Tag: "keystone xl"

Keystone XL Meet Energy East

President Obama’s reluctance to approve the Keystone XL pipeline from Canada to the Gulf Coast, is forcing one of the largest energy rich countries to look at alternative ways to export its crude. The proposed TransCanada Energy East pipeline would be an all-Canada pipeline transporting the vast reserves of Alberta’s oil sands to the city of Saint John. The crude reserves could then have supertanker access to the Gulf Coast refineries that the Keystone XL planned to deliver.

  • Canada’s Alberta oil sands contain the third largest reserves in the world at 168 billion proven barrels.
  • The 2,858 mile Energy East pipeline will cost $10.7 billion and completed by 2018.
  • Energy East pipeline would transport 1.1 million barrels per day.

If a reality, the Energy East pipeline would be more than twice as long and carry a third more crude than the Keystone XL pipeline. The growing European demand for crude from other sources than Russia increases the need for large pipeline projects. Opponents to large energy pipelines are already lining up to halt any start to such a project. TransCanada Corp will find one way or another to start exporting Canada’s vast energy and natural resources. Time is running out for Keystone XL and the subsequent economic boost to the United States.

President Obama Keeps Energy Costs High

While Obama has not yet been able to stop the fracking technology that is producing an American oil and natural gas boom on private and state owned lands, he has sharply constricted exploration and development on the extensive federally-owned lands and offshore. That is why gasoline prices have doubled since he became President.

The Heritage Foundation explains that under Obama’s policies, the EPA’s:

Proposed limits for carbon dioxide emissions essentially would prohibit the construction of new coal-fired power plants, and force existing ones into early retirement, driving up the cost of energy on American families and businesses.

Then there is Obama’s indefinite hold up of the Keystone XL pipeline, which would simply transport, at no cost to taxpayers, abundant, low cost Canadian oil and natural gas to American Gulf Coast refineries, assuring American access to low cost, reliable oil and gas supplies. But if Canada cannot sell to America through the Keystone pipeline, then they will sell the oil and gas to our emerging rival in China, through pipelines on the Canadian west coast. These policies would deprive America of 50,000 high paying jobs not only for construction of the extensive pipeline networks, but also for the budding boom and rebirth of American manufacturing and associated higher paying blue collar jobs, which the revival of low cost, reliable American energy supplies is producing.

The Heritage Foundation further explains that “higher energy prices shrink production and consumption, resulting in less income for families, more people in the unemployment line and less economic growth.” All of this means that Obama is on track for increasing electricity and other energy costs that are the inevitable result of a constricted supply of low cost, reliable, American energy.

Keystone XL: More than a Domestic Issue

The United States has been abuzz with activity this past year over the promise that President Obama made concerning pushing forward the Keystone XL project. However, the President is still failing to deliver on any of his promises. What is new are the affects that are taking place on the Canadians. There are currently 3 pipeline projects (Northern Gateway, Trans Mountain Expansion and Keystone XL) that are at the forefront of energy development in Canada.

The Canadian Energy Pipeline Association predicts that all three projects combined are worth a staggering $1.298 trillion dollars to the Canadian economy. By allowing Canada’s crude to transport down to the Texas Gulf where it can be refined, Canada expects to bring in about $15.52 billion dollars in additional salaries to its citizens. In addition, the U.S. State Department reported an increase of 42,000 jobs during the construction process, and roughly 118,000 jobs to maintain the pipeline and the refineries.

pipeline economic impact

There are currently four ways that crude oil is being transported in the U.S. and Canada, which are train, truck, pipeline and by ship. Depending on which environmentalist you ask, each mode of transportation is more dangerous than the other. 70 percent of petroleum and crude oil are currently shipped by pipeline, which in recent years has proven to be safer. A recent study by Fraser affirms their safety by reporting pipeline accidents are a staggering 30 times less harmful than by train. Although, an increasing number of transports by rail are creating more harm than good.

At this point, a majority of the holdup seems to come from the upcoming elections and Obama’s reluctance to fulfill his promise. The regional trade partnership that can be gained from the pipeline is very advantageous for the U.S. and can only decrease the overseas dependency on oil. For the good of the environment, Keystone XL should be moved forward. It is imperative that the safer, and cheaper alternative be used.

