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Page added on November 8, 2015
Without Keystone, industry must find new paths for oil
Following the Obama administration’s rejection of the Keystone XL pipeline, the oil industry faces the tricky task of making sure the crude oil targeted for the pipeline still gets where it needs to go.
The pipeline, first proposed by TransCanada Corp. in 2008, was projected to carry 800,000 barrels a day of crude from Canada and North Dakota down to Nebraska, where existing pipelines would bring it to refineries on the Gulf Coast.
Keystone XL was expected to come online toward the end of this decade. Until then a combination of existing pipelines and railroads was expected to be enough to handle anticipated production. Now the question becomes whether there will be enough pipeline capacity to move the oil and keep costs from getting too expensive.
Skip York, vice president of integrated energy at consultancy Wood Mackenzie, said the oil industry “didn’t need Keystone today,” but will need the capacity in the future. President Barack Obama’s decision means shipping the oil will require “a more expensive form of transportation than it would have with Keystone XL,” he said.
At the moment, the biggest impediment to the flow of oil is low prices. Oil has averaged about $50 this year, making many projects in the Canadian oil sands uneconomical. According to Wood Mackenzie, projects totaling about 485,000 barrels a day have been delayed this year. Canadian oil producers still expect production to rise to 5.3 million barrels a day in 2030, up from 3.7 million barrels a day in 2014, even after lowering their forecast to take into effect the impact of lower prices.
The U.S. imports more crude oil from Canada than from any other country, about 3.4 million barrels a day as of August, according to the U.S. Energy Information Administration.
Tim McMillian, president and chief executive office of the Canadian Association of Oil Producers, is concerned that the rising cost of getting oil to market could hurt the Canadian industry’s competitiveness. Last month, Shell abandoned an oil sands project in Alberta, and its CEO pointed to concerns about high costs and insufficient pipeline capacity for the decision.
McMillan said other proposed pipeline projects should be able to help make up for lost shipments via Keystone XL.
About 100,000 barrels a day of the oil that was supposed to move through Keystone XL would have come from North Dakota, where a boom in unconventional drilling has propelled it to become the No. 2 producing state in the U.S. behind Texas.
Keystone XL would have reduced some of the dependence on rail and truck shipments, said Kari Cutting, vice president of the North Dakota Petroleum Council, which represents more than 500 companies working in the state’s oil patch.
North Dakota produces about 1.1 million barrels a day, with about half of it moved by rail, down from about 70 percent a year ago. Recent derailments and fires involving North Dakota crude – including an explosion in Quebec two years ago that killed 47 people – have drawn criticism from lawmakers and the public about using trains to move oil.
Keystone XL would have replaced at least one, mile-long oil train each day, state and industry officials say.
Now, not having the pipeline built means railroads will get to keep much of the business they’re already hauling and compete for new production as it comes online. Even with safety concerns, oil producers have become more comfortable shipping by rail, although it costs more than shipping by pipeline.
“Five years ago or eight years ago very little oil left Canada by train. Today it is commonplace for us to see unit trains moving oil to market,” McMillan said.
Even if the Keystone XL had been built, oil would have continued to be shipped by rail because oil production exceeds pipeline capacity in North Dakota and oil producers have come to like the flexibility railroads offer. Shipping by rail allows oil producers to send their product to different markets to obtain the best price.
Keystone was supposed to expand the market for Canadian crude on the U.S. Gulf Coast. Refineries there are better equipped to refine the so-called heavy crude that comes from Canada’s oil sands.
“The Keystone XL decision does not mean less oil sands overall but it may complicate oil sands access to the U.S. Gulf Coast, where there is substantial refining capacity for heavy types of crude,” added Jim Burkhard, vice president at IHS Energy.
Burkhard sees Venezuela and other countries that ship heavy oil to the U.S. as benefiting from the Keystone XL rejection. Venezuela heavy crude “will continue to be consumed by U.S. refineries in the absence of access to Canadian crude oil,” he said.
For many proponents of Keystone XL, that aspect was the most perplexing when considering the rejection.
“The most baffling part of this decision is that this administration would rather continue importing oil from countries that fund terrorism than from our very own resources and our Canadian allies,” Cutting said.
28 Comments on "Without Keystone, industry must find new paths for oil"
rockman on Sun, 8th Nov 2015 3:18 pm
Just too much bullsh*t to address in one message. First, the point out record Canadian oil exports to the US without KXL. Rail transport and the capacity explansion of the 6 EXISTING BORDER CROSSING PIPELINES make this possible. BTW those capacity increases required approval from the federal govt…which they did receive.
