Why Jeffrey Simpson is both right and wrong about Keystone

On GHG emissions and the environmental assessment

Today’s Globe and Mail column from Jeffrey Simpson takes on the question of Keystone XL and greenhouse gas emissions.  For the most part, Simpson is correct—the final environmental impact statement is not a green light, its conclusions do hinge on the assumption that the pipeline changes nothing with respect to the oil sands production decision, and it does conclude that oil sands emissions are higher than the emissions from the crude currently being run in the Gulf Coast refineries served by Keystone XL. His conclusions on these issues are not dissimilar from what I wrote in this space when the report was released.

What’s off, however, is Simpson’s conclusion that, “if the Obama administration wants to focus only on emissions within U.S. territory, and not on global emissions, it could argue that saying no to Keystone will help cap emissions in the U.S.” That conclusion is not supported by the State Department report (see Volume 4-14).

GHG_table_kxl_eis

If you look at the figure above, you’ll see the comparison of greenhouse gas emissions between oil sands crude and the Mexican and Venezuelan crude it would displace. The total emissions (right-hand column) are, indeed, higher with oil sands by a significant margin, but the added emissions are all on the production end of the process (left-hand column). In terms of emissions which would occur within the U.S. (refining), as well as emissions which would occur partially within the U.S. (combustion), oil sands crude would be expected to generate lower emissions within the U.S. The environmental assessment also goes on to discuss emissions from the combustion of petroleum coke and other by-products, which are slightly higher with oil sands than with Mexican or Venezuelan crude, but not significantly so.

As the graphic below shows, the incremental emissions associated with crude displacement (excluding the question of whether oil sands crude would be produced anyway and any emissions from rail transportation) are actually less than the difference in total extraction emissions.  In other words, quite opposite from what Jeffrey Simpson argues, the State Department Environmental Impact Assessment shows that U.S. emissions would likely be lower with the pipeline than without it.

Source: State Department Keystone XL Final Environmental Impact Assessment (2014)

So, even if you ignore the issues of whether or not the oil would be produced as Simpson suggests you should, the question for the President coming out of the final environmental assessment is not one of capping U.S. emissions, but rather a question of the degree to which he wants to use U.S. domestic policy to cap emissions in Canada and substitute those for fewer emissions in Mexico and Venezuela.




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Why Jeffrey Simpson is both right and wrong about Keystone

  1. Let’s recall that Andrew (an Albertan with a pipeline sponsorship) brazenly exclaimed on this page a couple of days ago that “The bottom line is that the greenhouse gas section gives the president all the room he needs under his standard to approve the pipeline.”
    Now Andrew has flip-flopped. If I read this correctly he is saying GHGs might be an issue if the President considers the global GHG impact, rather than the domestic GHG impact, of OS WTW emissions vs. Mayan and Venezuelan substitutes.
    So Mr. Simpson (an Ontarian without a pipeline sponsorship) read table 4.14-3 wrong. Big deal. Mixing up domestic versus global WTW emissions is a lesser fumble than flip-flopping.

    • Keep trying, Chris. The “room” for the President comes from the conclusion based on the market analysis, whereas Simpson’s column ignores that assessment. This post uses the part of the EIS which Simpson uses to make his point, and show that his point is, in fact, contradicted by the report he cites. There’s zero flip flop in that. As for the pipeline sponsorship, you know that you can read all about that here: http://andrewleach.ca/conflict-of-interest-disclosure/

      I look forward to your conflict of interest disclosure where we learn who pays your salary and whether or not you’re just talking your firm’s book, which I am sure is forthcoming.

      • Debating Andrew Leach is a personal hobby. My only skin in the game is that as a US resident and taxpayer I paid for some of that State Department report. Maybe I just care about climate more than you do.

        • Thanks for being so forthcoming. We’ll all give your comments the degree of attention they deserve as a result.

          • Uh, people who like to debate you are therefore unworthy of attention? Run that one by me again.

