Obama Administration Officially Rejects Keystone XL

Posted by Ed Burke on Nov 6, 2015 3:05:33 PM

Protesters holding a sign the reads, Obama-lead onClimate

As of this morning, the Obama Administration has officially rejected the Keystone XL Pipeline on the basis of Climate Change concerns.  As we discussed with the TransCanada "pause petition" delivered Monday, many had thought the President would “kick the can” to the next president and decline to rule on the proposal before the end of his term.

Ironically, the petition to pause consideration of the project may have simply served to force the decision .

Obviously, the saga most likely continues in the Courts, but as of this moment the project has officially been nixed.

It’s important to note however, that stopping the pipeline project has very little effect on the development or transport of oil sands derived Crude – it will simply continue to be transported via tankers and rail, which ironically, has more of an impact on Climate than pipeline transport.

The pipeline would have moved over 800,000 barrels of oil per day from Canada to Nebraska, where it would hook with existing pipelines and travel on from there to Gulf Coast refineries. Approximately 100,000 of the barrels would be from North Dakota oil fields, according to the Wall Street Journal.

The Keystone Pipeline has been a major political issue for the past seven years, splitting people between those with environmental concerns regarding oil sands development, general fossil fuel dependency issues and potential spills. (Like this one: Mayflower Arkansas Highlights Keystone XL Environmental Concerns )

Then there are those who supported the development for the jobs it would supply, and the strengthening of the US as a major global energy player, in addition to moving more of our importing from Canada versus OPEC nations. (For more on that see: Energy Security, not Independence Should be the Goal )

President Obama’s focus throughout his second term has primarily been on Climate Change, so the move to reject Keystone isn’t all that surprising. Especially when you consider the pipeline project in tandem with Federal limits on Power Plant Emissions that include regulations on methane from fracking, truck fuel regulations, a veto of a previous Keystone Bill, and a threatened veto of the Crude Oil Export Bill – all of which have been significant moves during the President’s second term.

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Topics: Keystone XL

TransCanada/White House Standoff Begins Ahead of Climate Change Summit

Posted by Ed Burke on Nov 4, 2015 1:24:28 PM

Picture of an oil pipeline in the snow

In a surprise move Monday, TransCanada issued a request to the U.S. State Department that they pause the ongoing review of the project until the legal challenges in Nebraska are settled. (Interestingly and somewhat ironically, this is the exact same reason Secretary of State John Kerry gave for why the review was taking so long when asked last year.)

The project that we’ve all been debating for the past several years was looking at a likely rejection from the State Department and the prevailing theory is that TransCanada would like the review process to linger on, in the hopes that the proposal lands in front of a more friendly Administration in 2016, after the Presidential Elections.

The White House put forth this same theory, that the petition was a play to get a more friendly administration to rule on the project and spokesman Josh Earnest said the White House will summarily dismiss the petition for that reason.

TransCanada denies there is any politics at play. Even if it were political, however, the political moves are certainly not one-sided.

The reason cited for the timing of the petition is because Obama is expected to veto the project ahead of the upcoming UN Summit in Paris on Climate change, in order to make a statement on the U.S.’ commitment to battling Climate Change.  Not an apolitical move in and of itself, no?  (In fairness, it has become pretty clear that the President intended to veto no matter what the timing was.)

The Keystone projects’ prominence in the political realm had substantially faded in the face of tumbling oil prices but the issue has come up again with the beginning of the election cycle, with Presidential Candidates on both sides being asked their positions on the project in interviews and debates. The bid from TransCanada this week only added fuel to that fire. 

Whether the move was political, or simply meant to re-raise the issue, it most certainly puts pressure on the Administration to make a decision. That can’t be exciting for the President.  One would think he would rather pass it on to the next person anyway and avoid both the gains and fallouts politically from making the decision.

It will be interesting to see if the veto comes down before Paris, or if the project trudges on longer and longer despite a refusal to pause. 