Second, an absolute lie about Canadian oil not making it to Texas refineries. For a while insufficient capacity from the LARGEST OIL TERMINAL IN THE US, ay Cushing, OK, restricted those imports from getting to Texas. This caused the Canadian to give big discountz to mid-continent regineries. But new pipelines, including the southern leg of KXL (which the POTUS gave full public support to) increased the thru put by more the 1.2 MILLION BBLS OF OIL PER DAY. Every bbl of Canadian oil any Texas refinery wants to buy is available to it today.
Someone mentioned that KXL not getting the permit was SYMBOLIC. I completely agree: it is very symbolic of the failure of all those opposed to the production of the oil sands and its consumption by US citizens. Which should be very obvious by the more then 42+ BILLION GALLONS OF OIL SANDS PRODUCTION EXPORTED TO THE US PER YEAR TODAY.
Plantagenet on Sun, 8th Nov 2015 3:36 pm
Rockman is right that oil from the Canadian tar sands is coming to the US anyway. All Obama did by cancelling the pipeline was push more of the oil onto dangerous oil trains, pulled by diesel locomotives that emit huge amounts of CO2. Right now Canada exports about 3.4 million bbls a day to the US, with about 1 million bbls a day of Canadian oil coming to the US by oil train.
I’m not quite sure why environmentalists are cheering a move that will result in even more exploding oil trains that emit more CO2, but perhaps as Rock says it is the “symbolism” of it all.
apneaman on Sun, 8th Nov 2015 7:13 pm
TRUTH BETWEEN THE LINES: THE “BREAKING: KEYSTONE XL PIPELINE REJECTED!” ANNOUNCEMENT CIRCULATED BY 350.ORG
http://www.wrongkindofgreen.org/2015/11/08/truth-between-the-lines-the-breaking-keystone-xl-pipeline-rejected-announcement-circulated-by-350-org/
Boat on Sun, 8th Nov 2015 7:20 pm
Plant,
I wonder who gets paid for polluting Texas air just to export finished petroleum products. The tax payer? Is the money made justify the health care problems of people near refineries? That should be the conversation.
Heck Plant, rail cars have to take condensate to Canada just to get the tar sands to flow in the pipelines. Has a study been done to weigh the impact of rail car vrs pipeline?
I say let Canada build their own refineries, ship finished goods and eat their own pollution.
Boat on Sun, 8th Nov 2015 7:29 pm
apeman,
Yes apeman. You would agree with everything in red. But your a radical. Sometimes movements get done what they can get done even if they know it is just but a small step. Small steps lead to big change over time if the movement survives.
apneaman on Sun, 8th Nov 2015 8:15 pm
boat, radicals are advocating for some kind of change they deem necessary and beneficial. I do not advocate. I discuss and give my opinion, but it’s too late for change and has been for some time. Our fate is sealed and I do not care all that much anymore either, therefore, I cannot be a radical. You and the rest of the apes are going to continue following your evolutionary programming of degrading energy to maximize fitness for reproduction and also amuse yourselves. The rest is just stories to sooth anxieties. Environmentalists have their feel good stories, techno utopians have theirs and so do denier corns. I go with the story of the history of the planet. Species come and species go. We will be going soon too.
Boat on Sun, 8th Nov 2015 8:35 pm
I read that the pipelines from Canada are at 87% capacity. If oil prices stay low we won’t need any more pipelines. We’ll need more tankers from the middle east.
rockman on Mon, 9th Nov 2015 7:02 am
Just caught a misstatement by President Obama: he said the “Keystone XL was not vital to the US economy”. What he should have said was that the NORTHERN LEG of KXL was not vital to the US economy. More than 2 years ago standing in the construction yard of the SOUTHERN LEG he publicly proclaimed that this section of KXL was vital to the US economy and instructed his departments to do whatever they could to expedite its completion. And it was completed a few months ahead of schedule.
But he was correct about the northern leg not being vital. Thanks to unlimited rail transport of oil ALLOWED by the federal govt and the permits APPROVED by the govt to expand the capacity of the existing 6 OIL PIPELINES THAT DO CROSS THE US/CANADIA BORDER, the import of oil sands production was able to reach record levels. The border crossing permit wasn’t needed to reach those record levels. And given the drop in oil prices there will continue to be no need for the extra capacity of the northern leg for many years…if not decades. If there is a future need for the northern leg that decision will be made by a POTUS whose name no one can even guess today.
Kenz300 on Mon, 9th Nov 2015 7:36 am
All Fossil fuel companies need to transition to “ENERGY” companies and embrace safer, cleaner and cheaper alternative energy or they will go broke……
the world is moving away from fossil fuels and toward alternative energy sources like wind and solar.
It is time for them to take their collective heads out of the sand.