However, it is also important to note that all of these advantages could be multiplied significantly with a new refinery built in the Gulf Coast. North Dakota is currently building the first oil refinery since 1976 and plans to further decrease the amount of reliance on foreign oil. Just by allowing one small refinery in North Dakota, we would decrease the amount of barrels imported per day by 53,000. A larger, more advanced refinery like the Port Arthur Refinery in Texas has a capacity of 600,000 barrels a day. Combine that with an additional pipeline from Canada, and the amount of economic growth would be tremendous. As of now though, the only thing that can be done is sit around and wait until after the November elections.

Economic Benefits of TransCanada Keystone Pipeline System

According to a study by Southern Methodist University’s Maguire Energy Institute, there are substantial economic benefits with the TransCanada Keystone Pipeline System.

Phase III of the Keystone Pipeline System, known as the Gulf Coast Project. The Gulf Coast Pipeline Project is a 485-mile (780-kilometre), 36-inch crude oil pipeline from Cushing, Oklahoma to Nederland, Texas.

An examination of per capita income growth in the Gulf Coast Project counties between 2000 and 2012:

  • Six of the eight affected counties in Oklahoma recorded faster per capita income growth than the state average of 65 percent.
  • 11 of the 16 counties in Texas posted per capita income growth higher than the state average.

State of Texas Pipeline Impacts

Total Economic Activity $3,638,561,905
Labor Income $1,696,054,834
Employment 26,924
Total Taxes $144,992,343
Indirect Business Taxes $112,533,584
Direct Business Taxes $32,458,759


State of Oklahoma Pipeline Impacts

Total Economic Activity $2,143,364,856
Labor Income $1,041,174,418
Employment 15,852
Total Taxes $72,384,852
Indirect Business Taxes $50,339,639
Direct Business Taxes $22,045,213

The Gulf Coast Project has the initial capacity to transport 700,000 barrels per day from storage tanks in Cushing to Gulf Coast refineries. With the expected completion of the Houston Lateral project in the fourth quarter of 2014, this number is expected to rise to 830,000 barrels per day adding $5.8 billion in new economic activity to Texas and Oklahoma.

The fourth and final phase of the Keystone pipeline system is known as Keystone XL. The Keystone XL Pipeline is a proposed 1,179-mile (1,897 km), 36-inch-diameter crude oil pipeline beginning in Hardisty, Alberta and extending south to Steele City, Nebraska. This pipeline is a critical infrastructure project for the energy security of the United States and for strengthening the American economy. The Keystone XL pipeline would have the capacity to transport 830,000 barrels of oil per day to Gulf Coast and Midwest refineries.

Approving the estimated $5.3 billion Keystone XL project would create approximately 9,000 construction jobs. When combined with the southern portion of the Keystone pipeline (the Gulf Coast Project), it is estimated that the total $7 billion pipeline would create:

  • 13,000 construction and 7,000 manufacturing jobs
  • Add $20 billion to U.S. GDP
  • Add $5 billion in taxes revenue to local counties
  • Create an additional 42,000 direct and indirect jobs

Why the U.S. Should Already be the Global Energy Leader

Nearly 40 years ago, United States Congress passed legislation that would cease all exports on crude oil in the U.S. This was done as a way to protect our natural resources, and ensure that the country would have oil in the event of an international incident that would cut off our supply. The belief was that we would conserve what oil we had, and remove dependence on crude oil. However, it did the exact opposite.

production of crude oil

The graph shows the amount of U.S. Field Production of Crude Oil per day from 1970 to 2013. In 1970, production of crude in the U.S. actually peaked and is the most barrels ever produced in a given year. An administration, claiming to preserve our natural interests, did the exact opposite leaving congress puzzled. However, free-market thinkers, are not puzzled. It is clearly visible that U.S. producers of oil realized the shrinking market, and began producing less and less oil. Since it was no longer advantageous to produce oil, they were forced to pull back on production or shut down altogether.

