No Keystone, No Problem: The Oil Industry Is Making Other Plans

Posted: August 21, 2015 by oldbrew in Energy, government, Politics
Tags: ,

Decision time [image credit: AP Photo/Tony Gutierrez]

Decision time [image credit: AP Photo/Tony Gutierrez]

After all the political argy-bargy, the final decision on the controversial oil pipeline plan is due as The New Republic explains. But the oil producers are already moving their product in other ways. Whether it’s still worth it with oil down near $40 a barrel is another matter.

Environmentalists have been waiting since 2008 for President Barack Obama’s decision on whether to approve the Keystone XL pipeline. That decision may come any day now. But Canada’s tar sands industry hasn’t been waiting around.

Publicly, TransCanada, the company behind the embattled pipeline, insists it is still optimistic it will win the long-running standoff—not just over Keystone, but another pipeline project that has faced environmental opposition as well, Energy East. “We’re optimistic for both of our projects,” TransCanada spokesman Mark Cooper told the New Republic.

The speculation in private, however, is that the writing may be on the wall for Keystone at least.

“The rumor is that the decision to deny has been made, and they’re just waiting for the right time and venue,” an unnamed source familiar with the company told The Canadian Press this month. Republican lawmakers in the U.S. have echoed the pessimism. “I don’t see a scenario where the president would sign off on Keystone,” Senate Energy and Natural Resources Chair Lisa Murkowski told Bloomberg recently. Then there are Obama’s own words over the last year, which suggest he’s leaning against the project.

This decision will be Obama’s final word on the Keystone XL pipeline. But for TransCanada, it won’t be the end of the story. Even if its permit is rejected, TransCanada has a few paths forward for keeping Keystone alive. The company may eye a NAFTA lawsuit arguing trade discrimination, or it may submit a new application under the next president—if it’s a Republican, the company would face a much easier time.

In the meantime, rail is the go-to substitute for missing infrastructure to ship oil from Canada to the U.S. Sixty percent of Alberta’s unprocessed oil already makes its way to American refineries by rail and pipelines. And in 2012, Canada exported 16,000 barrels of oil per day by rail to the U.S. In the first quarter of 2015, it exported 120,000 barrels per day, which might rise depending on whether global oil prices begin to increase again. As green organizing has focused on pipeline infrastructure, it’s done little to stop the explosion in tar sands shipments by rail and tanker.

Full report: No Keystone, No Problem: The Oil Industry Is Making Other Plans | The New Republic.

Maybe ‘explosion in tar sands shipments‘ was a poor choice of words :/

  1. oldbrew says:

    Corrosion is an issue for pipelines. One possible cause that maybe gets little media attention: GICs.

    ‘Geomagnetically induced currents (GIC), affecting the normal operation of long electrical conductor systems, are a manifestation at ground level of space weather. During space weather events, electric currents in the magnetosphere and ionosphere experience large variations, which manifest also in the Earth’s magnetic field. These variations induce currents (GIC) in conductors operated on the surface of Earth. Electric transmission grids and buried pipelines are common examples of such conductor systems. GIC can cause problems, such as increased corrosion of pipeline steel and damaged high-voltage power transformers. GIC are one possible consequence of geomagnetic storms, which may also affect geophysical exploration surveys and oil and gas drilling operations.’

  2. Gail Combs says:

    Obama’s buddy Warren Buffett (Berkshire Hathaway) purchased Burlington Northern Santa Fe for $34 billion five years ago. By the beginning of 2014, BNSF has ramped up its operations so it was moving 600,000 barrels of oil per day. In terms of refined gasoline that is enough to fill the gas tanks of 1.35 million cars. It is more than ten times the amount moved in 2010.

    Buffett says he supports Keystone, but I can only see that if he has a financial stake. Actions speak louder than words when it comes to politics.

  3. gbaikie says:

    Pipelines are a cheaper way to ship oil- because they are a more energy efficient way to transport millions of tons of material.
    Or we transport hundreds of billions of tons of water via pipelines, and it uses less energy and therefore water is cheaper. If we had to ship water via trains, it would use a huge amount of energy, bankrupt the nation [but it would be good for the rail business].
    Since it costs more energy to ship bulk material via rail as compared to pipeline, it results in emitting more CO2 per ton shipped, and it does not matter if the trains were electric- it still would still result in more CO2 emission- probably more CO2 emission. Anyhow, the trains are diesel powered.

  4. Paul Vaughan says:

    “As green organizing has focused on pipeline infrastructure, it’s done little to stop the explosion in tar sands shipments by rail and tanker.”