Climate Change is real….. we will all be impacted by it……
Exxon’s Climate Change Cover-Up Is ‘Unparalleled Evil,’ Says Activist
http://www.huffingtonpost.com/entry/exxon-evil-bill-mckibben_561e7362e4b028dd7ea5f45f?utm_hp_ref=green&ir=Green§ion=green
———–
Wind Power Now Cheaper Than Natural Gas for Xcel, CEO Says – Renewable Energy World
http://www.renewableenergyworld.com/articles/2015/10/wind-power-now-cheaper-than-natural-gas-for-xcel-ceo-says.html
apneaman on Mon, 9th Nov 2015 10:16 am
The Keystone Victory
Last Friday Barack Obama followed the recommendation of the State Department that the Keystone XL pipeline would not “serve the national interest of the United States,” and thus he rejected it. I didn’t think that would happen, so Obama’s decision came as a mild surprise.
More
http://www.declineoftheempire.com/2015/11/the-keystone-victiory.html
And now a curious thing is happening. Environmental activists are celebrating, certainly, but victory in this case simply highlights the fact that Obama’s rejection of the pipeline will have only a trivial (if any) effect on humanity’s climate change problem. Whoops!
And so Dave Roberts, who is perhaps the most thoughtful climate change journalist working today, felt compelled to write a long defense of the Keystone campaign (hat tip, reader Jeff). Roberts’ defense is convoluted, but I am not going to review it because it is also silly.
The same invisible elephant—the inevitable consequences of global economic growth—is still taking up a lot of space in the room, and humans continue to tip-toe around it.
What did “Wild Bill” McKibben and his activist friends hope to accomplish by stopping the Keystone pipeline? They wanted a victory over Big Oil, who they blame for wrecking the planet. Curiously, Robert’s defense of the Keystone campaign contains the word ‘oil’ only once, and mentions Wild Bill only one time.
rockman on Mon, 9th Nov 2015 11:43 am
Apeman- “They wanted a victory over Big Oil, who they blame for wrecking the planet.” I’m always amazed when those folks frame the debate as though “Big Oil” was in favor of the KXL pipeline. Certainly some Canadian oils would have liked to see some more transport competition in hopes of lowering costs. But it’s as if they have no idea that 99.8% of US oil companies are not just opposed to granting the permit but wished the govt would ban the importation of all Canadian oil
They really don’t have a clue as to how much the Canadian imports hurt US companies. Companies that have to DIRECTLY COMPETE against the 1.2 BILLION BBLS year of those imports. Imagine how much more revenue US produces would be making if those imports were banned. Yes, there are a few US companies producing the oil sands. But overall imagine if oil sands imports were banned and it increased domestic prices not back to $100/bbl but increased it by $25/bbl to about $70/bbl. It would increase the revenue of all US producers by $80+ BILLION PER YEAR. And the shale producers themselves would see a revenue increase of $46+ BILLION PER YEAR.
IOW it’s easy to speculate that collectively US oil producers are losing more revenue than the combined revenue earned by all the oil sands producers combined. Simple put: why the f*ck would US oil producers be unhappy to see anything that might inhibit the production of the oil sands? Most folks really have no idea of the dynamics involved in this situation. Not a f*cking clue. LOL
Ohh…one last reminder: if the planet is being wrecked by the production of GHG then exactly who is to blame? The vast majority of GHG is being produced by the folks burning all those hydrocarbons…the consumers. It is a PROCESS: hydrocarbon exploration – hydrocarbon production – hydrocarbon refining – conversion of refinery products into GHG. Each component of the process has its share of responsibility. And by far most of that responsibility falls on the last step of this process: the consumers If the consumers reduced their consumption by 50% then ExxonMobil et al would reduce their oil/NG production by 50%. So reducing GHG production is rather simple: consumers…stop burning the sh*t. LOL.
Of course, the consumers won’t stop. Similarly they won’t tolerate any effort by anyone to inhibit XOM et al from producing oil/NG despite all the disingenuous rhetoric tossed about by some. Just consider the words of the POTUS: little or no benefit to the US economy by building the northern leg of KXL. That’s completely true: the US economy is already getting the max benefit from the oil sands production. Isn’t that what he’s really is saying?
But good for the greenies if it makes them feel better. They have little other reason to be happy: the world is producing more oil than ever before; and producing more of the “dirtiest oil on the planet” then every before; and in the last 5 years the world has burned more coal then during any other 5 year period in history increasing coal consumption by 6.5%. Yes indeed…time for environmentalists to celebrate…mission accomplished. LOL. Folks really need to think about the effect of such claims of “victory” on the public attitude: they are being told that the situation is being handled and the future isn’t as grim as it had been. Which is 180 degrees from the reality.
