A potentially hazardous oil pipeline stretching from Alberta, Canada to Houston, Texas is facing widespread public opposition. Some oil companies oppose it, too. So why is the Obama Administration inclined to support it?
A Canadian oil pipeline called Keystone XL will begin at the tar sands of Alberta, Canada and will stretch 1,700 miles across six states to the oil terminals of Houston, Texas. It poses a spill-threat to the massive Ogallala aquifer – the major source of drinking and irrigation water for six states including much of America’s farm and ranch land.
The estimated seven billion dollar pipeline has been opposed by oil companies in Canada, environmentalists on both sides of the border, ranchers, farmers and average citizens from the Dakotas to Texas.
Tar sand oil is the dirtiest, most toxic oil on earth. Oil companies have to use high pressure steam to blast it out of the ground. The steam becomes water that collects in surface-level ponds. The tar sands extraction water is so toxic Canada is using special propane cannons to scare away ducks so they don’t land in the tar sands water ponds – and die.
This devil’s brew will be pushed, at extremely high pressure and high temperatures, through Keystone XL which runs through some American prairie land that is hours from the nearest fire department. Three U.S. refineries are suing to get out of the Canadian pipeline deal.
On the face of it the Keystone XL pipeline doesn’t make good business sense. A combination of the deep recession and improving vehicle fuel economy has resulted in a glut of U.S. refining capacity. This is how energy sector expert Daniel Yergin described it in an April, 2010 interview on Yale University Television:
“Demand in the United States has roughly fallen by about 10% in the last couple of years, partly because of the recession, and suddenly those concerns that there aren’t enough refining capacity have turned around now to the view that there’s a surplus of refining capacity.”
A refining industry analysis in December, 2010 from Deloitte Services, a major consulting firm, predicted U.S. demand could fall 20 percent over the next ten years. The study says U.S. refiners must cut their capacity by one to two million barrels per day to matching falling demand. Deloitte described the outlook as “a refiner’s version of the Dark Ages.”
Paul Blackburn is a former utility industry attorney now working at Plains Justice, a South Dakota law firm fighting the proposed Keystone XL pipeline in behalf of ranchers, farmers and land owners. Blackburn notes three U.S. refineries – two in Kansas and one in Oklahoma – are suing TransCanada, the pipeline owner. They say cost overruns mean the prices they will have to pay for the Canadian tar sands oil are too high to make it a feasible business deal. Here’s what Blackburn said at a Nebraska public summit on the pipeline:
“I think the fact they want to void their contracts and not just try to reduce the rates suggests they would just as soon get rid of the contract altogether. I think it’s because oil demand in the U.S. is down, refineries are very much underutilized right now.”
Canadian oil industry analysts told the Toronto Globe and Mail when Keystone XL comes online they expect oil pipelines between Canada and the U.S. will run half-empty due to lack of demand. That’s not the spin being put out by TransCanada. Here’s what TransCanada spokesman Jeff Raugh told KETV, the ABC affiliate in Omaha, Nebraska, which has been pursuing the pipeline story:
“This is a project that responds to demand in the U.S. for a stable, secure, long-term source of oil.”
Keystone XL has its political boosters, of course, like Oklahoma Republican State Senator Harry Coates. Apparently Coates thinks any oil production deal is a good deal, no matter what the industry experts and concerned citizens say. Here’s what he told My Legislator TV about the proposed pipeline which will run through Oklahoma on its way to the Texas Gulf:
“Ohmigosh, Keystone pipeline system. This is going to be amazing for Oklahoma and in particular my senate district.”
Landowners, ranchers and farmers in the Great Plains States disagree with Coates. They are concerned about spills which could contaminate the Ogallala aquifer. They’re worried about oil fires from pipeline ruptures.
Duane Vig is a rancher in Mud Butte, South Dakota, which is not far, in plains-state distance reckoning, from Wyoming and Montana. In July, 2010 Vig testified at a hearing about the Keystone XL pipeline project:
“Myself and every person alive out there has been fightin’ prairie fires. We have nice little fire departments. No plan whatsoever has been brought up about oil line fires. Our closest fire departments that might even be close to handling an oil line fire are over two hours away. And yes, they could say we could come in and we’ll train the people. We have ranching duties. We do not have time – we’ll gladly fight our prairie fires – we do not have time to fight oil line fires. Never been discussed or reviewed.”
