Nick Snow
Washington Editor
US imports of heavy crude produced from Alberta oil sands would improve domestic energy security, a US House Foreign Affairs Committee subcommittee recently was told. But TransCanada Inc.'s proposed Keystone XL pipeline expansion project is not necessarily a permanent solution, several witnesses added.
President Barack Obama's administration should move quickly to approve the project, said Western Hemisphere Subcommittee Chairman Connie Mack (R-Fla.) in his opening statement. "This administration could create tens of thousands of jobs to help boost the ailing economy, and secure an additional 500,000 b/d into US refineries in Oklahoma and Texas," he maintained. "Canada's sovereignty means that production will commence, despite efforts by President Obama's liberal allies, but the difference is that the oil will go to Asia instead of the US if Obama fails again to act."
One witness outlined additional benefits from the proposed project, which still requires a cross-border permit from the US Department of State. "Most of the expanded import volume would be in the form of blended bitumen, which is similar to heavy crude oil," said Lucian (Lou) Pugliarisi, president of Energy Policy Research Foundation Inc., in his prepared statement. "Because of production declines in Mexico and Venezuela, US refiners are receiving reduced shipments of heavy crudes. Higher volumes of heavy crudes from Canada offer considerable potential to improve operating margins for US refiners, many of whom long ago made expensive upgrades in complex facilities that favor heavy oil."
He noted that TransCanada also has proposed expanding Keystone's capability by offer Bakken Shale oil producers in North Dakota and Montana an opportunity to connect with the new pipeline and send their crude to US Gulf Coast refineries for the first time. "By increasing transport efficiency and allowing Bakken producers to tap into new Gulf Coast refinery markets, the Keystone XL project will have the added benefit of improving wellhead values for oil production from the Bakken formation," he observed.
'Not perfect answer'
Other witnesses generally agreed in their written statements, but with qualifications. "This is not the perfect answer, but a step toward better energy security for the country," said Paul Sullivan, an adjunct professor of science, technology, and international affairs at Georgetown University.
"Canadian tar sands and this pipeline system are not comprehensive and perfect answers to some of our energy security needs," he continued. "However, sometimes the perfect is the enemy of the good especially when we face increasing competition for resources, have to deal with oil exporting countries [that] don't like us, have to prop up some regimes we would rather not in order to get their oil, and have to face the whims of oil prices and their effects on our people without doing much about it."
Jeremy Symons, senior vice-president for conservation and education at the National Wildlife Federation, was more critical as he called Canadian oil sands an energy security mirage in his written testimony. "There is no viable scenario of increased Canadian oil production from tar sands that would stop our dependence on oil from other nations or significantly reduce the amount of money that nations such as Venezuela make from their oil sales," he said.
"We can try [to] pick and choose where we buy our oil, but the only thing we can do to reduce the flow of money to hostile nations is to reduce world oil prices," Symons said. "As the world's leading consumer of oil, we can reduce prices and the flow of money by cutting back our demand for oil."
But David L. Goldwyn, president of Goldwyn Global Strategies LLC and a former international energy security coordinator at the US State Department, argued that the importance of the proposed Keystone XL pipeline project "is fundamental and irrefutable" from a US energy and general security perspective.
"While oil sands production poses serious environmental challenges for Canada, robust analysis has demonstrated that the permitting of the pipeline . . . will have no significant impact on Canada's decision to produce that oil or the emissions associated with it," he said in his written statement. "The associated environmental impacts of oil sands production are important. Canada is addressing these issues at the national, provincial, and commercial level."
More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com