And once again how ironic: an oil patch hand pointing out that the situation isn’t being handled and isn’t getting better while “environmentalists” are basking in the sunshine of their “victory” over the oil sands. LOL.
apneaman on Mon, 9th Nov 2015 12:28 pm
If apes were to ever attempt to stop burning shit or slow down, it would only have a chance from the top down and then it would have to be global. Impossible given how the ape brain (all life) evolved to maximize energy and our inbuilt distrust of the other will lead to one or more tribes cheating for military advantage. I am convinced that many consumer-citizens who are concerned about AGW really believe the economy can be decoupled from fossil fuels and their consumptive lifestyles can, more or less, carry on. Many big environmentalist, techno-heroes and politicians have told them this. Elon Musk, said so. Bill Gates said so. Obama, said so and so have many other beloved, admired and trusted folks including many favorite big name celebrities. We’re social monkeys and facts and data have little influence compared to what the popular monkeys are saying. Most don’t even know what peak oil is. How many celebs or politicians have talked about peak oil in public? It’s a no no, same as saying AGW, and the rest of the overshoot predicaments can’t be solved. There is a peculiar unwritten rule in societies that certain subjects cannot talk about. Ours are existential threats of our own making.
Boat on Mon, 9th Nov 2015 12:29 pm
You can discount the Keystone Victory all you want but it was still pretty impressive considering oil collectively has the biggest oil lobby and is the largest commodity in the world.
Oil own the Republican party and has won most of the oil political battles since Rockefeller. This is why we still flare off nat gas in the face of climate change. Not just oil but all energy companies are very important and powerful.
apneaman on Mon, 9th Nov 2015 12:45 pm
Rockefellers fund 350.org too, boat. Apparently they can’t loose.
rockman on Mon, 9th Nov 2015 2:28 pm
“You can discount the Keystone Victory all you want but it was still pretty impressive considering oil collectively has the biggest oil lobby and is the largest commodity in the world.” You still don’t seem to understand that the vast majority of the US oil producers have never wanted the KXL pipeline. Do you really not understand that the lobbyists for US oil producers have been pushing to have the permit denied? Really? You don’t understand why that is a FACT? It has been the refinery lobbyists that have been pushing it. Have you not read a single word of the bitter battle between US producers and our refiners? It doesn’t even take Econ 101 to understand why…remedial high school economics should be sufficient. LOL.
Again the relentless “victory” comment without a single reference to what has actually been won. Is less oil sands production being exported to the US…NO! Has the pipeline capacity to export oil sands production to the US been decreased…NO! Has the collapse of oil prices made the building of KXL unnecessary…YES! Did the completion of the southern leg of KXL (as promised by President Obama) remove the choke point in Cushing that was habiting the expansion of oil sands projects…YES! Has the US been importing more oil sands production than ever before…YES! Is there current transport capacity to export every bbl of oil sands production to the US…YES! Will there be increasing export capacity of the oil sands for years to come since new projects are being delayed/cancelled…YES!
So again one simple question: name one positive benefit to the environment by the permit not being granted. I just gave you numerous reasons why there has been no substantial positive benefit by not granting the permit. I’m just asking you to name one thing environmentalists have won. Other then, of course, the benefit of the anti-KXL: folks deluding themselves into thinking they accomplished anything. Come on…just one substantive benefit is all I’m asking.
This is the same delusion US environmentalist have believing that it was them that have caused US coal consumption to decrease and it wasn’t a result of years of very low NG prices allowing US power plants to switch. Given such “power” of the environmental lobby wouldn’t you think they could have convinced the “greenest POTUS” in US history to stop exporting coal from govt lands instead of actually increasing those coal exports to China by more than 500% during his watch? US coal exports increased rapidly in 2011 during his administration, returning to levels not seen since the early 1990s and accelerating to keep up with rapidly rising global demand. The U.S. is the fourth-largest source of coal exports in the world under the leadership of President Obama.
And why relate oil sands production to US coal exports? Easy: In 2011, the group Sightline calculated the carbon dioxide emissions from U.S. coal exports versus Alberta’s tar sands, and found projected emissions from coal exports to be substantially higher. And is Sightline a group of rightwing industrialists? Hardly: “Sightline Institute is an independent, nonprofit research and communications center—a think tank—founded by Alan Durning in 1993. Our mission is to make the Northwest a global model of sustainability—strong communities, a green economy, and a healthy environment.”
Coal exports: The calculation assumed that 110 million tons of Powder River Basin coal (virtually all from govt leases overseen by President Obama) are exported each year. The estimate assumed that Powder River Basin coal generates 8,500 BTUs per pound, and that one million BTUs would produce 212.7 pounds of CO2, consistent with U.S. Department of Energy figures. The final calculation was 199 million tons of CO2 per year in “direct” emissions from the coal exports. And while there has been strong local opposition to new west coast terminals the POTUS had ordered all his departments to expedite permits approving the expansion of other coal export terminals: “It was announced in June 2012 that U.S. coal companies were looking to boost exports through the Gulf of Mexico after meeting resistance to West Coast port expansions. Kinder Morgan Energy Partners stated that the company the company will be on expanding their terminals in the Gulf and the Southeast. Kinder announced they were planning to spend $200 million to boost capacity at the location to 8 million tons a year from 2.5 million. The project is set to be completed by this year.