          • I’m happy if people choose to debate me. If people choose to launch that debate with an accusation of conflict of interest while refusing to disclose their own, then I’ll reserve the right to spend my time engaging with others. That all right with you?

          • I commend your engagement with whomever you please to engage with. As a well-wisher, I’d just add that it’s not a good strategy to seem prickly on the subject of industry ties. I googled you and found (http://andrewleach.ca/conflict-of-interest-disclosure/ ) that you’re not what I’d call an oil industry guy at all. But from first encountering you via this blog post and your response to this guy in NYC, I immediately suspected something nefarious. I was wrong but why not just link to that candid post of yours? It’s also beneath you to seem to be attacking Simpson for a factual error. Pointing out a factual error is sufficient.

          • Thanks. Unfortunately, there’s some history here that I allowed to bleed into this thread. I am very forthcoming with my own sources of income and interests in this discussion, so I am prickly with those who repeatedly return to that line while not disclosing their own. I didn’t feel like this was an attack on Simpson – the piece actually says that he’s mostly correct – but rather a well-documented rebuttal to a particular point he made which I believe to be in error.

          • Speaking of attention, its nice to see you are giving those GHGs some attention. You didn’t do that 26 months ago. You thought Keystone opposition was all about the spills and not the GHGs. In hindsight, I suppose you are happy you weren’t that prescient — otherwise you’d have nothing to write about!

            http://andrewleach.ca/oilsands/keystone-xl-decision-more-questions-than-answers/

          • Thanks for reminding me of that piece, Chris. I think it stands up pretty well. I’ll put that up against this any day of the week. http://www.bloomberg.com/news/2012-12-18/blame-canada-s-kyoto-snub-for-keystone-trouble.html Funny though, it only lists your position held before that piece was published. It’s odd that Bloomberg didn’t ask for your current affiliation given the content of that piece or that you didn’t feel an ethical requirement to disclose.

        • What’s Obama doing about the use of coal in the US?

          • Actually it’s going down. Being replaced by gas. Which is why the US will hit its Copenhagen targets and we won’t . Your question should have been why then is the US continuing to export lots of coal. But then the whole western world, Australia and Canada is guilty there too.

          • We export metallurgical coal, the stuff used to make steel. Any thermal coal mined in Canada is used in Saskatchewan and Alberta, (very rarely in Manitoba, I think Ontario and Nova Scotia have stopped (?)) and its use by Canada is also dropping versus natural gas increases. USA use of thermal coal emits approximately 50 times as much GHG as all the bitumen sands combined (IEA report from 2010). That’s why I made my comment. Obama could do much more for the environment by acting in his own country against coal than he thinks he’s doing by not approving the northern part of Keytone XL. By the way, the southern part of Keystone XL is already in the ground, moving oil from Oklahoma to Louisiana and Texas.

            Now if only Baird and Harper would stop disrespecting Obama…

          • But Obama is doing something – that is the point. Meanwhile Harper defers oil and gas regs…real genius chess move that. Shoring up the base in the hopes the next POTUS will be more friendly.

          • Cdns in general have their hands in the tar-sand. It is clear to the likes of FT, Economist, and many other quality int’l publications, but not to Cdns. Proof that mimes, rhymes and mantras vie with hockey for the Cdn mindset.

          • It’s tough to give up what puts bread on your kids table; even when you know you oughta slow down and think it through a bit more.

          • I’m as scathing on the Brits, and I’m a Dual. Ironically, for all that Britannia trips over her own foibles, they appear to be growing GDP considerably faster than Canada. ONS figures are highly suspect (Statscan is still highly regarded), but BoE Guv Carney has buffered those stats, and although justifiably cautious, he believes the gist of the indications.

            Canada? Trying to sell herself cheap, and it appears to be the only option at this point. Devaluation is a boomerang.

          • Ironic that the Harper crowd used to castigate Chretien for living off the low dollar. But then everything’s ironic when it comes to SH.