 

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Topics: Keystone XL, TransCanada, climate change, obama

Keystone XL Hits the Senate Floor

Posted by Ed Burke on Nov 18, 2014 11:59:17 AM

Oil pipeline in the snow

Today, the bill to approve the construction of the the Keystone XL pipeline hits the Senate, after the House approved Cassidy's legislation by 252-161 on Friday. 

In an exciting twist, the Senate is apparently stuck at 59 votes in favor, one shy of the 60 needed to pass the legislation and send it to the Presidents desk. However, Mary Landrieu (D-LA) claimed yesterday to have secured the 60th vote. The bill hits the floor in what some say is an attempt to boost Landrieu's chances of maintaining her Senate seat in the December 6th runoff election she faces versus, oddly, the bill's sponsor, Bill Cassidy.

(Sounds cynical, yes, but given that the House has previously passed 8 seperate bills to push the vote on Keystone and none saw the Senate floor, it seems pretty reasonable as well.)

The jury is out on whether if the bill passes it will be vetoed by the President or not. He cited a legal challenge to the pipeline in Nebraska that is still ongoing, stating that "process should not be interfered with", but Secretary of State John Kerry recently made statements in Canada that implied the Administration may not veto a bill if it came down to it. It's really anyone's guess. 

Obviously, this has been a lighting rod political issue for the over 6 years the project has been on hold. On one side there are environmental groups and people in the geography impacted, who are concerned with  the climate impact, potential leaks,  and the "doubling down" on a commitment to fossil fuels they see the pipeline as representing. On the other are groups who argue this strengthens our energy independence and supports American workers and the American economy versus that of other countries, and those who cite the immediate jobs boost the project will represent. 

We've talked about some of these Keystone related issues before: 

There are 6 hours scheduled for debate on the floor, with the vote expected to occur at 6:15pm. Stay tuned! 

 

 

 

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Topics: Energy Independence, Keystone XL, Energy Infrastructure, TransCanada, senate

Midterms 2014: What Will the Energy Agenda Look Like Now?

Posted by Ed Burke on Nov 6, 2014 8:00:00 AM

United States House of Representatives

How will the 2014 Midterm Election results cause a shift in the Energy Agenda?

Keystone XL:

Prior to the midterm elections, Congress sent numerous bills to the Senate to push approval of the Keystone XL pipeline, none of which were brought to the Senate floor. That all likely changes with a Republican Majority Leader. Most likely we will see a vote happen on Keystone, and with Republicans controlling the Senate there are solidly enough votes to pass. Whether the President will sign it or not is up for debate, but in late October during a visit to Canada, Secretary of State John Kerry said he would like to "see a decision, sooner rather than later", maybe signaling that the President won't veto the bill once it hits his desk. 

Crude Exports

Less of a change expected here with the party shift. Exports were expected to be a big consideration in 2015 regardless of party control. Republican Lisa Murkowski and Democrat Mary Landreiu were both expected to move the issue forward. As of this morning Landreiu is locked in a runoff contest, but Murkowski will be stepping up as Chair of Senate Energy and Natural Resources Comittee next year, and has vowed to push the issue on LNG and Crude exports. 

Other Issues

Other issues that may come to the fore include addressing the EPA's proposed regulations on pollution generated from coal fired plants. This is probably too late to be relevant in the New England region, where we are seeing skyrocketing electricity costs and Natural Gas supply issues as a result of retiring older plants. 

It will be interesting to see if other items come to the floor as the legislative session advances. Perhaps RFS issues, blendwall issues, or indications of a reversal of the prohibition of fracking on Federal Land. We shall see.

 

 

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Topics: US Crude Exports, EPA, Keystone XL, carbon emissions, Election Results

Pipeline Stubbornness - Canada's "Work Around" & US Environmental Harm

Posted by Ed Burke on Oct 17, 2014 12:00:00 PM

Protestors holding a sign that reads, Stop Keystone Climate Change

In response to the perpetual Keystone XL pipeline approval delays by the US government, Canada is closing in on a deal to make the final Keystone connection "irrelevant", in the words of former US ambassador from Canada McKenna. 

