by Robert Lyman
Copyright 2015 (contributed to Friends of Science Society)
According to recent press reports, U.S. President Obama soon may announce his Administration’s final decision concerning whether to grant a presidential permit for the Keystone XL Pipeline to cross the Canada-U.S. border. The announcement, when it comes, will be an anti-climax, because it has been clear for most of the seven years that the Keystone XL Pipeline application has languished before U.S. regulatory bodies that the Obama Administration’s decision would not be based on the merits of the pipeline, as would be the case if it were built entirely in the United States. Indeed, over the past seven years, more than 20,000 miles of oil pipelines have been approved and built in the United States, almost none of them requiring more than 18 months of review. Instead, the decision in this case became hopelessly politicized because the United States environmental lobby decided to make it a symbol of their ideological opposition to greenhouse gas emissions. Obama will reject the permit as one element of his “environmental legacy”.
The champagne corks will be popping in the boardrooms of the ultra liberal foundations and radical environmental groups across the United States and Canada. They think they have won the game. I have news for them. They have been watching the wrong ball.
To understand why, one should revisit three of the key arguments accepted on faith by the anti-Keystone lobby:
·         Blocking Keystone will prevent Canadian crude oil from reaching the U.S. Gulf Coast refineries;
·         This will significantly reduce greenhouse gas (GHG) emissions; and
·         The world will use less oil and thus reduce its GHG emissions.
Demand will be satisfied – Economics 101 for Eco-Radicals
While all that lobbying effort and expense has been devoted to stopping Keystone XL, what has happened? Canadian crude oil exports to the United States have been growing steadily since 1990. In 1994, the exports were about 40 million barrels per year and they grew to 110 million barrels per year in 2015. In fact, just in the last year, from 2014 to 2015, Canadian crude exports grew from 2.7 million barrels per day (b/d) to 3.2 million b/d. Why? Well, it was primarily because U.S. refiners wanted it and were prepared to pay for it. Also, while the green lobby wasn’t looking:
·         In 2012, Enbridge reversed the Seaway pipeline, built to carry Texas crude to the U.S. Midwest, adding enough capacity to move 850,000 b/d south from Cushing, Oklahoma to Freeport, LA., the heart of the Gulf Coast.
·         Further north, Enbridge built the Flanagan pipeline system (585,000 b/d) and the Spearhead pipeline system (193,000 b/d) from Flanagan, Ill. to Cushing.
·         TransCanada built its 700,000 b/d Gulf Coast Project crude oil pipeline (originally part of the Keystone XL project – oh, the irony!) between Cushing and Nederland, Texas, which began deliveries in January 2014.
·         Later this year, the $300 million, 36-inch diameter pipeline from Trans Canada’s recently completed Marketlink pipeline will be filled with Canadian crude.
·         Literally dozens of expansions were made to the pumping capacity of smaller cross-border pipeline systems, none of which required a Presidential permit.
There’s much more coming. There are 70 pipelines across the Canada-U.S. border. Just as water will find a way to seep through a crack in cement, Canada’s oil keeps streaming its way to Texas’ refinery row. Keystone XL would be better and cheaper, but its denial will only raise costs, it will not block movement. The fact is that the Gulf refineries were built to process exactly the kind of heavy crude oil that is available from Canada. Most of the growth in U.S. production is light crude oil. So, the Canadian crude is displacing heavy oil from Venezuela.
It’s not Significant If You Can Barely Measure It
In 2013, President Obama announced his alleged “standard” for the acceptability of the Keystone XL pipeline. It had to be demonstrated that approving it would not “significantly” increase GHG emissions. The U.S. State Department Environmental Impact Statement devoted pages and pages to analyzing this subject and waffled in its observations. It stated that:
“The total direct and indirect emissions associated with the proposed project would contribute to cumulative global GHG emissions. However, emissions associated with the proposed project are only one source of proposed emissions.”
“The following climate changes are anticipated to occur regardless of any potential effects for the proposed Project.”
The State Department report provided no support for the claim that refusing to approve the presidential permit would prevent Canada from developing the oil sands.
If one accepts the thesis that catastrophic climate change may be caused by human-made GHG emissions, how much difference to the world’s emissions would be made if the Keystone XL pipeline were not built? This can be demonstrated in percentage terms. Canada produces 1.8% of global GHGs. All current oil sands production accounts for 6.5% of Canadian emissions. The emissions associated with the oil that would be transported by Keystone XL represents about 20% of the production from the oil sands. If you multiply those figures (i.e. 1.8 x .065 x .2), you can calculate that the production of oil for the Keystone XL project would contribute 0.2% of global emissions. In other words, it is one five thousandth of annual global emissions. That is much less than the rounding errors used for statistical analysis. So, in the worst case, the emissions that would be avoided by rejecting the Keystone XL project can hardly be measured.
You Cannot Keep the People Down
The proponents of the climate catastrophe theory would have the people of the world believe that they must stringently reduce their use of all fossil fuels – coal, oil and natural gas. They are delighted that the international price of crude oil has declined sharply over the past year, because that will offer less incentive for investment in new oil supplies, especially in higher cost sources like oil sands. They believe that their efforts will be successful in reducing oil and gas development and infrastructure construction.
They do not seem to realize that 85% of the emissions associated with the oil fuel cycle occur at the final consumption, or tailpipe, stage. Lower oil prices just mean increased demand for the fuel. Before the recent oil price decline, the U.S. Energy Information Administration projected world oil consumption to increase by 36% above 2010 levels through 2040, with demand growth strongest in the less developed countries, and especially in China and India. With lower oil prices, the demand increases may be even faster. The OPEC Oil Market Report and the International Energy Agency Oil Market Report, the two most authoritative sources of expert analysis on oil market trends, both projected in July, 2015 that global oil demand will increase by 1.6 million b/d in 2015, the fastest pace in five years, and continue growing by around 1.4 million b/d in 2016.
Despite the decline in prices, infrastructure investment is booming.  In 2015, 1,115 miles of new crude oil pipelines will be constructed in the United States and 352 miles in Canada out of a global total of 1,886 miles. Crude oil pipelines under construction now that will be completed in future years total 3,885 miles in the United States and 2,968 miles in Canada out of a global total of 10,626 miles. Total onshore oil and natural gas pipeline construction worldwide in 2015 will total more than $40 billion. The people of North America and the world are demonstrating that they want access to modern energy services and do not believe the radical environmentalists’ rhetoric.
Maybe they better forget the champagne.
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