Out With Bad Arguments – In With Energy Security

Mark Green
Posted December 27, 2013

The long-delayed Keystone XL pipeline and whether President Obama will agree with a strong majority of Americans who believe that the full project is in the U.S. national interest landed on a couple of year-ending lists of top energy issues, here and here, no doubt reflecting the politics surrounding the pipeline’s five-year federal review.

Much of politicizing has been fueled by opponents who say stopping Keystone XL will stop oil sands development. The U.S. State Department disagreed in its most recent review, citing key economic factors that argue oil sands will get to market with or without the Keystone XL. The dynamic already is at work.

Last week, Canada’s National Energy Board recommended approval of the Northern Gateway pipeline to bring as much as 525,000 barrels a day of oil sands from Alberta to British Columbia. At the same time others are making plans to build loading terminals to service oil sands-bearing railroad cars. Demand for supply is driving the infrastructure needed to deliver that supply.

The question for the U.S. concerns the impact of Washington’s never-ending deliberation over the Keystone XL, even as other infrastructure for delivering oil sands moves toward reality.

First, remember that the U.S. Energy Information Administration projects that oil and natural gas will supply 62 percent of our energy in 2040, reflecting their desirability as fuels based on availability, reliability and superior energy content. Second, Canada is our largest source of imported oil. Put those two together, and there’s a compelling argument that the U.S. should do everything it can to strengthen its energy partnership with our neighbor and ally.

Canada wants that partnership to grow, but it’s also looking at other options while Washington dithers over the Keystone XL. Platts reports:

The “landlocked” Canadian heavy sour crude, when the Northern Gateway pipeline comes online, will allow greater shipment of Canadian heavy sour crudes to Asia, the region in the world with the highest demand growth. China and Asia in total are expected to add slightly more than 3-million b/d of refining capacity between now and 2016, according to OPEC. Enbridge is expecting the Northern Gateway project to be in operation by 2018. … The Northern Gateway pipeline will reduce Canadian heavy sour crudes’ dependence on the US Midwest and Gulf Coast … “The need to reduce dependence on the US market is the key to ensuring Canadian heavy sour crudes obtain market value and not fall into a boom bust cycle,” said a Canadian producer.

Oil sands development is an important part of strengthening U.S. energy security. We could see 100 percent of our country’s liquid fuel needs met domestically and from Canada by 2024 with pro-energy development policies – including full development of Canadian oil sands. That development is going to occur. The question is whether that oil will come to the U.S. or go to other markets.

The Keystone XL always has been a no-brainer in terms of jobs, economic growth and increased U.S. energy security. A recent editorial in the Las Vegas Review-Journal connected proposals to extend federal unemployment benefits with the benefits of pro-energy development policies, including approval of the Keystone XL:

The country needs jobs, not more jobless benefits. Congress and the White House have completely lost sight of this. Washington could take many steps to put Americans back to work almost immediately. President Barack Obama finally could authorize the $7 billion Keystone XL pipeline, a private-sector project that would employ thousands directly and thousands more through multipliers. Congress could open vast amounts of federal land to oil and gas exploration and allow states besides North Dakota to share in the country’s energy boom.

The Keystone XL has been studied – multiple times – and its economic and energy benefits are undeniable. It wouldn’t significantly impact the environment, the State Department has found – multiple times. Oil sands development is ongoing and will continue. All that’s left is seeing whether the U.S. be the beneficiary in jobs and energy.