Tar sands: To calculate the CO2 emissions from the Keystone XL Pipeline, it was assumed that the pipeline moved 830,000 barrels of oil per day, in line with U.S. State Department figures, working out to about 303 million barrels per year. It was then assumed that each barrel of oil contains 0.43 metric tons of C02, which the U.S. EPA assigns for an “average” barrel of oil (direct emissions from burning are the same regardless if it’s oil or tar sands), which works out to about 144 million short tons of CO2 per year for direct emissions from burning the oil. To account for the particular crudeness of tar sands oil, the emissions that are associated with extracting and processing it for use were factored using figures from David Strahan, Wikipedia, and other sources; it was assumed that extracting the oil and “upgrading” to make it suitable for refining results in somewhere around 18 to 26 percent more carbon emissions than the direct emissions from burning the fuel itself. A mid-point of that range, 21.7 percent, was used, and added up to 31 million tons of CO2, for a combined direct and indirect emissions total of 175 million short tons of CO2 per year for the pipeline oil.
But again even this comparison showing more CO2 production from US coal exports (THAT ARE PROMOTED BY THE POTUS) then would come from the oil sands production transported by the northern leg of KXL is also very misleading: that oil sands production is currently being exported to the US vis other border crossing pipeline and rail cars…without the northern leg of KXL. IOW that total CO2 load is already being generated.
Are you saying that environmental lobbyists have greater influence over the oil patch then they have over the Democrat POTUS? Is that what you’re really trying to convince folks? Or is this just another attempt to steal credit from the actually cause of the potential decline of oil sands production: the decline in oil prices and thus the loss of the need for the norther leg of KXL?
So again the truly bizarre irony of an oil patch hand pointing out how the environment is continuing to take a hit despite the rejection of the border crossing permit while supposed friends of Mother Earth try to argue that BAU is in the process of being stopped. The rest of y’all see it, don’t you? Don’t be afraid…speak up. LOL.
Boat on Mon, 9th Nov 2015 4:17 pm
Rock,
There is to much to cover from your lengthy comment but I will mention a couple of things.
The Koch brothers own around 1.5 millions of Canadian land. They are the Reps biggest oil donors and a fierce Dem rivel.
I read pipelined oil saves 66% over rail car transportation.
BNSF is the railroad Berkshire Hathaway Inc/ Warren buffet bought.
The rise of nat gas has cut coal shipments
Dragging shipment numbers down, coal railway car traffic is off 9.3% to 4.1 million carloads. Coal represents the largest product railroads ship.
Was the XL pipe line a bone for a huge Dem donoer? You tell me. I think that’s how politics work.
Almost all tar sands from Canada is refined in Montana, Illinois, Ohio etc. The Gulf very little. They got heavy oil from Mexico and Valenzuela. Were there political deals made with these two countries?
The stats about coal are true but the regulations for coal won’t hit till later, I think 2022. These coal plants are shutting down because of the writing on the wall and the lack of tec to clean it up cheaper. I asssume once again it was political to allow more exports of coal out of the US and the flaring of nat gas to get the regulation votes against coal. Just a guess. Part of that equation is the tightening of regulations at refineries for cleaner air using nat gas with CHP tech. Which came btw with huge tax breaks for very expensive equipment.
I think a lot of give and take goes into deals beyond ideology.
rockman on Mon, 9th Nov 2015 6:43 pm
Wrong: week (February 19, 2015) Enterprise Product Partners announced the start of line fill on their 780 Mb/d ECHO to Beaumont/Port Arthur pipeline. The new route will open access for Canadian heavy crude shippers on the recently completed Seaway Twin pipeline from Cushing to Houston to 1.5 MMb/d of refining capacity in Beaumont/Port Arthur including 0.3 MMb/d of heavy crude coker processing. These refineries were a key target of the Keystone-XL pipeline from Canada to the Gulf Coast that still awaits approval. Today we look at demand and competition for Canadian heavy crude on the Texas Gulf Coast.
Monday, 03/02/2015
Published by: Sandy Fielden
Last week (February 19, 2015) Enterprise Product Partners announced the start of line fill on their 780 Mb/d ECHO to Beaumont/Port Arthur pipeline. The new route will open access for Canadian heavy crude shippers on the recently completed Seaway Twin pipeline from Cushing to Houston to 1.5 MMb/d of refining capacity in Beaumont/Port Arthur including 0.3 MMb/d of heavy crude coker processing. These refineries were a key target of the Keystone-XL pipeline from Canada to the Gulf Coast that still awaits approval. Today we look at demand and competition for Canadian heavy crude on the Texas Gulf Coast.
