Keystone Pipeline

[Cutlass]

No, crucify the Republicans for forcing a decision before an acceptable plan was completed.

 

[MagisterCultuum]

Wouldn't it make more sense to build a new (hopefully more efficient) refinery near the source of the oil sands than to pump the crude stuff thousands of miles?

 

[Cutlass]

Wouldn't it make more sense to build a new (hopefully more efficient) refinery near the source of the oil sands than to pump the crude stuff thousands of miles?

No. And for the same reason that Saudi Arabia isn't a refining superpower: It's too dangerous.

When transporting raw oil the risk is an extremely ugly mess where you get a spill. When transporting gasoline or many other refined oil products, the risk is massive explosion and fire. Which is why most places that consume oil refine regionally if they can afford to do so. And it is also more expensive to ship many different chemicals and keep them separate and pure than it is to transport oil.

On the similar subject, I heard today why it makes no sense to pipeline the oil to the Pacific coast for export. It's a factor I forgot about. Essentially, it is called the Rocky Mountains. It takes a hell of a lot of energy to pump oil uphill 7000 feet. Too much to be economically viable.

 

[History_Buff]

Absolutely they should have done that in the beginning, but it is still in the planning phase... so it's ok... we don't need to crucify them over it.

It wasn't really in the planning stages. It's clear that Trans-Canada was expecting a rubber stamp on this one. Otherwise they wouldn't have bought all the pipe; it's currently lying in various fields throughout the US and Canada.

 

[Orka]

I don't know if anyone has mentioned it yet, but keep in mind that the XL Pipeline is not going to increase our oil imports from Canada compared to w/o the pipeline. We already buy almost all of Canada's oil, and existing pipelines can handle oil imports for the foreseeable future. From the Department of Energy's analysis of growth in Canadian imports (pg 85-90) [EDIT: sorry, analysis to the Department of Energy from an energy consulting firm]:

building or not building KXL [Keystone XL pipeline] per se has little impact on total U.S. imports of WCSB [Western Canadian] crudes over time, this because sufficient alternative pipeline capacity to be deliverable over time to lead to similar WCSB pipline flows... Under the KXL case, total Canadian crude oil imports to the USA are projected to grow from 1.9mbd in 2009 to 2.7 mbd by 2020 and 3.6 mbd by 2030. The results for the No KXL case are almost identical.

So the extra capacity is not needed - the reason for the pipeline is to gain access to world markets, allowing them to charge higher prices to the U.S.. Canada has tried to do this in its own borders (the Northern Gateway pipeline to British Columbia), but the project has been slowed by very strong opposition from environmentalists and Native groups.

Plus there seems to be a lot of concern among British Columbians at large about the project. This poll showed showed 80 percent supporting a ban on crude oil tankers in British Columbian coastal waters, and opposing the pipeline by 51%-34% (To be fair, a later online poll seems to show a reversal, indicating 48%-32% support, but it was commissioned by the very oil company pushing for the pipeline. Interpret it how you will). This pipeline's future is uncertain, at best.

So that leaves XL. Currently, Canadian oil flows mostly to Midwestern refineries (which are planning big upgrades to handle growing supply), giving the Midwest a great bargaining position, and thus big discount. Once XL is built, however, Gulf Coast refineries and the rest of the world gain more access. Midwest refineries will be hurt, and American buyers will have to compete with hungry developing countries for Canadian oil products, resulting in higher oil prices. It's good for Canada, I guess (or at least for the oil companies), but so far it doesn't seem to be in the U.S.'s national interest.

And this isn't even considering the environmental risks, which are also significant.

 

[warpus]

Spoiler :

I don't know if anyone has mentioned it yet, but keep in mind that the XL Pipeline is not going to increase our oil imports from Canada compared to w/o the pipeline. We already buy almost all of Canada's oil, and existing pipelines can handle oil imports for the foreseeable future. From the Department of Energy's analysis of growth in Canadian imports (pg 85-90):

So the extra capacity is not needed - the reason for the pipeline is to gain access to world markets, allowing them to charge higher prices to the U.S.. Canada has tried to do this in its own borders (the Northern Gateway pipeline to British Columbia), but the project has been slowed by very strong opposition from environmentalists and Native groups.

Plus there seems to be a lot of concern among British Columbians at large about the project. This poll showed showed 80 percent supporting a ban on crude oil tankers in British Columbian coastal waters, and opposing the pipeline by 51%-34% (To be fair, a later online poll seems to show a reversal, indicating 48%-32% support, but it was commissioned by the very oil company pushing for the pipeline. Interpret it how you will). This pipeline's future is uncertain, at best.

