The State Department claims the Keystone XL pipeline will have no impact on tar sands development. Their claims are false. The reasons go well beyond the logistics of importing the bitumen sludge.
Oil companies playing in the Alberta tar sands want the Keystone XL pipeline for two reasons. One is that it is the most inexpensive way to transport the product to markets. Second, Gulf Coast refineries in Texas and Louisiana can handle bitumen in barely diluted form. Without the pipeline, the oil companies would have to invest more money in upgrading the bitumen to synthetic light crude before sending it to refineries and foreign markets.
Can you guess what the oil companies are going to do with their cost savings?
Oil industry consultants IHS CERA released a report last week on tar sands economics ("Extracting Economic Value from the Canadian Oil Sands"). The bottom line is that profit margins are larger for oil companies without upgrading, but that requires the Keystone XL pipeline to get bitumen to heavy oil refineries on the Gulf Coast. That also frees them up to expand production.
That change in practice means that instead of investing in upgrades, companies can devote their capital to increasing oil sands production, leading to more permanent jobs in the region and better tax revenue for Canada, the IHS CERA report concluded.
Houston Chronicle, March 28, article by By Jennifer Dlouhy
The big players in the Alberta tar pit certainly act like the Keystone XL pipeline is a done deal. They are
all canceling plans for building bitumen upgraders, which cost between $10-12 billion for each facility. To date, 8 upgraders have been mothballed, freeing up nearly $100 billion.
Suncor Energy Inc.’s (SU) decision to scrap an C$11.6 billion ($11.4 billion) oil-sands plant shows Canadian producers are betting they can boost shareholder returns by shipping crude directly to refineries instead of investing in costly processing.
Suncor, Canada’s largest energy company, abandoned plans last week with partner Total SA (FP) to build the Voyageur upgrader that would have converted heavy bitumen to a synthetic light crude, amid rising competition from U.S. oil. Paris-based Total instead outlined plans to focus on heavy-oil production from its proposed Fort Hills and Joslyn oil-sands developments, spending C$15 billion on Canadian energy projects through 2020.
“We can develop Fort Hills and Joslyn without upgrading,” said Andre Goffart, chief executive officer of Total’s Canadian unit, in a phone interview from Calgary on March 28. “We are looking to ship some products to the U.S. Gulf Coast, but also to Asia as well, because we think that Asia in the future will be an important customer for oil sands.”
Bloomberg, April 1, article by Edward Welsch & Rebecca Penty
Odd that the State Department failed to mention that the Keystone XL pipeline allows oil companies to increase tar sands production because they will not have to invest in upgrading the bitumen. Of course, increasing production increases greenhouse gas emissions along with oil company profits.
For those keeping score, here is a breakdown of Keystone XL pipeline winners and losers. Canada gets more oil industry jobs and tax revenues as production increases. Oil companies get higher profits since they can feed directly into Gulf Coast refineries, where most of the refined products can be exported to lucrative foreign markets. America gets refinery pollution, pipeline spills, and the satisfaction of exporting petroleum products to more successful economies. Future generations get climate chaos and toxic waste. Congratulations to the fine folks at the State Department for all your hard work. I am sure you will be rewarded by the oil industry when your "public service" is complete. And my heart goes out to John Kerry for having to divest himself of $750,000 in Suncor stock.
|
Help Us Spread the Word About Climate Change
For those of you on Facebook and Twitter: Please help to spread the word by hitting the FB and Tweet links at the top of this diary and if you have time, join the discussion with comments. Share such postings with friends, family, co-workers, and acquaintances.
Thanks, as all of this helps build the Climate Change movement as well as introducing critically important ideas about renewable sources of energy.
Please use hashtags #climate, #eco, and #climatechange to tweet all diaries about the environment.
"Green Diary Rescue" is Back!
After a hiatus of over 1 1/2 years, Meteor Blades has revived his excellent series. As MB explained, this weekly diary is a "round-up with excerpts and links... of the hard work so many Kossacks put into bringing matters of environmental concern to the community... I'll be starting out with some commentary of my own on an issue related to the environment, a word I take in its broadest meaning."
"Green Diary Rescue" will be posted every Saturday at 1:00 pm Pacific Time on the Daily Kos front page. Be sure to recommend and comment in the diary.
|