How? By going East. 

The proposed route would take Bakken shale oil from Alberta to Quebec, and then onto the Irving refinery in St John. The route would utilize an existing, underused nat gas pipeline, with some additions and modifications. The deal would reportedly be a 50-50 venture between TransCanada and Irving Oil.

The port in St John puts Canada in the position of being able to easily and efficiently ship oil to India, or Europe, versus being forced to transport huge quantities (160K barrels per day) by rail instead of pipeline into the US.

An irony of the Keystone delays, as well as pipeline opposition in general, is that it's pretty easy to argue that pipeline transport is more environmentally friendly than railcar or any other means of transport. 

In 2013, 1 million barrels of oil per DAY were transported by railcar, while that number is expected to jump to 1.5 million this year. 

Why? Because Shale is booming and we have no pipeline. And because environmental groups and prominent financiers (ala Tom Steyer, who pledged $50 million dollars to support candidates that oppose the Keystone pipeline) argue that pipelines, especially the Keystone, are environmentally bad news. But is that true? And more importantly - is the alternative to pipeline transport even worse?

It would appear that yes, the alternative may be worse. A Congressional report from a few months ago stated that more oil spilled in 2013 due to railcar accidents than had in the past 35 years. Seems crazy, since stricter safety and environmental standards have been imposed over that 35 year time period in transportation and every other industry. 

Speaking of safety regulations - upcoming costly new regulations on retrofitting railcars are on the horizon. These proposed regulations came up after several high profile railcar explosions (notably Lac-Megantic, which destroyed half a town and killed almost 50 people)

The costs of these retrofits are potentially crippling. The Wall Street Journal reports that thousands of railcars are being scrapped - but it will be tough for the industry to supply new, conforming railcars quickly enough to keep oil transportation costs down. 

(As an aside, these railcar regulations will also impact ethanol transport. A recent Federal Investigation found that ethanol rail transport was equally or more dangerous than crude rail transport. In fact - when exposed to prolonged fire, ethanol railcars were found to be 150% more likely to explode. Yikes.)

So if continual delay on Keystone is having an environmental impact, and new regulations for the alternative-to-pipeline transport method could drive costs up... what exactly is everyone still arguing about?  

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Topics: Keystone XL, TransCanada, shale, railcar regulations, irving oil, environment

Progress on Keystone XL? ....Don't Get Your Hopes Up

Posted by Ed Burke on Jun 25, 2014 2:49:09 PM

Oil pipline in the snow

 

Tuesday the House passed bipartisan legislation to speed up the approval process for cross-border energy projects (ie Keystone XL), despite a promised veto from President Obama.  The bill is known as the “North American Energy Infrastructure Act”, featuring 12 Republican and 8 Democratic co-sponsors. If it passed the Senate, it would establish by law that projects be granted or denied approval within 120 days of the Environmental Impact Study, and more significantly, it would remove the need for Presidential Approval.

Technically the bill doesn’t apply to Keystone XL, because the applications and environmental impact studies are already completed for that proposed project. However, that’s obviously the most glaring example of the need to speed up the process, and probably the impetus for the bill’s submission in the first place. In theory, TransCanada could resubmit their application and be subject to the speedier process. (A motion to prevent TransCanada from resubmitting should the bill pass was handily shut down by a wide margin.) 

It’s unlikely that the bill will get through the Senate with a veto-proof majority, though. It may not even be likely that the bill be considered by the Senate, as Majority Leader Reid has indicated he has no inclination to move this or previous Keystone related bills to the floor if he can help it. 

As you know, the project has been languishing for over 5 years after delay upon delay. Earlier this year, progress looked promising when the Environmental Impact Study found no significant environmental concern to prevent the project from going forward (actually, its more environmentally safe to transport via pipeline than railcar - but I digress...). However, nothing much happened and now the current hold up is purportedly related to a "wait and see" on how a Nebraska district court rules on the proposed pathway for a portion of pipeline in that state.

