructure as well as ceded control to those resources to those of the US.
Davy, Hermann, MO on Fri, 7th Feb 2014 7:22 pm
Damn DC, are you whining about how mean the big US bullies are kicking you poor Canadian in the Butt. Pushing you around. Making you sell you commodities to us and getting nothing in return. Sounds like bully talk around the playground. Do you really think it is that simple? Come on my friend, Canada benefits as much from the US as we do from Canada. That is called trade and trade is mutually beneficial for both parties. If it isn’t why are you guys trading. Did you get your ass whooped and laying down to us….Not likely! If it were that bad the borders would be closed I assure you. The American Military would invade then…I am guessing is your next answer. You argument will not hold up to reality. You have been reading too many little North Korean anti-American propaganda books. Remember like Mao had when China was Communist……that little red book.
penury on Fri, 7th Feb 2014 8:32 pm
I suppose my family is correct I am a bitter opinionated old man, but Davy,Hermann. managed to push one of my many buttons. The attitude displayed reminds me of when as a young person I was told by the adults that slavery was beneficial for the slaves as well as the owners because they were provided free food, lodging and medical care if they required it to make it to work.Yes, U.S. citizens are exceptional and we expect our neighbors to share their oil with us at a lower price because where else would the sell it? I neither support nor object to the Keystone pipeline, because in my opinion it is not about the enviroment but about which group of rich people will become richer. Canada, Mexico and our other neighbors do not in my opinion derive a mutual benefit, they may benefit but at a much lower level than the U.S. And remember questioning government policy is not anti-American even if the person has the mis-fortune of not being one of the chosen people. USA USA USA
ghung on Fri, 7th Feb 2014 8:56 pm
Meanwhile, back at the ranch, WTI is again hovering around $100. When is this oil glut gonna kick in?
rockman on Fri, 7th Feb 2014 11:05 pm
Penury – So you would expect the hundreds of $billions needed for developing Canadian oil resources would be invested by folks not looking to make a profit? Along those same lines: how many $billions have the citizens spent to develop those resources? From one old bitter fart to another: have you ever gotten a paycheck from an unprofitable company? Or a poor man? If the majority of the Canadian citizens are getting the benefit they deserve all they need do is elect politicians that will get what they want. Last time I looked Canada was a democracy with a decent record of honest elections.
Davy, Hermann, MO on Fri, 7th Feb 2014 11:25 pm
Penury, look, I let my friend DC piss me off by his regular anti-american statments. I should have been a bigger man about it. I love Canada and been there multiple times. I especially love Banf and Lake Louise. Anyway my stupid point was directed to him not Canadians.
But, Rock has a point. And One worn out old fart here too.
Boat on Sat, 8th Feb 2014 3:02 am
EIA.gov shows over 3 million barrols a day in exports of gasonlne, diesal,etc. Why would the US need the extra 700,000 of tar sand oil? Seems like the smarter choice would be to eliminate exports of refined products so like Nat Gas the price would not be set by Global market but by a US market. If we were not exporting large amounts of refined petroleum products and were desperate for imports i could understand the argument for a pipeline more.
Foreign companies seem to be buying up larger and larger chunks of the tar sand fields. The largest refinery in Houston recently went through a 10 billion upgrade and is owned by the Saudis and Dutch. It would be nice to see a comprehensive report of foreign ownership in Canada, US and Mexico to understand more the politics of fossil fuels.
Davy, Hermann, MO on Sat, 8th Feb 2014 2:10 pm
The US export of refined products is a good thing for the US in regard to maintaining a strong refining system. It gives us strong options with the varied types of fuel that are being produced currently. We need to export a small amount of light sweet crude and maintain the comparative advantage in heavy sour crude
Personally it sucks for me my VW TDI (40 mpg) uses diesel which is 50 cents or more higher because of this
rockman on Sat, 8th Feb 2014 5:16 pm
Not that I’m unsympathetic but this isn’t a new story. The water applies in S. CA wasn’t capable of local meeting demand decades ago. Appropriate to discuss this topic on a site focused on peaking resources. Just as US domestic oil resources peaked long ago so did the water resources for S. CA. So the inevitable: no more cheap oil or water. From 1998…16 years ago:
Nowhere in the West is there a region as obsessed with the possibility of a future water shortage as Southern California. Water is so important to the southland that, as one writer once quipped, “the history of Southern California is the record of its eternal quest for water, and more water, and still more water.”
Not that we aren’t preoccupied with the issue of future water supplies for a good reason. In the LA Basin alone, we have approximately 6% of California’s habitable land but only .06% of the State’s stream flow — yet we hold over 45% of the State’s population. And if the population projections are to be believed, the entire southland is “scheduled” to grow from our current 16 million to over 24 million people. When policy questions are asked about whether Southern California can support this level of growth, the issue of greatest concern is not traffic or air quality or even quality of life, it is water. And the predominant question asked is “where will this water come from?”
Our water fears are not new. Since the pueblo days of Los Angeles, the lack of local water resources has been seen as the primary problem for the southland’s economic future. All plans for the development of the region have hinged around schemes to secure new water supplies — a fact recognized by Carey McWilliams, the pre-eminent historian of the southland, who wrote in 1946 that “God never intended Southern California to be anything but desert…Man has made it what it is.”
rockman on Sat, 8th Feb 2014 5:19 pm
Sorry…posted elsewhere and showed up here.
rockman on Sat, 8th Feb 2014 5:38 pm
Boat – We’ve gone into the details of refining economics before so I’ll skip. You might want to search the web a bit. The dynamics have nothing to do with the numbers of bbls of anything being exported/imported. We’re importing a lot of oil from Canada. But the US is also exporting at least 200,000 bbls of oil per day to Canada. That includes at least 50,000 bbls of Eagle Ford oil that’s shipped past the largest concentration of refineries in the world on the Gulf Coast to eastern Canadian refineries. And just a few weeks ago the southern leg of the Keystone XL pipeline began moving 600,000 bbls per day of Alberta oil sands production directly to those same Gulf Coast refineries. And some of the diesel from those eastern Canadian plants is shipped to the EU which, in turn, ships gasoline back to North America. This dynamic would be very confusing if one doesn’t understand the global refining and product marketing system.
If you want dig a little on your own and swing back with any questions. Lots of smart folks here.