Dwayne Vig’s complaint about the mystery surrounding emergency response illustrates a dirty little secret about oil pipeline safety. Here’s what Paul Blackburn of Plains Justice told an audience of concerned citizens in Nebraska:
“There’s emergency response planning for this required by the federal government. And those emergency response plans are developed and reviewed only between the industry and the federal government. You know, we tried to bring this up in South Dakota and they refused to let us participate in the process.
“Nebraskans should be able to look at the emergency response plan that’s developed to protect them and have a chance to comment on it and have an opinion about it. You know, you should know where the emergency responders are located. We should know where the equipment is. We should know what kind of equipment it is. We should know what the training has been for the emergency responders. How long will it take them to get to different places in the pipeline? You know, all those kinds of details are very, very important for determining whether a response plan will, in fact, work.”
TransCanada officials dismiss worries about oil spills contaminating the Ogallala aquifer. But the 36-inch Keystone XL pipeline will be buried four feet underground and in some places the water table comes very close to that depth. Here’s what Professor John Gates of the Dept. of Earth and Atmospheric Sciences at the University of Nebraska-Lincoln told KETV:
“From a scientific perspective the possibility of severe contamination, I think, is very real with the hypothetical of a release.”
Nebraska rancher Stan Dobrovolny believes a pipeline release or leak is more than a hypothetical:
“You know, history tells us that’s the case. There will be leaks. Now whether they’re one barrel or ten thousand is anybody’s guess.”
The people around Kalamazoo, Michigan don’t have to guess. In July of 2010 over 819,000 gallons of oil spilled into the Kalamazoo River from an oil pipeline owned by Enbridge, another Canadian oil transporter. That mess is still being cleaned up. As is the usual pattern after an oil spill has caused an environmental and economic disaster, the oil tycoons are momentarily contrite. This is Patrick Daniels, the CEO of Enbridge:
“Our intent is to return your community to its original state and the waterways to their normal state and we do commit to doing that.”
Enbridge is no stranger to oil spills. The Canadian pipeline company has had nine of them in the United States in the last ten years. In 2007, an Enbridge pipeline fire in Minnesota killed two workers. That line had been repaired shortly before the fatal fire.
Oil pipeline industry assurances of safety are anything but reassuring. As 2010 drew to a close TransCanada was digging up 10 sections of new pipeline because U.S. government-ordered tests found 47 so-called anomalies. The TransCanada pipe may have stretched and expanded beyond specified limits due to defective steel. As it is, the pipeline safety tolerance anomalies were found despite looser regulations put in place in 2009 by Washington to please the pipeline industry and to placate a nation hell-bent on reducing government oversight of just about everything.
The pipe TransCanada is replacing was imported from India. Welspun Power and Steel, the Indian company which manufactured the pipe, has reportedly provided sub-standard pipeline steel to other U.S. projects in 2007 and 2008.
In Washington, the buck stops at the State Department when it comes to deciding whether to allow the Keystone XL pipeline to be built across America’s midsection. That’s because it’s an international pipeline, crossing the border between the U.S. and Canada.
The EPA – the Environmental Protection Agency – warned the State Department in a July, 2010 letter that the initial environmental impact analysis for the Keystone XL project is inadequate in scope and detail. In December, 28 members of Congress sent the State Department a “letter of concern” about Keystone XL. Numerous wildlife and environmental protection groups have expressed alarm over the pipeline, too.
What is the State Department response? The Department has signaled it is inclined to approve the pipeline. Here’s Secretary of State Hillary Rodham Clinton during a Q&A session after she gave a speech to the Commonwealth Club of San Francisco in October:
“Q: This is some of the dirtiest fuel in the world. And how can the U.S. be saying climate change is a priority when we’re mainlining some of the dirtiest fuel that exists? (Applause) A: Well there hasn’t been a final decision made. Q: Are you willing to reconsider it? A: Uh, probably not.” (Laughter)
Why not? Why not reconsider it? Why would the Obama Administration, with all the talk about clean energy and how the pursuit of alternative fuel sources will be good for the economy and good for the planet, ignore all the opposition and deep concern and approve the Keystone XL pipeline project?
Here’s a possible answer in five words: The People’s Republic of China.