oil rigs

While the Energy Information Administration does not have data for oil rigs going back to 1970, we can see that until 2005 the trend was declining over time. Until the newest energy revolution or “Age of Innovation,” our country was in serious harm of reaching energy dependency. Legislation clearly harmed the oil industry and cost thousands of jobs, all for a result that produced the exact opposite of their intention. In order to achieve the desired effects the administration must do several key things;

  • The first is allowing exports of crude oil. If exports are allowed again, the amount of oil production our country will achieve will be monumental and our lower prices will reflect that.
  • Next, laws must be changed so that a new oil refineries can open in the United States. The amount of innovation and production at existing refineries is substantial, but there has not been a new refinery opened in 40 years. If our production rise is to continue a new refinery must be built.
  • Finally, Obama must open the Keystone pipeline. While many point out the key economic benefits associated with the project such as jobs and lower prices, we must also recognize the diplomatic advantages. Canada wants the pipeline approved as well, and is irritated that Obama has not done so. We must open it to improve relations with Canada, and work with our neighbors in the energy sector. Even Mexico has key energy resources, and with the ability to privatize oil now, we can gain a lot from both of our NAFTA partners.

The volatile nature of international energy markets that includes OPEC members and countries in the Middle East could be avoided with propelling and establishing our own energy sector. We must begin removing the barriers that constrict our energy economy.

EPA Advancing on Numerous Fronts

The Environmental Protection Agency has been all over the new recently with a flurry of activity. Joining the President’s strategy of going forward with their agenda and without Congress, the EPA is taking bold steps while receiving some harsh criticism.

The latest action by the EPA directs bold new standards/regulations on carbon emissions. According to the EPA, by 2030:

  • Cut carbon emission from the power sector by 30 percent nationwide below 2005 levels, which is equal to the emissions from powering more than half the homes in the United States for one year.
  • Cut particle pollution, nitrogen oxides, and sulfur dioxide by more than 25 percent as a co-benefit.
  • Avoid up to 6,600 premature deaths, up to 150,000 asthma attacks in children, and up to 490,000 missed work or school days — providing up to $93 billion in climate and public health benefits.
  • Shrink electricity bills roughly 8 percent by increasing energy efficiency and reducing demand in the electricity system.

While the EPA clearly states some benefits to the new carbon emissions regulations, greater consequences could result from such carelessly calculated action. Electricity rates could skyrocket and the entire economy suffer.

According to the Heritage Foundation there will be serious economic damage:

  • Cumulative gross domestic product (GDP) losses are nearly $7 trillion by 2029 (in infla­tion-adjusted 2008 dollars), according to The Heritage Foundation/Global Insight model (described in Appendix A).
  • Single-year GDP losses exceed $600 billion (in inflation-adjusted 2008 dollars).
  • Annual job losses exceed 800,000 for several years.
  • Some industries will see job losses that exceed 50 percent.

Further action by the EPA has modified the Clean Water Act and directly affects the definition of water ways and the productive aspects of agriculture. EPA also modified the Reasonable and Prudent Alternative (RPA).

The EPA ruling on carbon emission gives the opponents of the Keystone XL Pipeline greater hope that they will succeed in their fight on the pipeline front.

“Going it alone” is a reckless decision for the entire Obama administration. Already reinforcing greater partisan divisions in Washington, completely ignoring entire branches of our government will only lead to greater problems for our entire country.

An All-of-the-Above* Energy Policy

Policymakers frequently tout their support for an all-of-the-above approach to energy generation, yet somehow nuclear energy largely seems to disappear from that conversation in any meaningful way. And many environmentalists — who castigate coal, insisting that we need clean, renewable energy — flatly ignore nuclear power, despite its zero carbon dioxide emissions. Instead, they hold up wind and solar and biofuels — none of which are ready for primetime — as the solution to our nation’s energy problems. Yet, nuclear power is one clean energy source that actually has the ability to provide affordable, reliable energy on a large-scale basis.