          • A lot actually. Far more than Canada. Here’s a concept for getting the presidential agreement on XL crossing the border:

            Match US regs. What a concept! Matching the requirements of the Market’s own domestic producers to compete in that Market.

            Obama and Coal: Bloomberg, Dec 10, 2013
            [U.S. Supreme Court justices hinted
            they might revive one of President Barack Obama’s biggest air-quality efforts, a rule that would curb emissions from coal-fired power plants in 28 states.

            In a 90-minute argument session today featuring analogies
            to last-second shots in close basketball games, the justices
            questioned contentions made by challengers to the Environmental
            Protection Agency rule, which targets air pollution that crosses
            state lines.][...]

            http://www.bloomberg.com/news/2013-12-10/u-s-supreme-court-weighs-reviving-obama-coal-pollution-rule.html

            Non-linear executive privilige besides, could you imagine Harper taking Alberta to court to impose a national clean-air and environmental strategy? Do pigs fly?

          • I can imagine Harper doing nothing and praying that Obama does nothing vis-a-vis regulations. Obama is giving Paul Martin a run for his “Excellence in Dithering Award.” He’s had six years but shows no signs of dealing with coal anytime soon and he is quickly running out of usable time.

            I wish I could be more optimistic.

          • Harper and Alberta – it’s them against the world – so, would never happen. What I can’t figure out is why the oil companies aren’t screaming from the rafters.

        • Please continue commenting – we appreciate an American point of view on this subject.

          • LOL!

          • Chris: I take it you’re being facetious…a very silly stance if you wish to sell to *anyone*.

            Cdns seem to have this God given attitude that the world owes them a market. Good luck with your economy based on that attitude. Bad enough Harper scares away as much inward investment as he attracts.

            And someone *please* buy him a new wig. The man’s an embarrassment.

  2. Jeez I dunno Andrew, you still haven’t explained how we intend to push out that Venezuelan and Mexican oil. Are we going to do that Canadian thing…you know, ask them to go home nicely?

    • That was an assumption of the State Department report, but the answer has got to be price. If Canadian shippers aren’t willing to compete with landed costs of imported Mx/Vz crude, there’s not much point in shipping it down there. Markets will be such that, in all but the strangest of circumstances, you’re not going to sail in a boat of heavy, unload it, re-load it with different heavy, and sail it back out to another port somewhere else. Traders tend to be able to figure out how to make money before that transaction happens.

      • ok but don’t these guys have long term contracts. I think i even heard the Venezuelans even own a piece of the refinery business.

        • Yes, some do have long term contracts and yes, the Venezuelans own some capacity. The Gulf Coast region has over 8 million barrels per day of refining capacity, and has imports about about 5 million barrels per day. KXL capacity is 1/10th of total refinery throughput, and the bitumen barrels would be a smaller fraction than that if you assume some of the diluent is returned north. Long term contracts mean you have to buy the crude, they don’t mean you have to run it in a particular refinery, so again, it’s back to price.

          • Thx. Slightly off topic.I’d appreciate a response to the question of keystone not being a gateway to more extraction[as per the state dpt report] The pipeline is supposed to increase capacity by as much as 25%, and i’m very skeptical approval will mean it will come off the trains if market conditions are still demand friendly. The conclusion seems counter intuitive to me. I don’t think McKibben’s carbon bomb scenario can be so easily brushed aside.

          • KCM2 has touched upon the real issue. If capacity increases then so too should the price for Canadian heavy (WCS) since Alberta is less landlocked than before meaning Canadian heavy should trade at less of a discount to WTI. Higher prices mean more production which means more GHGs. Surprisingly, State used WTI rather than WCS as the reference price for oil sands development rates. That is a critical error. Maybe Andrew can talk about the WTI vs. WCS issue and whether the project would flunk the President’s test if the WCS-WTI discount were reduced as a result of Keystone approval?

          • What he said.

