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Gulf coast wants to know what the holdup is in getting Keystone approved

The Keystone Oil Pipeline is pictured under construction in North Dakota in this undated photograph released on January 18, 2012.

Credits: REUTERS/HANDOUT PHOTO

JACKIE L LARSON | QMI AGENCY

HOUSTON, TEXAS -- With Alberta bitumen languishing for want of pipelines to refineries and tidewater, on the other end of the proposed TransCanada Keystone XL pipeline, the Texas Gulf Coast is crying out for Canadian crude.

Over a plate of steaming crawfish at Houston's Ragin' Cajun, David Holt, president of the North American-based Consumer Energy Alliance, says hope for the Keystone's a bi-national thing: Canadian crude is already America's number one energy partner, so a conduit to bring the safe, abundant, reliable supply of energy -- and some needed job revitalization -- into the Gulf Coast is essential.

"The bottom line is not only jobs being created in the energy sector from the Keystone pipeline, potentially, but jobs being created in all sectors of the U.S. economy and particularly on the Gulf Coast. We've seen over the last several decades a decline in jobs, so there's a lot of folks who are very anxious to get the pipeline approved, to have these jobs brought back to Texas and keep the economy going," he says.

With 2.2 million miles of pipeline already criss-crossing the United States, the Keystone extension's 1,700 miles represents not even 1/10 of 1% of the pipelines already in existence. So what's the hold up? Like other Keystone supporters, Holt wants to know.

"They're ready, they want it to happen, Texas wants this to happen, all the states along the corridor have expressed a strong desire for the Keystone pipeline to be permitted and we're waiting for this administration to finally do the right thing and get this pipeline permitted," Holt says.

"We're waiting for the Obama administration to do the right thing and listen to the vast majority of the American public who say 'We want this pipeline,'" he says.

It's economic survival in Canada, where between bottlenecks and gluts, the gap between what Alberta crude fetches compared to the world market has sent Alberta and the federal government scrambling for spending cuts.

North Dakota now produces more oil than Alaska and they're nipping at the leader Lone Star State's heels -- but without enough pipeline capacity, it bottlenecks. A million barrels of oil from North Dakota's Bakken formation ships east by train each day. A pipeline spur from the Bakken to the Keystone would bring oil to the Gulf Coast refinery complex where 70% of American refining has been done for a century.

"There's multiple ways to transport oil and natural gas from point A to point B. Pipelines are by far the safest mode, far safer than truck traffic, far safer than rail traffic, far safer than shipping. What TransCanada and the Keystone pipeline have proposed is multiple steps safer than any other pipeline that's ever been constructed," says Holt.

"This is a state-of-the-art operation that's taking the entire industry up to the next level, to bring this much-needed energy down to the Gulf Coast where it can make jobs."

John Durkay's been in the industry for decades. General counsel to the Southeast Texas Plant Managers Forum, he sees the pipeline as a solution all the way around.

"I hope it is built because we're going to get a lot of good crude oil from a good friend. We don't have to worry about having to travel half-way across the world, we don't have to worry about the politics of oil," he says.

Miles and miles of refineries clustered around the Gulf Coast are raring to work on more Canadian crude.

"By golly, as much crude as Canada has to sell, we'd like to buy and make it into gasoline. That's just what we do. We don't have any problem with a discussion about the issues of transporting it. It's certainly a whole lot better to transport it by pipeline than by any other method," Durkay says.

A match made in crude heaven

Alberta bitumen and Texas Gulf Coast refining infrastructure is a match made in crude oil heaven.

Kenneth B. Medlock III, a fellow in energy and resource economics at Rice University's Baker Institute and senior director of the Center for Energy Studies, says new American oil development -- the Bakken and Eagleford formations, Permian Basin -- produces light, tight oils.

Alberta crude can use Gulf Coast infrastructure without capacity overhaul.

"It's nice that we're seeing a production renaissance in the U.S. and in North America more generally, because crude oil production has increased year-on-year since 2008, and that's not happened since the late 1960s. You're talking about a step change -- but if you can't refine it, it dilutes some of the energy security benefits," says Medlock.

The two nations are great partners, he says.

"They have very deep natural gas ties, very deep crude oil ties, there's no real concern of Canada cutting off supplies to the U.S. Because the two neighbours are so closely tied and have a good relationship, it's a system that works to promote energy security for both countries, energy security are linked very intimately," he says.

Naysayers playing the environmental card fail to take into account increased points of contact -- truck to rail to barge -- increase the odds for spills, adds Madlock.

"Look at the spill rate associated with tankers versus pipelines. It's eight to 10 times higher. What that tells you is if you can develop things domestically and utilize economies of scale, and reduce the number of touch points or transfer points for a commodity, you minimize environmental hazard. This is something that's lost on a lot of people," he says.

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