So that leaves XL. Currently, Canadian oil flows mostly to Midwestern refineries (which are planning big upgrades to handle growing supply), giving the Midwest a great bargaining position, and thus big discount. Once XL is built, however, Gulf Coast refineries and the rest of the world gain more access. Midwest refineries will be hurt, and American buyers will have to compete with hungry developing countries for Canadian oil products, resulting in higher oil prices. It's good for Canada, I guess (or at least for the oil companies), but so far it doesn't seem to be in the U.S.'s national interest.

And this isn't even considering the environmental risks, which are also significant.

That was all very insightful, thank you. More real content in one post than we have in the rest of the thread

 

[Janusi]

And that analysis also explains why the pipeline is likely to cost jobs, rather than create them.

 

[Ziggy Stardust]

So maybe there is a point in first taking a real good look at this instead of knee-jerk politics?

 

[Murky]

I love this this. Bill Moyers on Obama's decision.


Link to video.

 

[kochman]

Wouldn't it make more sense to build a new (hopefully more efficient) refinery near the source of the oil sands than to pump the crude stuff thousands of miles?

It would if it didn't take dozens of years to get such a project approved... all sorts of palms to grease... etc.
It shouldn't be too easy. We don't need a new refinery everytime we find a new source. I agree though, Canada should just build their own refinery.

It wasn't really in the planning stages. It's clear that Trans-Canada was expecting a rubber stamp on this one. Otherwise they wouldn't have bought all the pipe; it's currently lying in various fields throughout the US and Canada.

It was in the planning stages. You can move pipe as needed and they already began planning the changed route a while ago.

I don't know if anyone has mentioned it yet, but keep in mind that the XL Pipeline is not going to increase our oil imports from Canada compared to w/o the pipeline. We already buy almost all of Canada's oil, and existing pipelines can handle oil imports for the foreseeable future. From the Department of Energy's analysis of growth in Canadian imports (pg 85-90):

So, if it goes to China, it doesn't decrease our imports? That's an interesting concept.
By the way, the source you chose isn't the DoE's analysis. It is an analysis provided TOO the DoE, in draft form, by Ensys Energy. It appears to be a good source, but just wanted to clear up the misleading approach.

So the extra capacity is not needed - the reason for the pipeline is to gain access to world markets, allowing them to charge higher prices to the U.S.. Canada has tried to do this in its own borders (the Northern Gateway pipeline to British Columbia), but the project has been slowed by very strong opposition from environmentalists and Native groups.

How does this give Canadia access to charging higher prices? They can already charge the market rate... how does this give them the ability to charge more than the market rate?

Plus there seems to be a lot of concern among British Columbians at large about the project. This poll showed showed 80 percent supporting a ban on crude oil tankers in British Columbian coastal waters, and opposing the pipeline by 51%-34% (To be fair, a later online poll seems to show a reversal, indicating 48%-32% support, but it was commissioned by the very oil company pushing for the pipeline. Interpret it how you will). This pipeline's future is uncertain, at best.

Uh, so, BCers don't like any oil, basically... big deal. How educated are they about need? They still use the oil, of course, they just want other people to dirty up their area to get it to them... pretty selfish.

So that leaves XL. Currently, Canadian oil flows mostly to Midwestern refineries (which are planning big upgrades to handle growing supply), giving the Midwest a great bargaining position, and thus big discount. Once XL is built, however, Gulf Coast refineries and the rest of the world gain more access. Midwest refineries will be hurt, and American buyers will have to compete with hungry developing countries for Canadian oil products, resulting in higher oil prices. It's good for Canada, I guess (or at least for the oil companies), but so far it doesn't seem to be in the U.S.'s national interest.

So, you are suggesting, for some odd and unsupported reason, that more Canadian oil on the market will lead to higher gas prices.
You do realize that makes zero sense?

In a day and age where demand for oil is going UP, supply not going up with it leads to higher gas prices... that's pretty common knowledge.

I'm sorry, on the surface, your post seems pretty cool... but critical thinking shows that your major premises are unsupported, and therefore your point in a house of cards.

Also, the conclusion of your report given to the DoE...

A combination of increased Canadian crude imports and reduced U.S. product demand could essentially eliminate Middle East crude imports longer term. Low U.S. demand is also projected to reduce U.S. net product imports and potentially turn the USA into a net product exporter after 2020.

 

[Azale]

More Canadian oil on the world market -> less that will or can be bought by the US at the same prices we are used to -> increase in fuel prices for the US and a special impact on the Midwest refineries that are used to dealing at an advantage with the Canadian oil companies.

That's what I got from Orca's post. Is this right?