Frustrating to be sure - but the strong bipartisan nature of the push to move Keystone forward in Congress is an encouraging sign. I'm sure we won't see any real movement until after the midterms, given the polarity of the issue in some areas and the amount of seats up for grabs in the Senate. Hopefully, no matter which way the chips fall in the mid terms, we finally see some real, meaningful progress on what is such an extremely important project for our Energy and National Security. 

 

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Topics: Energy Independence, Keystone XL, Energy Infrastructure, Congress, TransCanada, Environmental Impact Study

Energy Security, Not Independence, Should Be The Goal

Posted by Ed Burke on Mar 27, 2014 12:36:40 PM

Crude oil terminal

We've discussed previously the debate about lifting the Crude export ban in the wake of the shale oil boom in the US. Last year alone the reduction in US imports (down 9%) and the increase in exports (up 11%) accounted for a $63 billion dollar reduction in the overall trade deficit.

Next year the US is expected to become the world's biggest exporter, and oil production is continuing to increase - analysts predict that by 2020 the US will be a net exporter, and the boom could create a net 4.7 million jobs by 2020 as well. 

The continued economic success of the oil boom however will be greatly impacted by whether or not the Crude ban is overturned. Without a growing export market to support the increased production, prices become depressed due to limited refinery capacity until the infrastructure catches up to the supply, which is never the goal, realistically.

The thought is that the US will be capable of being virtually self sufficient in oil production by that 2020 horizon, although that's not necessarily the practical goal. Trade relationships are often a positive for nations, and the thought is we get a better energy security by maintaining relationships than setting the goal as an isolated, completely energy independent nation. For example, we currently get almost half our oil imports from Canada and Mexico, and the Keystone pipeline would enhance our ability to get Canadian oil into the market and strengthen our relationship with Canada. There is a school of thought that an energy alliance between Canada and the US, or Canada, the US and Mexico would be a much better solution for all three countries' energy security and economic opportunities than being a completely independent country would.   

Exporting will have an enormously positive impact on the trade deficit, and US supply would keep downward pressure on global pricing. In terms of energy security, the availability of alternative crude sources for other nations is a positive as well - being that its a global market, political and other issues in oil-producing nations will always affect one another, but with varied supply an issue in one nation isn't neccessarily a catastrophe for others. For example, as we are seeing in the Russia/Ukraine situation, Europe is in a tight spot given that a huge percentage of their energy supply comes from Russia. That sort of limits their ability to enforce tough sanctions because they risk an economic mess if Russia decides to push their prices higher in retaliation. As we all know - energy prices have huge impacts on almost all sectors of a nations economy.  

Political ramifications and implications of Energy policy and security aren't the only issues at play in the debate, obviously. Environmental groups strongly oppose exporting crude because it will likely make renewable energy even less cost effective in the wake of plentiful oil supply, and reduce the pressure to find alternative, non-fossil fuel energy sources. 

I wrote an article on this topic for the March issue of Oil & Energy Magazine - you can read that article in their online magazine here: http://oilandenergyonline.com/how-energy-independent-is-america/ 

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Topics: Energy Independence, US Crude Exports, US Energy Boom, Keystone XL, russia, ukraine,

Energy Issues Top the Political Agenda for 2014

Posted by Ed Burke on Feb 25, 2014 12:52:00 PM

Main energy topics in the headlines for 2014 include the Crude Export Ban, the Keystone Pipeline, the Climate Change Action Task Force, RFS Volumes, and an expected final ruling on the Tier III mandate from the EPA. 

State of the Union 2014
(Photo Credit: Amanda Lucidon, WhiteHouse.gov Official Photo)

There is a lot of work to be done on energy infrastructure in the US - something that became especially clear with record breaking spikes in Natural Gas pricing to the New England and New York markets on the heels of the Polar Vortex. This topic is supposed to be the highlight of the Administrations Quadrennial Energy Review. However, the most obvious energy infrastructure and transport improvement - the Keystone XL pipeline is still bogged down in its 5+ years of paperwork, with no decision in sight, even following the most recent Environmental Study which found there would be no major negative impact environmentally from the project. The State Department review was expected after the President's State of the Union Speech, with a Presidential decision to follow but so far as of late February we haven't seen any movement on the issue. 