    Indeed that is interesting and curious.
    It’s a key insight that’s challenging to interpret sensibly.

  5. DD More says:

    Whether it’s still worth it with oil down near $40 a barrel is another matter.

    That wasn’t the plan, since Barack Obama’s stated “Under his plan prices would skyrocket”

    And in 2012, Canada exported 16,000 barrels of oil per day by rail to the U.S. In the first quarter of 2015, it exported 120,000 barrels per day

    The Keystone Pipeline (Phase I), delivering oil from Hardisty, Alberta 480-kilometers (300 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.

  6. Gail Combs says:

    Paul says “…It’s a key insight that’s challenging to interpret sensibly.”

    As long as you understand most of the ‘Activists’ are actually paid Astroturf, or wet behind the ears Useful Innocents it all of a sudden becomes much easier to understand.

  7. oldbrew says:

    gbaikie: on the other hand the trains already exist, but the pipeline doesn’t.

  8. Paul Vaughan says:

    Gail, I had some really good conversations with the activists protesting the TransMountain pipeline and I think their belief and expectation is that there will be no need for oil transport in the tangibly near future. I did not think at the time to ask them why they were not out blockading the exponentially growing number of oil trains. Some of the protesters were really good, very intelligent, notably endearing people with whom I felt a very strong personal connection. I did not have the heart (or the time) to discuss climate with them. One thing I found quite notable (a key insight) was that they were unaware that a nearby major pipeline leak in 2007 had destroyed homes & marriages and triggered a long ban on recreational summer boating (due to enduring toxicity in the inlet). Another thing I found anomalous was the number of propane canisters lying around the protesters’ campsite. A logistical challenge the protesters were having was cell-phone battery charging, needed for their live social media engagement. This and other logistical challenges were in part overcome by a small army of volunteer couriers running errands between the mountain park and the adjacent city.

    The other part of the equation I find interesting is defense. I would be curious to hear a few sensible military strategists outlining the benefits, drawbacks, & bet-hedging of pipe, rail, & road transport during times of peace and a range of levels of conflict.

    Ok, enough of this peripheral stuff… more interesting things to do, like exploring nature… and that includes sea-kayaking & hiking, not just relatively boring climate data exploration!!

  9. oldbrew says:

    PV: ‘It’s a key insight that’s challenging to interpret sensibly.’

    It’s probably more difficult to stop trains running day and night than to prevent a pipeline being built.

  10. oldbrew says:

    DD More tells part of the story. In fact 3 of the 4 phases of Keystone are already complete.

    ‘Three phases of the project are in operation, and the fourth is awaiting U.S. government approval.’

  11. Glenn999 says:

    as long as obam the destructor is around, and needs to continue paying off his friends, the keystone will be blocked.

  12. Paul Vaughan says:

    oldbrew (August 21, 2015 at 10:22 pm) suggested:
    “It’s probably more difficult to stop trains running day and night than to prevent a pipeline being built.”

    That’s the point I’m trying to make about strategy & bet-hedging. A localized symbolic oil train protest would be easy to stage, but I’ve not seen news about any such protests if they exist. A diffuse rail & especially road network has different implications & challenges for both environmental & military defense. It might be entertaining watching military & environmental strategists questioned on the hot-seat for honesty about pros, cons, & bet-hedging. A strictly daily operations economic formula (cost of getting stuff from point A to point B today) that doesn’t include longer-term environmental & military defense responsibilities probably gives a simpler answer, but that doesn’t explain why all of the stakeholders in the oil transport debates appear biased & ignorant. I could see comparative pros & cons for all of the viable options in our local case and none of the options was a clear winner but rather just a different compromise shifting the balance of impacts and benefits across stakeholders …and there are multiple stakeholders wanting incompatible things — far from the oversimplified, misleading mere polarity portrayed in the media, the stakeholder landscape is multi-polar. I was invited to participate in pipeline hearings, but I declined having been advised that input would influence only public relations framing and not decisions.

  13. gbaikie says:

    –oldbrew says:
    August 21, 2015 at 10:19 pm

    gbaikie: on the other hand the trains already exist, but the pipeline doesn’t.–

    Also making locomotive is steady work:
    Nineteen months have passed since GE Transportation, a subsidiary of General Electric, opened the plant near Texas Motor Speedway. The operation has steadily grown and now employs more than 500 people — two weeks ago adding a second shift to meet growing demand from railroads, Amaya said. The factory now cranks out an average of 1.2 locomotives per day, he said.