 

[Cutlass]

More Canadian oil on the world market -> less that will or can be bought by the US at the same prices we are used to -> increase in fuel prices for the US and a special impact on the Midwest refineries that are used to dealing at an advantage with the Canadian oil companies.

That's what I got from Orca's post. Is this right?

Pretty much. Don't forget that Saudi Arabia can always reduce its supply a bit to offset any new supply. That makes theirs last longer. This pipeline does the US no good at all.

 

[kochman]

More Canadian oil on the world market -> less that will or can be bought by the US at the same prices we are used to -> increase in fuel prices for the US and a special impact on the Midwest refineries that are used to dealing at an advantage with the Canadian oil companies.

That's what I got from Orca's post. Is this right?

That's what he was saying, but it is wrong.
Does anyone think we are paying less for oil from Canada than we would from Mexico or S Arabia?
OPEC regulates... the oil is bought on a global market.
We don't pay less for gas from the US than we do for gas from Venezuela... it's all regulated (NY & London)

Pretty much. Don't forget that Saudi Arabia can always reduce its supply a bit to offset any new supply. That makes theirs last longer. This pipeline does the US no good at all.

Canada can do the same... OPEC regulates supply in order to guarantee a somewhat steady price. You are suggesting that S Arabia would get into a trading war with Canada, which is not supported by anything other than your mind's perspective.

 

[Ziggy Stardust]

So, if it goes to China, it doesn't decrease our imports? That's an interesting concept.

I didn't get that out of his post. (Didn't read the report, not that bothered)

It seems the claim is that "the XL Pipeline is not going to increase our oil imports from Canada compared to w/o the pipeline. We already buy almost all of Canada's oil, and existing pipelines can handle oil imports for the foreseeable future". Which would mean import from Canada does not decrease.

 

[Cutlass]

Canada can do the same... OPEC regulates supply in order to guarantee a somewhat steady price. You are suggesting that S Arabia would get into a trading war with Canada, which is not supported by anything other than your mind's perspective.

Saudi Arabia has frequently acted strategically to quell competition. They have in the past made it clear that they would put any shale oil company out of business by lowering the price of oil until that company failed. What's different now?

 

[kochman]

I didn't get that out of his post. (Didn't read the report, not that bothered)

It seems the claim is that "the XL Pipeline is not going to increase our oil imports from Canada compared to w/o the pipeline. We already buy almost all of Canada's oil, and existing pipelines can handle oil imports for the foreseeable future". Which would mean import from Canada does not decrease.

Read the conclusions in the article... that's all that really matters...
Anyhow, it was written by a US oil company.

 

[BasketCase]

Saudi Arabia has frequently acted strategically to quell competition. They have in the past made it clear that they would put any shale oil company out of business by lowering the price of oil until that company failed. What's different now?

Maybe that was the whole point of Keystone the entire time....? Think about it. Start up a company to force Saudi Arabia to drop its prices. Result: cheaper oil. One company goes out of business, then you start up another to force Saudi Arabia to keep its prices down.

I should run for President, I would run circles around the Saudis.

 

[History_Buff]

It was in the planning stages. You can move pipe as needed and they already began planning the changed route a while ago.

The point is that they've already paid for it. If they suspected it wasn't going to get approved, or even that it could be significantly delayed, they wouldn't have done that. After all, money now is always worth money tomorrow, and it's definitely worth more than pipes sitting around not doing anything. It's not like the pipe is in short supply.

 

[kochman]

The point is that they've already paid for it. If they suspected it wasn't going to get approved, or even that it could be significantly delayed, they wouldn't have done that. After all, money now is always worth money tomorrow, and it's definitely worth more than pipes sitting around not doing anything. It's not like the pipe is in short supply.

Really, your point is rather pointless... So, yeah, one way or another, a pipeline is getting built somewhere... they bought some supplies to make that happen... so what?

They have been and are actively changing the route, based on the survey that showed it could be harmful to certain protected areas if their was a spill. You really are exaggerating in the opposition to this, they are taking reasonably prudent steps. The government is often the one to come up with the research, before it gives final approval for such things, due to regulation... are you mad the private organization didn't provide their own study first? I really don't get what bothers you...

 

[History_Buff]

My point is that, from a purely economic point of view, buying the pipe before getting approval to build it is a stupid idea. Even if they knew that the pipeline was going to be approved, but there would be a 120 day wait (for some reason), it would be stupid to spend all that money on pipe, because that capital could be invested somewhere else in the mean time.

It's all about the present value of money. The only reason they would outlay so much capital is if Trans-Canada was confident that approval would come. Why were they so confident?