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Pipelines like Keystone remain the best way to transport oil and gas

President Barack Obama has followed his earlier rejection of the $10 billion+ Yucca Mountain nuclear storage project with a rejection of the proposed $7 billion Keystone XL pipeline extension project.

Keystone XL is a supplement to the existing Keystone pipeline system, which now brings Canadian heavy oil to Illinois refineries and to Cushing, Okla., via Steele City, Neb. The first phase of Keystone XL is a pipeline from the oversupplied oil-storage terminal at Cushing to Texas refineries. The second phase is a new line from Hardesty, Alberta, to Steele City, which would double Alberta-to-the-U.S. shipping capacity to 1.1 million barrels a day. U.S.-produced oil would also flow in these new pipelines.

A report to the U.S. Senate from the General Accounting Office states that the Obama administration's closing of the Yucca Mountain nuclear storage facility "was made for policy (political) reasons, not technical or safety reasons." The new Keystone XL rejection appears to have the same political basis as large groups are lobbying to block the project.

There are more than 200,000 miles of oil pipelines in the United States that operate with minimal safety problems. The Keystone XL pipelines will incorporate 57 new safety requirements, and continuously monitor thousands of sensors indicating pressure and leak issues. Valves are closed remotely to limit loss from leaks.

Ogallala Aquifer concerns Keystone opponents
Opponents of the pipeline are concerned about the health of the Ogallala Aquifer, over which the pipeline will run. But perhaps the biggest threat to the Ogallala is from corn/ethanol production. Millions of tons of fertilizers, pesticides and irrigation water are continuously dumped on the soils that drain directly above the aquifer. A study by professor Sangwon Suh of the University of Minnesota reported that in Kansas and Nebraska, 500 gallons of water are required to grow and process the corn for each gallon of ethanol produced. Much of that irrigation water is drawn from the Ogallala, which is in steady decline.

Opponents are claiming that much of this new oil will be exported. Actually, it's finished products like gasoline, diesel and jet fuel that will be exported — primarily to Latin America, which lacks the capacity to refine this heavy oil. This is good business, earning export credit that offsets all those imports we buy, and creating well-paying American refinery jobs.

Older domestic oil reservoirs are declining, and there are three major new nearby sources. There's the sub salt oil in the deepwater Gulf of Mexico; the Alberta oil sands; and the oil shale in the Williston Basin (Bakken field, etc.), which requires hydraulic fracking with those nasty chemicals.

Largest, safest: Alberta oil-sands deposit
Of the three, the largest and safest source is the huge Alberta oil-sands deposit. It can be pipelined here, or you can have long lines of tanker trucks. Protesters can burn gas junketing to various capitol protests, but it won't do much. They could campaign for carbon taxes to reduce oil consumption, but that's harder than staging protests. There are biofuels, but 100 percent of our corn crop might provide 15 percent of our gasoline supply.

As to greenhouse gases, 80 percent of emissions from oil come from end-use burning of the gasoline or diesel made from the crude; those emissions are the same for conventional and oil-sands oil. So the overall so-called well-to-wheel difference is small. At present, all Canadian oil-sands operations account for one tenth of 1 percent of world greenhouse gas emissions. The province of Alberta has 147,000 square miles of boreal forest. A total area of 1,850 square miles is set aside for oil-sands surface mining. As of January, just 275 square miles have been disturbed.

We do need serious carbon-tax and fuel-conservation measures to reduce fossil fuel consumption. But pipelines will remain the best way to transport oil and gas, our major energy fuel source for decades to come.

Rolf Westgard is a professional member of the Geological Society of America and teaches classes on energy for the University of Minnesota's Lifelong Learning program.

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Comments (12)

Good article, Rolf. And I agree with your comment that we need serious carbon-tax and energy conservation measures to reduce consumption and demand. You at least acknowledge that there is a relationship between development of the tar sands, the transportation of the oil and demand. One thing that stands out is the refusal of the government to make that connection. In other words, wouldn't you agree that a coherent energy policy would link the decision to approve or disapprove the Keystone XL pipeline and also relate the impact of the development of these very expensive methods of extraction to climate change? And what do you say to NASA scientist James Hansen's comment that development of the Alberta Tar Sands is "game-over" for climate change?

Rolf makes the legitimate point that (by deduction) there are fewer and fewer good options for the continued use of fossil fuels.

First a disclaimer: I have owned Canadian oil trusts and stocks for years, so the Keystone would be great for me, they pay handsome dividends and are well run. So, I have learned more than I wnat to know about tar sands oil. And I do have serious concerns. The extraction and processing costs are large for tar sands -- it takes lots of heat (energy) and water (a finite resource itself). The processing definately creates signficant greenhouse gasses. Then the transport is much more difficult because tar sands oil is much thicker, less viscous, and flows even slower in cold climates -- so further processing is needed to move it. Finally, it is much more toxic than conventional lighter crude. Therein lies the rub, should a catastrophic spill occur. Moreover, we have heard about the incredible safety of virtually every well drilled...till the spill happens.

There is also the"enabling" factor -- finding more (though more difficult and expensive) fossil fuels merely delays the long term inevitable.

Obama has merely postponed a decision (his motives are unclear); but probably Keystone will be built as long as there is a shortage of fossil fuels. But skeptisism and even the delay for further vetting is not a bad idea.