          • Not a direct answer to your question, but relevant none-the-less to the skewed transport capacity debate as that pertains to XL and ‘benefit’ for the US. Heavy and light are not necessarily interchangable w/o refinery reconfiguration, a debate in itself, but be aware: (And Obama can most certainly use this to promote “US interests first”)

            Reuters, Oct 16, 2013
            [The company leading the U.S. oil boom in the Bakken oilfields in North Dakota said it would be open to talks with the Keystone XL pipeline project on it carrying a greater amount of domestic U.S. oil instead of Canadian crude.

            TransCanada Corp, the Alberta-based company that wants to
            build the 800,000 barrels per day Keystone XL pipeline to help
            link Canada's oil sands to refineries on the Gulf Coast, has
            said the line would take only about 100,000 bpd of oil from the
            Bakken oil fields.

            Harold Hamm, chief executive and largest shareholder of
            Continental Resources Inc, made headlines this summer
            when he said the pipeline was no longer crucial because it would take a relatively small amount of U.S. oil and because rail and existing pipelines offered alternative ways to ship the oil.][...]

            http://www.reuters.com/article/2013/10/16/usa-continental-keystone-idUSL1N0I60OS20131016

            Some dispute Hamm’s contentions, but this debate has been raging esp in the US Mid-west press for years. Cdns appear oblivious to the Market arguments beyond what they are spoon-fed by the obviously biased major Cdn press.

          • Nobody plays hard ball like the Americans. Another reason it was dumb of Harper to antagonize Obama, or at least not actively give him an excuse to listen to US interests first,second and last.

          • No answer x 2 now…i’m beginning to think Mr Leach doesn’t want to play any more for some reason. Or was the question somehow out of bounds? Beats me. Guess you’re just busy eh.

          • In all fairness, he might be consulting reference.

          • I honestly don’t know.

            Turns out he’s busy at a conference after all.

        • The problem in Venezuela is two-fold. First off is the government control of the oil business that has resulted in a free-fall of domestic oil production. Operating revenues from product sales have been siphoned off to pay for the increasingly absurd socialist fantasies of the Venezuelan government. One example: Gasoline costs pennies per gallon at the pump, but only the wealthy have cars (there were 772 cars sold in Venezuela in January, or about as many as are sold in Red Deer in a month). The domestic gasoline production is actually sold at a tremendous loss, which ripples down the supply chain. The wealthy are subsidized by low fuel prices, the refineries aren’t compensated for the product they sell, the maintenance ins’t done on the production and refining equipment, the production and refining equipment goes off line leading to lower and lower production, which leads to reduced revenues to the government (there’s a Thatcherism at work here having to do with socialism and other people’s money). The second factor is that the idea of a contract being a binding agreement is increasingly rare in Venezuela and the Venezuelan government is increasingly prone to walking away from contracts with foreign businesses and seizing the assets of foreign owned companies. This is also leading to a drop in production. It’s also why it’s real easy to find Venezuelans living and working in the oil patch anywhere but Venezuela. I have personally met several Venezuelan expats with valuable expertise in oil related enterprises who won’t ever be going back unless there is a major change in government down there.

          • Are you making a moral argument for pushing them out of the N.American market? I can see your point but i don’t understand why you’re making it. Who’s really going to suffer if they get pushed out and does it matter since presumably China or someone like that will just step in? It’s a tough call. On the face of it they’re being utterly irresponsible and reckless – unethical – with their birthright. But it is up to the people of Venezuela to figure that out.

