In Keystone XL Debate, Obama's Warning on Oil Exports Rings Only Half True


Nov 17 (Reuters) - President Barack Obama's sharpest criticism yet of Keystone XL this weekend included a controversial contention that the huge pipeline would be used to pump Canadian oil sands crude to global markets, not to U.S. refiners.

TransCanada Corp., the pipeline giant that has been waiting six years for U.S. approval to build the $8 billion line, strongly denies it and says it is constructing the 1,179-mile (1,900-km) conduit only to serve import-dependant Gulf Coast refiners, weaning them away from supplies of heavy crude from Saudi Arabia and Venezuela.

The truth, experts say, lies somewhere in between.

The 830,000-barrel-per-day (bpd) pipeline helping link Canada's oil sands to the Gulf Coast was conceived six years ago to supply U.S. customers. Since then, however, the U.S. shale revolution has turned the market on its head: oil flows have been rerouted and refiners have retooled.

Canadian crude once urgently sought to reduce a growing U.S. reliance on foreign oil may now end up being a surplus commodity in a region suddenly awash in oil. Although most American shale crude is light and sweet, unlike Canada's viscous oil sands', it is already displacing heavier crudes, data show.

"Some of it will stay in Gulf, some of it will leave," said Sarah Emerson, president of Energy Security Analysis, Inc. in Boston. "I don't think anyone would have built if they thought the oil was just going to stay in the Gulf Coast, that is like bringing coal to Newcastle."

Obama's comments at the weekend emerged amid an acceleration in congressional efforts to force a final decision on Keystone XL, which requires State Department approval because it crosses an international border.


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Tom Sandin  |  November 17, 2014
President Obamas argument that the Keystone Pipeline will transport Canadian crude oil for export is correct but the following arguments are also valid: ­The same amount of crude can be exported by building a pipeline to the west cost of Canada but it is objected to by the Canadians. ­Anybody favoring it have been provided political contributions by the beneficiaries. ­Refineries at the Gulf Coast are already working to full capacity so there is no benefit to them. ­The pipeline may become a catalyst to expanding the petrochemical plants in the Gulf Coast area and increase the already much polluted air.