Rolf Westgard notes that according "to the General Accounting Office the Obama administration's closing of the Yucca Mountain nuclear storage facility was made for policy (political) reasons, not technical or safety reasons." He speculates - probably correctly - that President Obama's decision to block the Keystone XL pipeline was also made for "political" reasons.

Most executive or legislative branch energy related decisions are policy or political decisions, nothing unusual about that. If policymakers limited their scope of review to simply technology and/or safety issues, we would have shut down nuclear power plants and coal-burning generation plants long ago. But, we didn't and we won't in the near future because of politics/policy decisions not at all related to use of technology or safety.

President Obama simply wanted time to allow federal and state agencies to thoroughly examine and review Keystone XL but was forced into making a hasty decision by Republicans in Congress. Wisely, the President observed that without a complete review of Keystone XL it could not be approved at this time - a "political" decision but one grounded in technology and safety related issues.

The Keystone XL pipleline is intended to carry crude oil produced from Alberta tar sands - a production process that bears huge environmental impacts and has substantial public opposition. Though Americans want cheap energy, poll after poll shows that we are not willing to pay any price to get it. Like drilling in the ANWR, the Keystone XL pipeline seems to be too much of a price to pay.

For Jon:
James Hansen's comment apparently refers to the GHG emissions from burning the entire deposit(a trillion barrels or more). At the projected 2020 level of 3 million barrels/day, it will be well past the year 3000 before that much is released. We are at 'game over' long before that whether or not the oil sands are all produced.

Myles, the old stuff which is being essentially mined is very profitable at current oil prices. The new stuff will mostly be melted in situ(SAGD) which is more costly - probably around $70 or so total cost per barrel for the diluted bitumen(dilbit).
This heavy oil does have a higher total acid number(TAN), wnd along with the need for higher pipeline pressure, puts pressure on the pipeline. I would not call it more toxic. Our Pine Bend operates on the dilbit via the Alberta Clipper pipeline and the Koch brothers spur from Clearbrook, MN, and it works fine. We all drive on the products, and a pipeline to MSP from Pine Bend fuels all the jets.

Jim: Despite all you hear, there is not a "huge" environmental impact from the oil sands.
       The Province of Alberta has 147,000 square miles of boreal forest. A total area of 1850 square miles is set aside for all oil sands surface mining. As of January 2011, just 275 square miles have been disturbed. Producers are required to restore disturbed land and make deposits to a fund guaranteeing restoration. That fund now holds over $900 million.  More than 80% of the remaining oil sands oil has to be recovered in situ by underground heating and recovery from pipes with minimal above ground disturbance.
        Water usage is limited by the law which requires that existing and approved oil projects may not use more than a total of 3% of the annual average flow of the Athabasca River. Water in the region is continually monitored to assure that it meets Alberta’s very strong standards for toxins.
That's not Augusta National golf course up there, but the environment issue is being exaggerated by the green contingent. REW

Disclosure: Like Myles I also own some of the Canadian oil and gas trusts whose dividends have been averaging around 7%. I also own Suncor which is the largest producer at the oil sands deposit.
Rolf

"It could be pipelined here, or you could have a line of tanker trucks."
Well, yes, it could be pipelined here, meaning to refineries in MN or ND or in Canada. That would avoid piping over the Oglalla, in favor of trucking refined products across the Northern USA. Other oils could then be diverted to end up in the export marketplace. The joys of a fungible commodity.

Over 300,000 barrels/day of oil sands heavy oil does come here to our Pine Bend refinery. It is the largest heavy oil refinery in the U.S.
The heavy oil that ends up in Texas is refined there, and we sell gasoline, diesel, etc(not crude) to the Latin America market. It is good export business for us, offsetting all those imports we buy at Walmart. Provides good well paying jobs and profits to US companies.

Rolf, thank you for disclosing your financial interest in oil sands development. I must say I'm disappointed that you downplay the environmental impacts of tar sands mining and development. Your facts and figures do not square with what leading scientists are telling us about the impacts of tar sands development. James Hansen, Bill McKibben and many respected environmentalists agree this is very bad news for the planet and for Alberta's ecosystems. For example:

http://www.sierraclub.ca/en/tar-sands/publications/tar-sands-boreal-forest

I still can't see how increasing our importing POTENTIAL from Canada by 500,000 barrels a day (2.5% of our usage a day) is worth $7 billion (not including the cost of the oil itself). The issue is not whether it's the safest way to transport oil, it's whether we should transport it at all. In another couple of years, that half a million barrels a day will be an even smaller portion of our consumption. It will make no significant lowering impact on oil prices in the US, let alone refined product prices. So, in a few years, we'll be told that we need more pipeline at the expense of the taxpayer and for the profit of the oil company and its shareholders. We'll be told that it will lower gas prices, or at least be allowed to believe that it will (it won't), and that it'll be the safest way to get oil. Again, avoiding the real problem--that we should be focusing on reducing our demand.

Oil prices are getting

Oil prices are getting worst.According to a recent survey, gasoline prices in the U.S. have spiked by almost 12 cents a gallon over the past three weeks. The price increase is blamed, at least in part, on the rising price of crude oil in the North Sea. Volatility in the Middle East is considered accountable for the wholesale crude price increases. Article source: Gas prices will continue to rise