          • It’s not about pushing them out of the market, it’s about our own oil companies doing the right thing for their customers, shareholders, and employees. If contract and property law has no force in Venezuela, it’s not prudent for oil companies to invest in production infrastructure there. If the Venezuelan government has no interest in helping to create a stable inflow of revenue from the offshore sale of oil, then we may as well oblige them.
            We all require energy. Canada has an abundance of it that we are happy to sell. Absent a Trudeau-ista style government, investors don’t have to worry about the feds confiscating their production infrastructure, people looking for jobs can be reasonably confident of long-term employment prospects, and our own governments can be assured of stable funding to squander.
            We’re not pushing Venezuela out, we’re competing for customers. Half the key to sales success is simply showing up. Venezuela has shown an inclination to not show up. We’re not only showing up, we’re knocking on the door (Hello! Barry O? Ya wanna buy some oil? We got a trillion barrels of it. How much ya want?).
            If Venezuela wants to sell oil, a choice will have to be made between the Chavista model of creeping catastrophe, or the reversion to a vibrant, free enterprise economy. Even then, you’re looking at a long time turning that ship around.

          • Reversion…in Venezuela!!

            You do know that the elites of SA in general have been screwing ordinary citizens forever don’t you? It is one of the reasons Chavez got away with some of his populist tripe…no one even pretended to care before. There is no reversion to free and stable anything in much of South and central America.

          • You’re right about the elites in SA. That’s why I thank God every day that my ancestors spoke English. Culture matters, and we have to always keep in mind that British liberty is a vital component of our culture and every time we put distance between ourselves and the concept of basic liberty (freedom FROM government), we put our future economic, religious, and political liberties and freedoms in peril. In French and Spanish and Portuguese speaking countries, liberty always comes with a list of caveats about as long as a Russian novel.
            If we want that idea of liberty to take hold in places like South America, we have to export the very real fact that religious and political liberty can only come from and with economic liberty. We do that by living by example. Let those countries that have imposed greater degrees of socialism fail and collapse, while we allow and even encourage the growth of lawful commerce in its’ myriad forms here and abroad where possible.
            It’s about as far from rocket science as it gets.

      • [but the answer has got to be price.]
        Mexico agrees.

  3. OK, I’m going to have to interject here as I see no one has adressed this mistake brought to attention in emails.
    The left hand column of table 4.14-3 Crude Oil Production and Extraction has a very important footnote b:
    Includes upgrading for WCBS oil sands crudes – meaning if you ship bitumen 9(the current proposal) this improperly reports its GHG emissions in Canada rather than the US.

    • It includes upgrading where it occurs, and the report uses a combination of 80% diluted bitumen and 20% SCO for its calculations. As such, the production emissions would include the upgrading emissions for the SCO, but they are not assuming all WCSB oil sands is upgraded in Canada – if they did, then the refining emissions would be much lower than reported.

      • Don’t follow.

        Production (left hand column) includes upgrading where it occurs.

        Say all incremental production shipped to US is bitumen. Wouldn’t then the right hand column indeed be the basis of comparison?

        • The left hand column includes production and upgrading emissions for 157.7k bbl/d of mined SCO, 8.3k bbl/d of in situ SCO (long lake), and production emissions for 664k bbl/d of dilbit from in situ bitumen production. The refining column includes emissions for refining the above. The combustion column includes the emissions from combustion of those refined products, and the right hand column totals them up.

          • Is 20% of new oil sands production shipped as SCO to US a fair forecast? I thought everyone was bailing out of that end of the business.

          • It’s not a question of whether it’s new or not…the question is, if you were to assume that the line only carried oil sands crude (which, given the Bakken link is not likely), does it make sense to assume it’s carrying 20% SCO. It’s a hypothetical on a hypothetical, but given that most people expect the Gulf to be long light oil, it seems unlikely. If you took that assumption out, your production emissions wouldn’t change much, since you’d be adding higher production GHGs but taking out the upgrader emissions, but your refining emissions would come up to closer to Maya/Vz in the US, and you’d be pretty close to even in terms of emissions in the US with the no-project scenario. (changed this last bit to be more clear).

          • Say no pipeline. Refineries configured to handle Venezuela/Mexican crude, and those upgraded in anticipation of Keystone are supply constrained if Ven/Mex continue declining. Wouldn’t those refineries reconfigure/revert and then refine light? I thought some were doing this.

