US Report: Keystone Pipeline Will Not Affect Canada Oil Sands Growth

US Report: Keystone Pipeline Will Not Affect Canada Oil Sands Growth


WASHINGTON, Jan 31 (Reuters) - The proposed Keystone XL oil pipeline is unlikely to increase the pace of Canadian oil sands development, a U.S. State Department study said on Friday, raising pressure on President Barack Obama to approve a project environmentalists see as a major climate change problem.

The massive 11-volume environmental impact study released on Friday did not recommend whether President Barack Obama should grant or deny an application by TransCanada Corp to build the $5.4 billion line, which would transport crude from Alberta's oil sands to U.S. refineries.

But a State Department official who briefed reporters ahead of the report's release said that blocking Keystone - or any pipeline - would do little to slow the expansion of Canada's vast oil patch, maintaining the central finding of the State Department's preliminary study issued last year.

The report's publication opened a new and potentially final stage of an approval process that has dragged for more than five years, taking on enormous symbolic political significance, potentially helping define Obama's legacy.

With another three-month review process ahead and no firm deadline for a decision on the 1,179-mile line, the issue threatens to drag into the 2014 congressional elections in November. Obama is under pressure from several vulnerable Democratic senators who favor the pipeline and face re-election at a time when Democrats are scrambling to hang on to control of the U.S. Senate.

The report reaffirmed the idea that Canada's heavy, bituminous oil sands reserves require more energy to produce and process - and therefore result in higher greenhouse gas emissions - than conventional oil fields.


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Philippe | Feb. 3, 2014
The Keystone pipeline project has become a political issue and in no way is more or less an ecological disaster in the making any more than any other oil or gas pipeline. This pipeline project is a political statement made to protect against a potential disaster that may never exist. The ecological belief that climate change is the reason why this pipeline should not be built is a far fetch idea without any consensus. The ecological movement is a fringe ideal with a political point of view beneficial to the US government in place. The economics of this pipeline is interesting. Can this pipeline produce a profit over its potential life and what alternative can compete? For a pipeline to be profitable it must secure patronages over a predetermine length of time at a set destination. The patrons will be required to pay a set fee for a volume of dilbit crude, regardless of the volume processed. Dilbit is bituminous sand crude diluted with 30% light crude oil, so it meets the pipeline industry crude specification. The potential competition is the rail road moving the railbit crude to infinite destinations. Railbit is bituminous sand crude diluted with 20% light crude oil, so it meets can be pumped in and out of rail tank cars. The oversupply of crude production in the US and the inability to export crude oil may lower the crude price to the point where by the diluent cost plus the transport of this diluent to the mixing area, will make the price of bituminous crude at its ultimate destination none economic. The case of the Keystone pipeline can become uneconomic for these reasons. Should the US crude be allowed to be exported will change the US O&G industry, for the better. It is pure speculation, at this time, to believe that the present US government would accept to abrogate the crude oil export law. In 2016 should a new government be more incline to the export of crude oil, the Keystone pipeline may be economic.

Ron Heffernan | Feb. 1, 2014
Yeah that "steam" injection sure is dirty. Impeach the imposter POTUS. For the sake of the free world.

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