Renewables are also on the table - The EPA's expected final RFS volume reductions should be out this month (the first time the EPA will have used waiver power to decrease, not increase, volumes). The tax credits for Biodiesel and Cellulosic Biofuels also expired at the end of 2013, but if you recall, last time these were reinstated retroactively. The EPA is also expected to release its final ruling on Tier 3 Gasoline Standards, which would affect the sulfur content of gasoline vehicle emissions.

I wrote a more comprehensive article for the February issue of Oil & Energy Magazine on the topics on the Energy Agenda for 2014, you can read that article by clicking here 

What do you think the priority items on the Energy Agenda should be?    

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Topics: Energy Independence, Biodiesel Tax Credit, President Obama Address, RFS 2, EPA Mandate, US Crude Exports, Cellulosic Ethanol, Keystone XL

Mayflower Arkansas Highlights Keystone XL Environmental Concerns

Posted by Ed Burke on Jul 30, 2013 1:33:00 PM

It's not often that specific Energy Policy issues are topics for discussion at the average American dinner table, but a notable exception to this is the Keystone Pipeline XL. From the nationally televised Presidential primaries and debates of 2012 to dinner tables around the nation, people are divided on the issue and they are definitely talking about it.

On the one hand, the percieved positives are enormous - from thousands of jobs at various skill levels to national energy security benefits from importing oil from Canada versus say Venezuela, Nigeria, etc. On the other hand are those with serious environmental concerns, the largest of which is the potential for spills or pipeline leaks that could devastate environmentally sensitive areas. Several incidents this year have intensified environmental objections, perhaps the most significant being the Mayflower Arkansas spill caused by a rupture in the Pegasus pipeline. The Pegasus, built in 1940, runs 850,000 miles across the United States - it was reversed in 2006 to carry 95,000 barrels of crude to Texas from Illinois.

One of the contentions regarding the pipeline rupture that has relevance to both sides of the Keystone Project has to do with the conclusions reached by the investigation of the event. It was determined that an original manufacturing defect contributed to the rupture, meaning it was not a maintenance or corrosion issue that could have been forseen and prevented. Why is that important?

The Pegasus was built in the 1940s. The Keystone, proponents argue, will be manufactured and built with today's cutting edge technologies and will actually exceed recommended requirements for safety issued by the federal government. It will be the safest and most technologically advanced pipeline in existence. 

Opponents argue that a reason for the rupture in the Pegasus may be tied to the fact that the pipeline was designed to handle standard crude oil, not the "oil sands" crude that has a different composition. They argue that the composition of "oil sands oil" is a factor in safety and that the Mayflower spill illustrates that standards used for light sweet crude are not sufficient to ensure safety. Essentially - if those same standards are those being used to model the Keystone XL, they will not be sufficient to ensure that a disaster like this does not occur going forward.

Additionally the issue has been clouded with arguments for alternative energy sources versus "expanding dependence on oil" - some opponents see the pipeline as an issue not for its immediate environmental concerns per se, but as an issue of the US continuing down the 'wrong path' in continuing to focus on fossil fuel derived energy sources versus alternatives.

Representative (now Senator) Ed Markey (D- MA) stated that "The pipeline spill in Arkansas serves as a reminder that oil companies aren't doing a good job of transporting Canadian crude safely". What ought to be the focus moving forward on discussion, in my opinion, is a thoughtful consideration of both sides of the concern to get a true cost-benefit analysis, versus the stubborn "side taking" that seems to characterize the issue in Washington presently. While Ed Markey has a valid point, so does the CEO of TransCanada looking to expand the Keystone XL. He said, "The US needs 10 million barrels a day of imported oil. The proposed pipeline is not a question of oil versus alternative energy. It is a debate about whether you want to get your oil from Canada or Venezuela"  

 

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Topics: Mayflower, Pegasus Pipeline, Keystone XL

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