Tuesday, January 24, 2012

Denied Keystone Pipeline Has Alternatives

It’s claimed that the Keystone XL Pipeline System is needed for transporting synthetic crude oil and diluted bitumen from the Athabasca Oil Sands in North Eastern Alberta, Canada to multiple destinations in the United States. However, it’s argued that the transportation of petroleum from Canada’s oil sands would profoundly damage the environment. The pipeline passing through environmentally sensitive areas including the Ogallala Aquifer in Nebraska is a suspected threat to the vulnerable largest source of drinking water for the mid-west of America. Therefore, the embattled multi-billion dollar project carries a number of issues related to the safety and environment.
Yet, the political ingredient is major part of the play as the fear factors related to construction/operation of the system have been exaggerated by some groups indeed.
Mounting pressure from the opposing protesters made Obama rush his negative verdict on the pending application for the said pipeline between Alberta (Canada) and Gulf of Mexico to reach the US refineries through Nebraska. Obviously, the environmentalists including Greenpeace Canada are blamed for creating uncertainty about the oil sands.
Consequently, a major job opportunity for Americans and Canadians is doomed for now, nevertheless, President Obama has enhanced his chances to get re-elected for another term.
On the other hand, China has the best chance to get a bigger foothold in the oil sands. The tar sands oil development is already reaching Asia via Vancouver, B.C. The northern gateway pipeline project now in hearings is meant to ship more both to China and the US. But the irony is – major portion of Canadian oil (2.67 million barrels a day) is exported to the US at lower prices, while Eastern Canada imports about a million barrels of oil a day at higher world prices from overseas.
The U.S. Energy Information Administration (EIA) estimates that American oil consumption will increase 4 per cent between 2009 and 2035. The increase occurs despite highly optimistic assumptions about vehicle fuel efficiency and bio fuels. The more oil America produces domestically and imports from neighbours, the more it is insulated from dramatic interruptions of global supplies.
As the largest supplier, Canada is the most dependable source of oil — or was until Obama’s decision.
Currently, major portion of Canada’s crude exports go to the U.S., a figure that Prime Minister Steven Harper wants to reduce in his bid to make Canada a “superpower” in global oil markets. Canada this month began hearings on a proposed pipeline from the oil sands to the British Columbia coast, where it could be shipped to Asian markets.
Even if the project has been rejected on environmental grounds, demand for oil and jobs means an alternative probably would emerge for sure. It clearly means that through by-passing the US and distributing the oil directly via the Gulf coast; Canada oil companies would be selling their oil abroad at a much higher price.
Building another pipeline across northern BC would mean that the USA would have to then compete with Asian markets for our oil. The only fear will come from the Environmentalists who view the oil sands as dirty oil.
After the election, Keystone XL pipeline could be approved with changes in the Nebraska alignment. Alternatively, TransCanada may simply build the US parts of the line now, starting from the Bakken in North Dakota and Elm Coulee in Montana, cutting a new alignment deal with Nebraska, and leaving a connection to Canada for some later date. They have about $1.5 billion invested already, so they can’t afford to waste it.
Canada and the U.S. share both – “the problems and profits of the oil sands.” The companies on both side of the border are partners in the development, production, transportation and marketing of oil sands products. Bitumen and synthetic crude oil are shipped (mostly) via pipeline from Alberta to the U.S. The majority of these refined products are destined for American domestic markets, but the U.S. ships over 200,000 barrels a day back to Canada, making it the United Statesʼ second largest market for refined products.
The current rejection of the proposed pipeline has actually encouraged Canada to seek new energy markets on its own terms. According to Canadian Prime Minister Steven Harper, U.S. opposition to the Keystone project is "a wake-up call" that should encourage Canadian industry to develop new markets in Asia. It reflects, he said, "the degree to which we are held hostage to decisions in the United States, and especially decisions that may be made for very bad political reasons."
After Republicans forced his hand, politically motivated Obama opted to please the environmental hardliners whose votes he needs to guarantee his presidency for another four years. Yet, he played really well by leaving the door wide open for TransCanada Corp. to re-apply for a presidential permit, which could see the pipeline in operation by late 2014, because Canada and the US have much to gain from oil sands development.
Regardless of the US permit, the best solution is to refine the oil in Alberta, piping products like gas and diesel to the coast, which can then be shipped to China or anywhere else to the highest bidders. Certainly, local refining would further generate jobs and revenue for everyone.

[Image Source google]

21 comments:

Muhammad Israr said...

a gas pipeline is urgently needed for pakistan too :)

tariq said...

Yes of course

Crystal said...

The oil and gas industry is huge right now. Oil rigs, gas lines, pipe lines. You name it. I know, because my husband does a lot of work for the oil companies and fracking companies as well. Chesapeake, Calfrac, Southwestern and BJ to name a few and those pipelines are very important to people looking for a job, and the oil rigs as well. Especially welders like my husband but unfortunately it also requires a lot of travel. I can appreciate the pros but at the same time, I know of the cons a little all too well but the money is good and I think if they did approve of this major pipeline, it would pump more money back into the economy and provide thousands of jobs. I can't believe that Obama is so against it, especially when so many people need the relief. Very interesting post.

Anonymous said...

It’s really very difficult in this full of activity life to listen news on TV, therefore I just use internet for that purpose, and take the most recent information.

Anonymous said...
This comment has been removed by a blog administrator.
Pari said...

It's the US loosing, Canada is still in a win win, as there are other markets and better price.

Pari said...

Canadian company has already invested billion and one half in US CURRENCY, so it's not fair unless president Obama soon realises to give jobs to the unemployed on both sides of the border in a time of global recession-a stubborn recession.

sunny said...

the post is terrafic Mr Tariq.

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tariq mian said...

@ Muhammad Israr ---thank you for your comment.
----------------

@Crystal --pipelines are very important to people looking for a job, and the oil rigs as well. It would pump more money back into the economy and provide thousands of jobs.
________________

@Anonymous
Ok Sir, keep using internet for taking the most recent information.
________________

@Pari
thanks a million for coming by.
yes Canadian company invested quite hugely already hoping to get the application permitted by the American administration.
_______________

@sunny --so nice of you for your terrific remarks.

Anonymous said...
This comment has been removed by a blog administrator.
Faraz Ezazi said...

YA I totally agree that a gas pipeline is needed for Pakistan but i don`t think that this regime will take some beneficial action
:(


Please follow my blog too
www.farazezazi.blogspot.com

tariq mian said...

@Faraz
SURE!

R. Ramesh said...

very interesting post and informative comments yar...enjoyed being here..tc buddy

tariqMian said...

thanks-RAMESH

Palomasea said...

Hello Tariq,

Thank you for enlightening me on this issue. I can always count on your posts for an interesting, balanced, and in-depth perspective.
Love that MLK Jr. quote..thanks so much. I agree with it a thousand percent.
Have a great week,
- Irina

Dave King said...

Sensitive is putting it mildly, I'd say!

tariq mian said...

@DAVE KING--
--thank you sir for your input.

tariq mian said...

@Palomasea:
so nice of you for evaluating favourably.

Anonymous said...
This comment has been removed by a blog administrator.
Rothstein said...

Hello Tariq, Thank you for enlightening me on this issue. I can always count on your posts for an interesting, balanced, and in-depth perspective. Love that MLK Jr. quote..thanks so much. I agree with it a thousand percent. Have a great week, - Irina

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