In Episode 1 of this two part series we looked at the rather painful progress developing pipeline infrastructure to deliver heavy Canadian oil sands crude to Gulf Coast refineries. Midstream developers have been beset by difficulties including headline grabbing delays to the Keystone XL pipeline and less dramatic but no less damaging setbacks to expansion of the Enbridge system. Since December about 240 Mb/d of heavy Canadian crude has flowed into the Houston Enbridge ECHO terminal on the Seaway Twin pipeline where it must now duke it out with incumbent suppliers to the Gulf Coast’s 1.5 MMb/d of heavy crude “coking” capacity. The largest of the incumbents is Mexican national oil company PEMEX that has already begun discounting it’s flagship Maya crude to do battle with Canadian producers. In this episode we look at heavy crude refining capacity on the Texas Gulf Coast that Canadian barrels will be competing to supply. We also ponder how the volumes of crude flowing on Seaway Twin today will impact the incumbent suppliers.
school of energy remix
It’s A REMIX! SCHOOL OF ENERGY CALGARY!
RBN’s School of Energy has been reworked, restructured and reorganized to make the conference even better – more content, more models and more labs.
Calgary – March 30 – April 1, 2015
School of Energy Registration
Heavy Refining Capacity
The map in Figure #1 shows the refineries that heavy Canadian crude coming south on the Seaway Twin pipeline from Cushing will be able to reach easily. The refinery nameplate capacity is shown on the map together with the capacity of heavy crude processing units called cokers. There are still more heavy crude refineries in Louisiana (Lake Charles and St. James area) further to the east that can be reached from Houston via the Shell Ho-Ho pipeline (see Oh-Ho-Ho It’s Magic) but that route is not direct and is constrained by the 250 Mb/d outbound Ho-Ho capacity. From the Seaway pipeline at the Jones Creek terminal (bottom right on the map) crude can be distributed to refineries clustered in three areas – in and around the Houston Ship Channel, south of Houston at Texas City and Galveston Bay and 100 miles to the east at Beaumont/Port Arthur. Distribution to these refineries from Seaway is primarily via the 850 Mb/d Jones Creek to ECHO lateral pipeline owned by Enterprise Product Partners (EPD) and Enbridge. The ECHO terminal is the central storage and distribution hub of the EPD Gulf Coast network and currently has close to 3 MMBbl of crude storage operational (see ECHO and the Blending Men). A pipeline link is being completed between ECHO and the Houston Ship Channel fand EPD’s connectivity along the Channel is enhanced by their recent acquisition of Oiltanking (see Starship Enterprise) who own pipelines linking the four area refineries. Those four Ship Channel refineries have combined nameplate capacity of 0.8 MMb/d with two (Lyondell Houston Refining and Shell Deer Park) having coking units designed to process 83 Mb/d of heavy crude each.
And more:
Much of RBN’s forecast 1.4 MMb/d expansion in Canadian crude production between 2014 and 2019 is expected to come from oil sands bitumen in Western Canada. An increasing proportion of this crude has to find its way to refineries configured to process this type of crude on the Gulf Coast. But pipeline capacity on that route is in critically short supply. An important set of expansions to existing Enbridge and Enterprise pipelines between Canada and Texas, parts of which are set to come online soon, hopes to alleviate the situation. Today we wrap up a two part series describing these projects and their impact.
Recap
In Part 1 we described plans to expand the Enbridge Western Gulf Coast Access System (WGCAS) to deliver as much as 800Mb/d of crude from Western Canada to the Texas Coast. This system expansion has become increasingly important to Canadian shippers because of continued delays in permit approval for the rival TransCanada Keystone XL pipeline. The WGCAS system has three sections. The first is the 2.5 MMb/d Enbridge Mainline that stretches from Edmonton, Alberta across the US border to the Chicago, IL region and delivers crude from Western Canada and the Bakken to the US Midwest and Eastern Canada. The second section is the Enbridge Spearhead pipeline between Chicago and Cushing, OK. The third is the Enbridge/Enterprise Products Partners 50/50 JV Seaway pipeline between Cushing and Freeport, south of Houston on the Texas Gulf Coast. Although the pipeline capacity on Spearhead is the weakest link in the current WGCAS, we explained that Enbridge has to expand the whole system, including sections of the Mainline north of Chicago to accommodate expanded demand from Canadian producers. Expansions to one of those northern sections, the Alberta Clipper, have been delayed until late 2015 by permit issues. In this episode we describe the two new build sections of the WGCAS between Chicago and the Gulf Coast and discuss the overall impact of the expansion.
