Why is Hillary Clinton backing the Keystone XL oil pipeline?

The Keystone XL pipeline was announced in the middle of 2008, and it’s highly unlikely anybody saw this coming. “This” is the controversy that the line has created. The Macondo spill certainly fanned the flames, but even before that, environmentalists targeted the line as a “fightable” representation of something they very much object to: the production of petroleum from Canada’s oil sands. Keystone XL, being developed by TransCanada, would be something akin to a spinoff from the original Keystone line that is now operating. The first part of it is in service, bringing mostly Canadian crude into Patoka, Ill. with stops along the way; the second phase will go straight to the NYMEX delivery point of Cushing, Oklahoma. It’s the third phase, the XL expansion, that is controversial. It will run a line for many miles from Alberta across the US Midwest to Steele City, Nebraska, hook into the second phase of the line, but then go from Cushing down to the Gulf Coast. Its capacity is projected to be just over 500,000 b/d. It would set up the first direct pipeline route from the Canadian oil sands to the refining center of the Gulf of Mexico. By doing so, it also should alleviate the criticism of the Cushing delivery point: that it is landlocked and disconnected to the wider world, so its price is not a reflection of the world market. The source of the oil will be oil sands production, and what will flow down the line will either be a blended bitumen, or a cleaner product from an upgrader. TransCanada had hoped to have work on XL underway by now; the next target is to begin construction sometime in the first quarter of 2011. Local areas, like cities or states, cannot stop it; it’s under federal jurisdiction. But they do have the ability to make approval difficult. That OK needs to come from the usual round of federal agencies, like the Federal Energy Regulatory Commission, but it also needs to come from the State Department, since the line crosses an international border. And that’s where Hillary Clinton comes in. She has been under tremendous pressure not to support the line, though most of her statements and actions so far have backed Keystone XL. “I don’t think Hillary is going to be swayed by the White House,” Lou Pugliaresi said. Pugliaresi is the president of the Energy Policy Research Foundation, which recently did a paper on the benefits of Keystone XL. He believes that some of President Obama’s more left-leaning environmentalists favor blocking XL. But “(Sec. Clinton) has figured this out and she understands the politics of this,” Pugliaresi said. “I don’t think if (Obama environmental adviser) Carol Browner says this is a bad idea, I don’t think Hillary cares.” What Sec. Clinton has “figured out,” according to EPRINC, is that the barrels that are coming out of the oil sands are either going to the US, under pipeline transportation economics, or they’re going to find their way to Asia, presumably China, and the US will simply bring in more imported crude, probably from the Middle East, in reaction. “She understands the false choice,” he said. They will be produced and will find ahome; the issue is where. EPRINC recently completed a study on the pipeline, which one of the authors, Trisha Curtis, said shows that “at end of the day, the benefits are outstanding.” Specifically, the report notes that Gulf Coast refiners that configured their operations toward the idea that the light-heavy split would steadily widen have been hit by the fact that it hasn’t. Petroleum from the oil sands has the capability of changing that, the study says. “If the production of several hundred thousand barrels of additional blended bitumen has any effect on the crude spread, it will be to widen it,” the report said. “To what extent is difficult to estimate, but…if it opens the spread by $1 or $2 per barrel it will have significant (positive) implications for the profitability of U.S. refiners.” ((14 JAN 2011))

http://www.platts.com/weblog/oilblog/2011/01/14/why_is_hillary.html

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