China is desperate for oil to fuel its booming economy. Without it, the so-called China miracle will collapse and it may bring the Chinese Communist Party down with it. A French documentary entitled China vs. the US – the Battle for Oil notes China now imports half of the petroleum it needs and it will soon be forced to import two-thirds of its oil to keep its economy growing:
“Without that oil China’s whole economy will grind to a halt. So China must find and secure new sources of supply for oil – all in an increasingly unstable world. In this crusade for black gold China is already jostling with the superpower that, for now, is still the primary consumer of oil; the United States. The battle for oil has begun.”
China is scouring the globe grabbing up oil and gas contracts anywhere and everywhere. One of those “anywheres” is Canada. China has spent several billion dollars investing in Canada’s tar sands oil producers. We’re not talking about China’s newly minted global capitalists. We’re talking about China’s sovereign wealth fund – the Chinese government’s money.
Sinopec, the state-owned Chinese oil company, paid four and a half billion dollars for Conoco-Phillips’ nine percent stake in Syncrude, Canada’s largest tar sands oil producer. Wenran Jiang is a Chinese professor at the China Institute of the University of Alberta. Here’s what he said about China’s investments in Canadian oil at the Calgary Enterprise Forum in October, 2010:
“China is fundamentally on the rise. This is an economy that doubles in size ever seven to eight years. China will need energy. And China will get energy. Somewhere. And how do we work with China to supply that energy is a key. The question we need to ask is: if China tomorrow decides, saying we would like to invest 25 billion dollars, what do we say to them?”
What Canada probably would say to 25 billion dollars from China is, “Ni Hau.” In English, that’s “hello.”
But there’s no pipeline from the tar sands of Alberta to Canada’s Pacific coast, which is the logical gateway for shipping Canadian oil to China. Opposition to such a pipeline is fierce in Canada. Not so coincidentally, PetroChina and Enbridge, the spill-prone pipeline company, agreed in 2005 to build a pipeline from Alberta to Kitimat, British Columbia, to move tar sands oil into China-bound oil tankers. Canadian opposition to the pipeline was so intense PetroChina pulled out of the deal two years later.
In late December a Canadian government panel concluded that the environmental impact of oil shale production in Canada is simply unknown and there are significant shortcomings in the monitoring system. It is one of a series of Canadian reports criticizing the environmental oversight of tar sands oil production.
All of this means there’s no way for China to leverage their investment in Canadian tar sands oil unless – unless – they ship it through the Keystone XL pipeline from Canada, across America’s heartland to Houston and then move it by tanker to China. If you forget U.S. refineries and the declining U.S. need for tar sands oil and think in terms of servicing China’s energy needs, the Keystone XL pipeline begins to make sense.
Think of Keystone XL as the Obama Administration’s one-way gift to Communist China. You can almost hear the American diplomatic chatter: “See how nice we are? We’re willing to risk environmental and economic disaster along every inch of the tar sand pipeline. We’re willing to put the property and livelihoods of thousands of people in our Plains States at risk, so you can have more energy to compete with us in the global economy. Aren’t we wonderful? Don’t you want to be our friend now?”
Some might wonder about the feasibility of moving Canada’s tar sand oil to China once it arrives in Houston.
There’s a project now underway to reverse the flow of an under-utilized trans-Panama oil pipeline running parallel to the Panama Canal. Oil will soon flow from East to West. Tankers sailing the Gulf of Mexico and the Caribbean would offload on the Atlantic side of the Canal and the oil would be piped to tankers and storage farms on the Pacific side. This would enable China to have access to oil from Venezuela – and tankers filling up with tar sands oil in Houston. This isn’t exactly an economical transport scheme but China’s oil needs are skyrocketing. When it comes to oil, Beijing looks at need first and price second.
It’s also important to note China has been on a refinery-building binge in recent years. They don’t need U.S. refineries for Canadian tar sands oil. They can process the crude themselves.
The globalists, our modern-day robber barons who never, ever let patriotism get in the way of profits held a couple of China business summits in late October. One was in Houston, where the Keystone XL pipeline will terminate, the other was in Washington, D.C., where our national policy decisions terminate.
Was there a discussion of Keystone XL in a hotel lobby or at dinner or over drinks? Did the Chinese and Americans discuss moving toxic Canadian tar sands oil over America’s Great Plains to Houston? Did they discuss putting the unrefined Canadian oil in tankers which will offload at the Panama pipeline and move the oil to China-bound Pacific tankers in order to feed the dragon’s insatiable appetite for oil? What do you think?