Flanagan South
Flanagan South is a new pipeline expected online during Q3 2014, that will run parallel with the existing 193 Mb/d Spearhead pipeline from Flanagan to Cushing. Together the 600 Mb/d Flanagan South and 193 Mb/d Spearhead will offer as much as 793 Mb/d of crude capacity between Chicago and Cushing.
rockman on Mon, 9th Nov 2015 7:07 pm
And lets follow the Koch Brothers logic. The bros hate the D’s and in particular President Obama. And the POTUS and D’s hate the bros. And the bros own a shit load of oil sands acreage. And since the beginning of the Alberta boom the US govt, under the leadership of President Obama, has facilitated all but one plan that has led to record exports of oil sands production. Such as President Obama’s very public support of increasing pipeline capacity from Cushing to Texas refineries. An expansion of the market gor Canadian producers who had been previously forced to sell to mid-west refiners at a big discount.
In addition to supporting pipeline expansion from Cushing to Texas, the current D administration has approved every permit request to expand the capacity of the EXISTING border crossing pielines allowing more access to the US market for the Koch oil.
Can y’all imagine the public outrage had this happened with an R POTUS? Can you picture the daily front page headlines by the MSM blasting President Bush if the greatest expansion of oil sands production had happrned on his watch instead of President Obama’s?
If anyone buys this “logic” then they’ll have to beleive the Koch bros have bought President Obama and most of the D congress.
rockman on Mon, 9th Nov 2015 7:12 pm
And lets follow the Koch Brothers logic. The bros hate the D’s and in particular President Obama. And the POTUS and D’s hate the bros. And the bros own a shit load of oil sands acreage. And since the beginning of the Alberta boom the US govt, under the leadership of President Obama, has facilitated all but one plan that has led to record exports of oil sands production. Such as President Obama’s very public support of increasing pipeline capacity from Cushing to Texas refineries. An expansion of the market gor Canadian producers who had been previously forced to sell to mid-west refiners at a big discount.
In addition to supporting pipeline expansion from Cushing to Texas, the current D hadministration has approved every permit request to expand the capacity of the EXISTING border crossing pielines allowing more access to the US market for the Koch oil.
Can y’all imagine the public outrage had this happened with an R POTUS? Can you picture the daily front page headlines by the MSM blasting President Bush if the greatest expansion of oil sands production had happrned on his watch instead of President Obama’s?
If anyone buys this “logic” then they’ll have to beleive the Koch bros have bought President Obama and most of the D congress.
apneaman on Mon, 9th Nov 2015 9:27 pm
2nd train derails in Wisconsin in 2 days, spills crude oil
http://fuelfix.com/blog/2015/11/08/2nd-train-derails-in-wisconsin-in-2-days-spills-crude-oil/
Boat on Mon, 9th Nov 2015 11:46 pm
Rock,
If I read your report right oil to Houston will go From Alberta to Chicago then to Houston. Wonder how much extra cost goes into that long a rout.
Wasn’t the main reason to relieve the bottleneck at Cushing, to help Kansas and Oklahoma get a better price for their oil?
theedrich on Tue, 10th Nov 2015 4:32 am
Thank the gods that Rockman contributes here! He is the best source for substantive information on the energy situation we have. I am particularly impressed to discover that it was Ø who approved KXL’s southern leg and the expansion of coal exports. The Green fanatics who claim credit for stopping the northern leg seem to be people who have been let out of insane asylums for an airing. As for Ø, I now give him credit for having, with these energy-transport approvals, done the best thing since he shipped that filthy statue of Winston Ill-Church back to Limeyland. Thank you, Rock!
electrorail on Tue, 10th Nov 2015 6:01 am
Yes I agree theedrich.
Rockman is a great source of balanced sane fact based information and opinion (and there are others too, of course).
His lucid straight ahead commentary with regard to some of the echo-chamber pundits posting on this site are just tremendous.
I will be offering him a First Class ticket on the inaugural run of the State-of-the-Art, Purpose-Built G7G Railroad to Alaska.
I hope he is healthy enough to make the trip as it will about 2021 or so when it is completed…entirely filling the TAPS back up and bound for markets in California and Asia.
I will really enjoy meeting him in person…if, of course, he accepts my invitation… 🙂
As the VP of our engineering firm AECOM says to me quite often,..(referring to the chances of KM TMX and TC EE getting permitting and social license to operate)
“We’ll See”
electrorail on Tue, 10th Nov 2015 6:19 am
Quote from article:
“Keystone XL would have replaced at least one, mile-long oil train each day, state and industry officials say.”
Finally, an official admits that rail can move oil in huge volumes easily.
In the early days of the G7G Railway development, some 5-6 years ago, in speaking with “officials” at CAPP in Calgary, I’d ask these very smart people what they thought 86 M bpd of relentless worldwide oil consumption looked like…
Mostly they had no idea.