Knowing just how much sense nuclear energy makes, it is frustrating to listen to conversations and debates over energy generation that either flatly ignore nuclear power or dismiss it as unsafe. (For some articles that debunk some of the myths and fears surrounding nuclear power, see here and here.) Cutting down on carbon emissions is apparently the premier goal of many unless doing so would mean using nuclear power – something actually effective and affordable.

But last week, Forbes ran an interesting piece by former EPA Administrator Carol Browner. Browner was Administrator of the EPA under President Clinton and served as director of President Obama’s Office of Energy and Climate Change Policy.

Her commentary immediately addressed that frustrating contradiction that exists among many who oppose nuclear energy:

“I used to be anti-nuclear.  But, several years ago I had to reevaluate my thinking because if you agree with the world’s leading climate scientists that global warming is real and must be addressed immediately then you cannot simply oppose clean, low-carbon energy sources.”

Browner notes that “[e]xisting nuclear power plants…emit virtually no carbon pollution and are among the cleanest sources of electricity available.”

If climate change activists are serious in their belief that man is responsible for global warming, then you would expect more of them to rally behind nuclear as an energy source. Unfortunately, an “all-of-the-above” approach sounds nice, but it’s often just a catchphrase that doesn’t necessarily represent a comprehensive energy policy.

(And of course, nuclear power isn’t the only casualty of the “all-of-the-above” refrain: President Obama claims an all-of-the-above approach to energy, yet apparently that does not include support for coal power or the Keystone XL pipeline…)

Keystone to Pass Senate, Not President

The Keystone XL pipeline looks like it will get a vote in the United States Senate really soon. Even the Senate Majority Leader, Harry Reid, is showing support for a vote. Pipeline supporters outnumber their opponents in the Senate, yet lack the two-thirds majority to override a presidential veto.

As the largest infrastructure project that has been proposed in the United States, the Keystone XL Pipeline Project will provide work for over 42,000 Americans who will directly and indirectly help in the manufacture and construction of the pipeline. The pipeline will add $172 billion to U.S. gross domestic product (GDP) by 2035 and create an additional 1.8 million jobs in the U.S. over 22 years.

The pipeline would also provide an additional 830,000 barrels a day of crude oil from Canada. This additional energy supply will help the United States with its current dependence on the importation of over 15 million barrels a day. On top of increased U.S. energy production and pipelines like the Keystone XL, the United States will become more energy independent quickly over time.

The American Energy Renaissance Act

Senator Ted Cruz (R-TX) recently proposed legislation that would harness America’s abundant energy reserves, not only supplying much-needed energy, but also spurring economic growth. This bill, named the American Energy Renaissance Act, is a two part plan with several steps that would halt harmful regulations and barriers to trade and development and expand energy exploration and infrastructure development.

This bill would leave the regulation of hydraulic fracturing in the hands of the states. It would also allow the states to lease, permit, and regulate energy resources on federal lands within their borders. A key provision in this bill develops energy infrastructure by approving the Keystone XL pipeline, and other national and cross-border pipelines, to be built by the private sector. It would open for energy development federal lands such as the National Petroleum Reserve in Alaska and the Coastal Plain of Alaska (ANWR). Finally, it would expand liquefied natural gas exports by facilitating permits and would also end the crude oil export ban.

Senator Cruz’s bill was inspired by the economic boom spurred by the oil and gas industry in North Dakota where the average hourly wage in the industry is $45.90 an hour. The state’s unemployment rate has fallen to 2.6 percent. Allowing the rest of the nation to follow suit would create jobs in the private sector, decrease unemployment, increase national revenue, and give America energy self-sufficiency.

Keystone XL Good to Go, But Wait…

In an article by Rich Lowry of the National Review this week, a new Department of State review of the New Keystone XL Pipeline Application concludes that the pipeline poses no environmental hazard, among other evidence, and supports the construction of the pipeline. Unlike the Alberta Clipper pipeline project, Keystone XL had become the focus of harsh attacks from fringe groups that caught the attention of the White House. Even though Keystone XL would add 800,000 barrels a day to our refineries, strengthen our strategic resources and give an economic boost; the final authorization for the pipeline may never happen — we will just have to wait and see.