          • Gtg – but points to consider/reply:

            If refineries are supply constrained now, then wouldn’t a pipeline for AB dilbit displace light instead of declining Ven/Mex. For the latter, they’d have to underprice to displace status quo discount.

          • Constrained refinery capacity is going to be another factor Obama has to consider. If the US can only process so much, and a number of heavy refineries are being converted to light/sweet, then why would they export jobs and value when they wish to export their own product? (Export beyond Nafta is imminent).

            It’s the next battleground.

          • Further to my point that IMO displacing Venezuelan/Mexican heavy is a bit of a red herring, have a look at Suncor and what it’s doing with its Montreal refinery (formerly PetroCan).

            Suncor Energy Inc. says it’s bringing lower-priced crude into its Montreal refinery by rail and ship as it awaits approval of a pipeline project that would send Alberta oil eastward.


            Suncor has been considering adding a coker – equipment used to convert heavy oilsands into easier-to-process light oil – to its Montreal refinery. That’s a much lower cost option than building an all-new upgrader in the inflation-prone Fort McMurray, Alta., area.

            “We want to configure the Montreal refinery so we can optimize a broad basket of crudes going into there,” said Williams.

            “We like the refinery. We like the flexibility and we’ll take advantage of whatever crude is the best crude of the day.”

            http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/suncor-hikes-dividend-posts-slight-dip-in-operating-earnings/article16680614/

            So, not unlike what is happening in the US, the process seems to be:

            1) displace foreign light with domestic light

            2)further displace light with dilbit to replenish supply constraints, then build upgraders at existing refineries to further displace light

          • When your follow-up to a statement that everyone is getting out of the heavy oil business is a statement about Suncor potentially putting in a coker in Montreal to run bitumen, I think maybe we’ve reached a good stopping point.

          • Actually, I was quoting your often claim that it is uneconomic to upgrade in AB.

            Yes, quit when logic has you cornered. Rick Omen will always be there to vote you up/me down. My mistake to attempt to re-engage.

          • With the exception of Horizon, there aren’t likely to be any NEW upgraders in Alberta. There is no prohibition per se on shipping synthetic from existing production on a new pipeline. As your quote suggests, the financial case for processing mid-continent heavy might justify adding a new coker in Montreal. Hard to see how that same crude market would lead you to shut down a coker on the Gulf Coast.

          • [...][First, most of the refinery capacity in Eastern Canada is not equipped to run heavy and high-sulphur feedstocks produced by the oilsands, although refits would be possible. Second, assuming that some refits would be undertaken as a less costly alternative to upgrading prior to shipping, additional pipeline capacity might be needed to return diluents used to ship oilsands bitumen. Finally, and perhaps most importantly, there would be the issue of tolls and pricing. If you’re considering moving western canadian crude over 5000km to eastern canadian refineries located on tidewater ports, the key question would be who pays for that self-sufficiency? The transportation costs would likely be $12-15/bbl, meaning Alberta producers would consistently get $12-15 below the world price, or domestic refiners would pay more than
            what they could pay to access crude right off their shores. Figuring out that issue might be just as challenging as building the pipelines...][...]
            http://andrewleach.ca/oilsands/what-would-it-take-for-eastern-canada-to-run-on-western-canadian-oil/

            A question for Mr Leach:
            Is there even yet one company signed to be a customer and/or investor in a West>East pipeline? AB and NB have overtly pledged large amounts, the Feds have covertly pledged, and Irving will gladly trans-ship. Are there any ‘takers’ besides those?

          • See a previous post here Checking the math on energy east.

          • You’re wrong about funding. TRP has firm shipping commitments for over 800k bbl/d, and 100k of that is Alberta’s Petroleum Marketing Commission. Fed and NB gov’ts have not pledged any financial support publicly to the project, nor are they subscribing to ship.

          • [ TRP has firm shipping commitments for over 800k bbl/d,]
            A signed contract?

            I’ll dig for clarification on my claim of provincial monies later.

          • [ Fed and NB gov'ts have not pledged any financial support publicly] “Publicly” is the key word for the Feds. NB? They have, I will clarify further later, and Alberta certainly has:

            [ ...][The commitment, which the energy ministry estimates could cost up to $5-billion in shipping fees called tolls over 20 years, marks the first publicly disclosed agreement for capacity on the TransCanada line. It comes as the province prepares for a marked jump in the volume of crude it receives in lieu of Crown royalties.

            The province collected about 70,000 barrels a day of light oil in
            lieu of royalties in the latest fiscal year. It has enlisted Shell Trading Canada and Nexen Energy ULC under two-year agreements to sell those barrels.][...]

            http://business.financialpost.com/2013/07/04/alberta-commits-5-billion-to-transcanadas-proposed-energy-east-pipeline/?__lsa=625c-5f20

            An MOU is *not* a ‘signed contract’ by any means, as many Cdns now know on the F-35 procurement fiasco.

            My position stands: There are no binding contracts to buy tranpsort on a Canada West-East pipeline, and unlikely to be.

            I’ll dig on NB’s pledge later.

          • Gulf Coast since we’re discussing an ostensible destination for bitumen, it looks questionable either way, albeit a new contract is pending with Aruba, but Eastern US cokers? Are there any left?

          • No idea what you are talking about. How far east? There is limited heavy capacity on the eastern US, but there has been a significant shift in the Midwest with Marathon, BP, and others adding cokers, and there is a new Husky project coming as well.

          • [...][ Five refineries on the US East Coast have been forced to close since 2010, and three more were threatened with closure before they sold at extremely discounted prices. Similar problems face Imperial Oil’s Dartmouth, Nova Scotia refinery, which was put up for sale in May 2012 and will close if a buyer is not found. Management does not believe that the Dartmouth refinery is positioned to compete against the new, low cost refineries on the US Gulf Coast (USGC) and the refineries in the US Midwest, that have access to low cost oil. But major market changes are coming. Energy companies are spending billions of dollars to re-pipe the continent. Once all these pipelines are completed, the Dartmouth refinery will be competitively positioned relative to its peers.][...]
            http://iveybusinessreview.ca/cms/1786/refinings-renaissance/

          • There are no new refineries on the Gulf Coast. The last refinery built on the Gulf is 40 years old. Yes, the re-piping might position Dartmouth a little differently, but it’s going to be a matter of $2-3 per barrel.

          • Dartmouth was a passing reference. Here’s the real meat:
            [Shell Plans Major Expansion Of Texas Gulf Coast Refinery
            Royal Dutch Shell PLC plans to nearly double the size of an oil refinery it operates with a Saudi partner in Port Arthur on the Texas Gulf Coast, making it the biggest in the nation and one of the largest in the world.

            More energy plant capital and people will be coming to the Bolivar Peninsula area. Energy Mecca’s Port Arthur and Beaumont are booming with over 20 billion dollars in new energy plants and expansions. ][...]
            http://www.texasgulfcoastonline.com/news/tabid/86/ctl/articleview/mid/466/articleid/72/default.aspx

            Technically you are right, Andrew. It isn’t a ‘new plant’ per-se. It’s one massive expansion already allowed by their existing permit.

            What do they intend to refine? Cdns would like to think bitumen, but the WSJ reports it quite differently:
            [...][But the expansion is more important strategically for Aramco. In three years, Aramco plans to open the spigots on what could be Saudi Arabia's last giant reservoir of crude: the Manifa field that stretches from the kingdom's east coast into the Persian Gulf. The field, first discovered in 1957 but later mothballed, is slated to pump 900,000 barrels a day of heavy Arabian oil.

            With Port Arthur, Aramco is moving to turn a potential weakness into a commercial strength by ensuring that its shipments of heavier crude have a guaranteed home. As part of the expansion deal, Aramco has pledged to provide at least half -- and possibly all -- of the heavy crude the new venture will need for the next 20 years. That will come on top of the 400,000 barrels a day of Saudi crude that Aramco already ships to Port Arthur and Motiva's two other area refineries. Aramco now ships around 1.4 million barrels a day to the U.S., or roughly 15% of the kingdom's total production.

            "The advantage that we provide ... to a venture in the U.S. is a long-term guarantee of supply, which no one else can do," says Ziad Labban, chief executive officer of Saudi Refining Inc., an Aramco subsidiary based in Houston.][...]
            http://online.wsj.com/news/articles/SB120752550905093569

            Odd. I haven’t seen a reference to that in the major Cdn press.

            See also:
            http://stateimpact.npr.org/texas/2012/07/02/shale-gas-and-the-rebirth-of-texas-gulf-coast-refineries/

          • Not sure what point you are trying to make now. Yes, there has been significant expansion of US refineries. They have some elements (scale) that Canadian refineries don’t, but otherwise no reason eastern canadian refineries could not employ some of the same business model. This is why, as Dott cites, Suncor is contemplating a coker at Montreal.

          • Indeed many are, led by no-less than Valero, which although a major stakeholder in XL, is now downplaying XL’s importance/relevance.

    • If you want to get into their accounting, one thing you could check is that it seems at first glance that they are assuming in some sections that diluent is recycled back but in other sections that KXL barrels replace Maya or Vz barrels 1:1. If diluent is recycled back, then your entire emissions profile would be different, but you’d only be bringing in 475k bbl/d of bitumen net of diluent and the SCO share.

  4. [The total emissions (right-hand column) are, indeed, higher with oil
    sands by a significant margin, but the added emissions are all on the
    production end of the process (left-hand column). In terms of emissions
    which would occur within the U.S. (refining), as well as emissions which
    would occur partially within the U.S. (combustion), oil sands crude
    would be expected to generate lower emissions within the U.S.]

    I’m sorry? How does that reduce *overall global emissions*? You’ve just made Simpson’s point. Obama isn’t approaching this on US emissions alone.

    So by Leach’s logic, if Canada did the refining, and just shipped the refined product to the US, then it would reduce US emissions even further.

    Except it’s not being approached that way. The US is moving beyond offshoring their pollution. What a concept…

    Canada should try that some day. In fact, Canada should try living up to her own claims. That would be news…

    • Re-read Simpson: “if the Obama administration wants to focus only on emissions within U.S. territory, and not on global emissions, it could argue that saying no to Keystone will help cap emissions in the U.S.” – the report is clear that the opposite is true. Hence my statement at the end that Obama’s decision will be, as it should be, based on total GHG impacts among other impacts.

      • And, yes, if emissions can occur either in the US or Canada, and they occur in Canada instead of the US, that would reduce emissions in the US.

      • Since you are so engaged in quality discussion, I owe that to you, and to this blog. So many Cdn blogs on the subject descend into uninformed rants. Already you’ve earned my respect by stating the most bearing factor: “Markets”. And on that point, things are changing rapidly as per projections and profitability.

  5. Whew.
    Lots of huff n’ puff on this one.

    Harper with his evil, smug assessment was right; the best way forward for the USA will become the way forward, protests or not. Geopolitics dictated that as fact a long time ago. The environmental debate on the issue is a dollar short and five decades late.

  6. All this obsession with CO2 emissions ignores the fact that the role of CO2 in the climate has been very much deprecated by the observations not matching the theories.

    As CO2 increases unabated:
    en.wikipedia.org/wiki/File:CO2_data_mlo.svg

    The temperatures that were supposed to be driven upward by CO2 have instead stagnated for well over a decade:
    http://www.cru.uea.ac.uk/cru/data/temperature/HadCRUT4.pdf

    Whatever else this tells us, it is clear that CO2 never was the Great Climate Boogeyman it has been made out to be.

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