So I would tell that its the same volume of oil you see going by in front of you as count the railcars at a level-crossing if the train is travelling about 50 mph give or take.
This always surprises people.
So the G7G RR would deliver 1 M bpd to Pacific tidewater by way of TAPS with about 7-8 trains per day leaving Alberta every day. One every 3 hours or so.
A train goes through my small town of Revelstoke every 40 minutes or so on the CP Rail Mainline. 24/7.
This always surprises people.
And if CP Rail had double track and better grades, they could send 3-4 times as many trains through the mountains of BC if all the other supply chain choke points were capable of handling the fright…but they aren’t…
But I digress
electrorail on Tue, 10th Nov 2015 6:21 am
Quote from article:
“Keystone XL would have replaced at least one, mile-long oil train each day, state and industry officials say.”
Finally, an official admits that rail can move oil in huge volumes easily.
In the early days of the G7G Railway development, some 5-6 years ago, in speaking with “officials” at CAPP in Calgary, I’d ask these very smart people what they thought 86 M bpd of relentless worldwide oil consumption looked like…
Mostly they had no idea.
So I would tell them that its the same volume of oil you see going by in front of you as count the railcars at a level-crossing if the train is travelling about 50 mph give or take.
This always surprises people.
So the G7G RR would deliver 1 M bpd to Pacific tidewater by way of TAPS with about 7-8 trains per day leaving Alberta every day. One every 3 hours or so.
A train goes through my small town of Revelstoke BC every 40 minutes or so on the CP Rail Mainline. 24/7.
This always surprises people.
And if CP Rail had double track and better grades, they could send 3-4 times as many trains through the mountains of BC if all the other supply chain choke points were capable of handling the fright…but they aren’t…
But I digress
rockman on Tue, 10th Nov 2015 7:27 am
Boat – Yep…helped the midcon oil producers a good bit also since they had to compete with all the Canadian oil stacking up at Cushing. And yes: the alternatives cost money. Consider Flanagan South…$2.8 billion. But think about this: if they charged $2.60/bbl to haul the 585,000 bbl capacity per day they would recover the investment in 5 years. And others would also benefit: During its construction phase, the Flanagan South line required about 4,000 temporary full-time equivalent jobs in Illinois, Missouri, Kansas, and Oklahoma, and created about $72-million in sales tax revenue across those four states. Flanagan South is expected to generate about $27-million per year in property taxes — $1.7-million in Illinois, $8.7-million in Missouri, $12-million in Kansas, and $4.6-million in Oklahoma. How many prayers do you think were said by politicians in those states hoping the KXL permit wouldn’t be approved? LOL.
http://www.enbridge.com/DeliveringEnergy/GL2GC/Image-Gallery/Flanagan-South-construction.aspx
By not approving the KXL permit it made Flanagan South a worthwhile investment. Same true for the southern leg of KXL and the Seaway pipeline reversal. It also justified connecting the Keystone Pipeline’s (began moving oil sands production across the border into Cushing in 2001) 600,000 bopd capacity:
Three phases of the project are in operation. They are:
The Keystone Pipeline (Phase I), delivering oil from Hardisty, Alberta, over 2,147 mi to the junction at Steele City, Nebraska, and on to Wood River Refinery in Roxana, Illinois, and Patoka Oil Terminal Hub (tank farm) north of Patoka, Illinois, completed in June 2010.
The Keystone-Cushing extension (Phase II), running 291 mi from Steele City to storage and distribution facilities (tank farm) at Cushing, Oklahoma, completed in February 2011.
The Gulf Coast Extension (Phase III), running 487 mi from Cushing to refineries at Port Arthur, Texas was completed in January 2014, and a lateral pipeline to refineries at Houston, Texas and a terminal will be completed late 2015, going online a year later.
Rail – Thanks. Been try to get to AK for decades but have only made it as far north as Banff Park and to watch the polar bears play at Churchill. As long as your train is wheelchair friendly I might take you up on the offer. LOL.
rockman on Tue, 10th Nov 2015 8:00 am
Boat – I didn’t mean to sound so harsh on my earlier post. Typing on my little phone with my fat fingers gets me frustrated. LOL. What you said was true…at one time. But not many were noticing the change. That’s why I kept beating on our buddy Graeme. The more he et al kept focusing on the KXL permit the less attention was paid to all the other expansion projects. And the folks pushing those projects didn’t care to get pulled into the oil sands debate so they didn’t go for front page headlines.
Boat on Tue, 10th Nov 2015 8:21 am
Rock,
I read a chart that listed every refinery and what percentage of tar sands was processed in 2012. It looked like Mcpherson KS was the farthermost south refinery that used tar sands/20%. When I have time I will continue to look at gulf refineries and where they get their inputs. Do you know if the gulf is refining tar sands now or at what volume?