Burkhard: Pipelines limit Canadian oil sands US supply role

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, May 24 -- Canadian oil sands could play an even larger supply role for the US, but the North American pipeline system will have to adjust to accommodate the additional supplies, James Burkhard, managing director of IHS-CERA Inc.’s global oil and gas group, told a US House Energy and Commerce subcommittee.

“The lack of significant pipeline capacity to transport Canadian oil beyond its traditional US Midwest market artificially deprives the broader US market of oil that is available,” he said in written testimony to the Energy and Power Subcommittee on May 23 at a hearing on legislation that would establish a Nov. 1 deadline for the US Department of State to issue a decision on a proposed cross-border system.

“A more flexible and robust supply system is better able to manage unexpected supply or demand developments, which would be a big positive for the US economy and consumers,” Burkhard said. “Oil producers in Canada—which include many American companies—would develop export markets in Asia if they are unable to broaden their reach into the US market.”

Environmental issues surrounding oil sands development are controversial, but manageable, he continued. “Ongoing advances in technology and operational experience have demonstrated that environmental concerns—particularly greenhouse gas emissions—are being addressed,” Burkhard said. “Life-cycle GHG emissions for the average oil sands product actually imported into the United States are just 6% higher than those from the average crude oil consumed in the US.”

Other witnesses outlined benefits both of producing from Canada’s oil sands in Alberta and of building TransCanada Corp.’s proposed Keystone XL project, which would transport the oil to Cushing, Okla., and on to US Gulf Coast refineries.

‘Reliable, sustainable’
“The Keystone XL project is fundamentally about meeting the needs of US crude oil refiners—and hence US consumers—for a reliable and sustainable source of crude oil to either supplement or replace reliance on declining foreign supplies, without turning to greater reliance on Middle Eastern sources,” said Alex Porbaix, president of TransCanada’s energy and oil pipelines division.

“There can be little dispute that this purpose enhances US energy security at a critical juncture,” Porbaix said, adding, “Moreover, the need for prompt approval of the Keystone XL project is particularly crucial today when US consumers are struggling to cope with the high cost of gasoline.”

Stephen Kelly, assistant general president of the United Association of Plumbers and Pipe Fitters, said that the project would generate thousands of high-paying US construction jobs at a time when there’s 20% unemployment in that industry.

“In addition, this project will produce a number of other important economic benefits, including jobs in related industries and hundreds of millions of dollars in state and local tax revenues,” Kelly said, adding, “And finally, this project will substantially increase our nation’s long-term energy security by enabling us to obtain more oil from our friends in Canada and less from the increasingly unstable and unreliable Middle East.”

Former Alberta Energy Minister Murray Smith, who was also the province’s first US diplomatic representative in Washington from 2005 to 2007, said that producing crude from Alberta’s oil sands provides significant contributions to the US economy from the 470-ton trucks manufactured by Caterpillar in Illinois to US refinery and pipeline expansion projects.

Jobs created
“These expansions will process increased volumes of Alberta oil into major US markets,” he said. “Multiple studies have placed job creation in excess of 13,000 direct and over 34,000 jobs in total just for pipeline expansion. This clearly demonstrates that Alberta oil delivers more economic value per barrel than any other barrel of oil imported into the US.”

Oil companies in Canada spend more money on environmental controls than any other industry there, according to Smith. “Companies continue every day to improve the efficiency, cost and environmental sustainability of oil sands operations,” he said. “Air quality in Fort McMurray exceeds Toronto 98% of the time and New York City 100% of the time. Carbon emissions from oil sands production differ only marginally from heavy oil production in Venezuela, Mexico, and the heavy oil of California.”

Dan McFadyen, chairman of Alberta’s Energy Resources Conservation Board, said that oil sands in the province are being developed under a rigorous and transparent regulatory framework based on sound science and continuous improvement. “Our integrated and comprehensive regulatory regime is founded on stringent legislation and regulations that take into account environmental, social and economic impacts as well as resource conservation and technical excellence,” he said. “Or, to put it another way, the regulatory regime is designed to ensure the oil sands are developed in the public interest.”

But other witnesses suggested that Canadian oil sands development and construction of pipelines to move more Canadian crude across the border and into the US could also create problems. Jeremy Symons, senior vice-president for conservation and education at the National Wildlife Federation, told the subcommittee that the Keystone XL project’s actual purpose was to ship Canadian crude to US Gulf Coast refineries owned by foreign national oil companies for possible shipment overseas. “Big Oil’s claims that this pipeline will help our energy security are a carefully fabricated mirage,” he declared.

Randy Thompson, a farmer from Martell, Neb., said he and others are concerned that building a large oil pipeline across the Ogallala Aquifer could contaminate the Western Hemisphere’s largest body of clean water. “We Nebraskans may be a little independent and bullheaded at times, but we’re not uninformed,” he said in his written testimony. “We have witnessed the results of other pipeline spills and associated problems throughout this country, and that’s why we are wary of this proposed project. It’s why we are asking you to slow down on this proposed bill and ensure the proper regulations and safety measures are in place.”

Contact Nick Snow at nicks@pennwell.com.

Related Articles

Oil-price collapse may aggravate producing nations’ other problems

02/05/2015 The recent global crude-oil price plunge could be aggravating underlying problems in Mexico, Colombia, and other Western Hemisphere producing natio...

Alberta’s premier seeks more North American energy integration

02/05/2015 Better policy integration and cooperation will be needed for Canada, Mexico, and the US to fully realize the North American energy renaissance’s po...

EPA suggests DOS reconsider Keystone XL climate impact conclusions

02/03/2015 The US Department of State might want to reconsider its conclusions regarding potential climate impacts from the proposed Keystone XL crude oil pip...

Syncrude sees additional $260-400 million in possible budget cuts

02/02/2015 The estimate for capital expenditures has also been reduced to $451 million net to COS, which includes $104 million of remaining expenditures on ma...

Novel upgrading technology cuts diluent use, capital costs

02/02/2015 A novel bitumen upgrading process that decreases the amount of diluent required for pipeline transportation and reduces overall operating costs has...

BHI: Texas anchors 90-unit plunge in US rig count

01/30/2015 The US drilling rig count plunged 90 units—a majority of which were in Texas—to settle at 1,543 rigs working during the week ended Jan. 30, Baker H...

Oxy cuts capital budget by a third

01/30/2015 In the midst of falling oil prices, Occidental Petroleum Corp., Houston, expects to reduce its total capital spending for 2015 to $5.8 billion from...

Cenovus trims additional $700 million from capital budget

01/28/2015 Cenovus Energy Inc., Calgary, will defer $700 million in additional capital expenditures originally planned for 2015 until crude oil prices recover...

Pengrowth cuts capital spending due to declining oil prices

01/23/2015 The recent “rapid” decline in world oil prices is the main reason given by Pengrowth Energy Corp., Calgary, for setting its 2015 capital budget at ...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


Cognitive Solutions for Upstream Oil and Gas

When Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected