HELENA — A new report from a Washington, D.C., oil policy advocacy group claims that much of the oil that would be pumped through the planned Keystone XL pipeline that would pass through Montana would be bound for overseas markets rather than shoring up America's domestic fuel supply.
Backers of TransCanda's $7 billion pipeline, which would transport crude oil from the Alberta tar sands region to refineries along the Gulf of Mexico, have argued that the pipeline is necessary for America's energy security. They also have said its construction would help wean the nation off its dependence on foreign oil sources.
The U.S. State Department last week gave initial approval for the project, stating that the pipeline, which would cut across a wide swath of Eastern Montana, would have "no significant impact" on the environment.
Critics of the project say the department ignored evidence to the contrary, and argue that the pipeline would facilitate massive industrial mining in Canada's boreal forest, leading to irreversible greenhouse gas emissions and global climate change. They also say the pipeline would pose serious risks to water and agricultural land along its 1,661-mile U.S. route.
The 12-page report released Wednesday by Oil Change International claims that the Keystone XL pipeline will not lessen America's dependence on foreign oil, but will instead transport Canadian oil to American refineries. Thoise refineries would then export the fuel to more profitable overseas markets, the report states.
According to the report, the Port Arthur, Texas, refiners at the end of Keystone XL's route are focused on expanding exports to Europe and Latin America, and much of the fuel refined from the pipeline's heavy crude oil will never reach U.S. drivers' tanks.
TransCanada disputes those claims, dismissing the report as "the latest concoction by activists who are trying to stop the oil stands."
"There are some basic realities that they either ignore or they're not willing to acknowledge," TransCanada spokesman Shawn Howard said. "The U.S. consumes 15 million barrels of oil per day. The U.S. imports between 10 and 11 million barrels per day. There's not enough oil produced in the U.S. to meet existing needs."
The Oil Change International report points to statements Valero Energy executives made during an Aug. 9 presentation to investors. According to the report, Valero — the world's largest independent refiner and the largest would-be recipient of Keystone XL-transported crude oil — explicitly detailed an export strategy to investors. Because Valero's Port Arthur refinery is in a "foreign trade zone," the company can carry out its strategy tax-free, according to the report.
"Valero has committed to take at least 100,000 barrels per day off of Keystone XL, which is roughly 20 percent of (TransCanada's) committed initial capacity of 500,000 barrels per day," said Stephen Kretzmann, executive director of Oil Change International. "Valero is the biggest receiver of this oil, and Valero details in slides (to investors) that their export strategy relies on refining heavy, sour crude for export."
Kretzmann said Valero is upgrading its Port Arthur refinery to process heavy, sour crude — the type of crude produced by the Canadian tar sands — into diesel fuel.
The Aug. 9 investor presentations does state that the company plans to ship diesel to Latin America and Europe.
According to one slide entitled "Valero's Gulf Coast System Well-Positioned for Global Export Opportunities," the company's large refineries on the Gulf Coast "are competitive due to low-cost operations and feedstocks," and a "structural supply-demand imbalance in Latin America and diesel shortage in Europe provide higher-margin export opportunities."
The presentation also states that the company's main products at the Port Arthur facility are "high-quality diesel and jet fuel for growing global demand," and that the company plans to "leverage existing operations and export logistics."
"They are going to sell this diesel abroad to maximize profit," Kretzmann said. "The refiners are just doing their fiduciary duty to their shareholders by selling this product abroad. You'd expect no less of an oil company, but that's not about energy security for the United States. That's about maximizing shareholder value."
TransCanada's Howard said the report ignores basic market forces in an attempt to paint the Keystone XL pipeline as something it's not.
"The reality is there is a big demand in the United States domestically for the kinds of products that refiners end up making," Howard said. "Gasoline, different types of fuel products, even the contact lenses I wear, are made out of a petroleum-based product. You can see how the products that come out of this are needed domestically."
Howard said it "defies logic" to take statements made by Valero executives and use them to "fear monger with misinformation."
"If the U.S. can't produce enough energy to meet its own domestic needs, how would it make sense to have oil exported oversees, only to have refiners and others import products back from the same places at a higher price?" Howard said.
He said activists such as Kretzmann are attempting to stall the Keystone XL pipeline in the hopes that it will stop production of the Canadian tar sands. However, Howard said, that's a misguided strategy because the United States will continue to rely on fossil fuels regardless of where they come from, and Canadian oil producers will find other means of shipping crude regardless of whether the pipeline is completed.
"We will need, in North America, fossil fuels for decades to come. Technology is nowhere near where it needs to be to replace oil the way these activists want to," Howard said.
Kretzmann countered that the technology that could reduce the nation's dependence on oil already exists, but that the country lacks the political will to make it a reality. Kretzmann said stopping the Keystone XL pipeline would "dry up" markets for Canadian tar sands crude and help usher in an era of more fuel conservation and cleaner technology.
"The amount of money that's going into tar sand production should be put into alternative energy and into conservation measures, and we should begin to do what we know we can do," Kretzmann said. "This is not a technical problem, and it's not even an economic problem. It's a political problem and it's important for President (Barack) Obama to stand up and say enough is enough, and we're going to end our dependence on all oil, not just foreign oil."
Reach Tribune Capital Bureau Chief John S. Adams at 442-9493, or jad...@greatfallstribune.com. Follow him on Twitter@mt_lowdown.
--
You received this message because you are subscribed to the Google Groups "Canada-EU CETA" group.
To post to this group, send email to canada-...@googlegroups.com.
To unsubscribe from this group, send email to canada-eu-cet...@googlegroups.com.
For more options, visit this group at http://groups.google.com/group/canada-eu-ceta?hl=en.