    And GE dreams of using natural gas someday:
    “Even topics that once seemed pie-in-the-sky, such as converting the nation’s locomotive fleet to natural gas — which would dramatically reduce emissions compared to diesel-burning locomotives — are being explored, said Blair Wimbush, chief sustainability officer for Norfolk Southern. Even so, such dramatic change is likely many years away, as it would require railroads to install a natural gas infrastructure at essentially every fueling point on their grid.”
    Plus GE exports hundreds of locomotive to China, which needs of a lot them to haul massive amounts of coal.
    One could also say that since less coal is being used domestically in US, more demand is needed for locomotive use, so using locomotive instead of lower cost and more efficient pipeline create more demand for locomotive that GE can sell.

  14. hunter says:

    The cynicism of Obama is matched only by the care he takes in lining the pockets of his cronies and insiders. Using rail, the most expensive, most energy intensive, environmentally hazardous and least efficient way to move the oil only helps his backer, Warren Buffet.

  15. tchannon says:

    I could move by rail the same amount of oil at the same rate using less energy but not rail as it is now.

    The technical basis is the lower fluid loss in air than in a pipe.

    Boils down to common sense, compromises. The infrastructure cost would be high.
    Here in England we still use pipelines from WWII, amortised by war.

    Similarly could move freight at near zero energy usage half way around the world but the infrastructure cost would be massive: evacuated pipe. That idea can be extended to an “oil” pipeline carrying wheeled vehicles in a vacuum. Too complicated.
    I suppose similarly some products to be transported could be gassified. Too complicated.

    Always comes down to engineering, all forms of costs.

  16. oldbrew says:

    Then there’s the Alberta Clipper…

    ‘As many of you know, John Kerry’s State Department worked out a backroom deal with the pipeline company, Enbridge, that has allowed the Alberta Clipper tar sands pipeline expansion to proceed in without any federal environmental review and on September 10th the Alberta Clipper case will reach federal court.’

  17. Paul Vaughan says:

    Conflict of Interest (?) at the Canadian National Energy Board:
    “Earlier this month, 35 participants dropped out of the Trans Mountain review process, calling it “biased” and “unfair.””

    Hardly surprising given that we were all clearly tipped off years ago that the decision had already been made and that the hearings were just for show and gathering intel on how to frame rationale.

  18. gbaikie says:

    –channon says:
    August 22, 2015 at 3:09 pm

    I could move by rail the same amount of oil at the same rate using less energy but not rail as it is now.

    The technical basis is the lower fluid loss in air than in a pipe.–

    A basic problem with rail is loading and unloading which requires time.
    “In 1977, one of the engineering marvels of the modern world made its debut: the trans-Alaska
    pipeline, 48 inches of steel traversing 800 miles, three mountain ranges and more than 800
    rivers and streams.

    In its heyday in the 1980s, the pipeline carried as much as 2.1 million barrels of oil a day
    from America’s largest oil field at Prudhoe Bay to the port of Valdez.

    Already, oil that once took 4½ days to surge from Prudhoe Bay to Valdez now crawls through in 14 days, with flow rates
    slowed to 2 mph.”

    So when there was enough oil one shipped it faster [at higher pressure] and it went about 3 times
    faster. So 2 times 3 is 6 mph and at 6 mph the 48 inch diameter pipe delivers 2.1 million
    barrels of oil.

    A barrel of oil weighs, “So there are a little over 7 barrels of petroleum in a metric ton.”
    So 2.1 million is .3 million tonnes per day.

    “According to data from BNSF Railway, crude travels at 15-20 miles per hour on a train, compared
    with 4-5 miles per hour via pipe.”
    An article arguing why trains are better- which generally I would agree is possible, but…
    First, if you had to ship oil at a high speed, one needs more pressure and more pressure gets you into problems- one problem is one would have more drag, but it’s the least of problems of having higher pressure. If you want more volume, one simply make a bigger pipe. Though as above article mentions
    if shipping at lower volume with larger pipe it goes so slow that it could freeze [or significantly increase it’s viscosity] which is less of problem in the lower 48.

    How much does a train move:
    Here is bunch details:
    It’s complicated, say 12,000 tons, or .012 million tonnes or about 25 train per day equals a 48″ pipe
    going about 6 mph.
    Trains work better if not going up a hill, with pipe it doesn’t matter much. It carry heavy load and go up 1%
    grade is problematic. And to accelerate [get to 20 mph in short period of time or go up a hill] requires weight over the wheel to get enough traction.

    So if had tracks without much grade, if you use the track 24 hours a day, and if one load and upload quite fast [say 1 hour]. You might handle as much as 4 foot diameter pipe, but seems unlikely.
    But it’s going to use more energy. Train are heavy, the have to go faster. And all you move with a pipe
    is the mass of the oil