The installers have been digging up parts of the new southern segment of the Keystone pipeline that only recently have been installed. It seems that the existing leg of the Keystone has spilled more oil in its first year than any other first-year pipeline in U.S. history (HuffPost).
With the tens of billions of dollars this pipeline will make for these companies each year, you’d think they’d spend a little extra to build it right. Or that they’d care about using new pipe that’s up to specs. We do have specs.
I can just imagine the mid-level manager’s thought processes on this. ”Hmmm…I’m making a decision on a pipeline that is involved in an extremely political battle, that may have a huge impact on the American economy, that could make tens of billions of dollars a year for my company but that could, if done badly, destroy the drinking water and irrigation supply for the bread-basket of America, and that even has international diplomatic ramifications.”
“So, yeah, I’ll save a few bucks and go with the crappy pipe.”
I understand making money. I even understand greed. But I just don’t understand the excessive super-callousness and super-greed required to make these kinds of bad decisions that risk so much just to save what amounts to a pittance on top of already enormous annual profits. These short-sighted decisions do nothing to add to shareholder profits or to the long-term bottom line of the companies.
You’d think that a $45 billion-a-year prize for the U.S. would warrant spending a few thousand dollars more for a decent length of pipe. Just the political capital alone that would come from demonstrating you care at all about the environment might go a long way to getting the President to approve such a Golden Goose.
Instead, this pipeline is becoming a Presidential Sophie’s Choice. It pits the environment against the economy. Greed against caring. The United States against Canada. Conservative against liberal. Labor against Progressives. There really is no good choice here.
But the economic and energy security arguments used in favor of the pipeline aren’t really that strong. The surge in domestic natural gas production, the rising global cost of oil, and the economic bust of 2008 have changed the energy equation dramatically. America has been steadily reducing its oil addiction. Oil consumption has dropped by 2.5 million barrels a day over the last eight years. That’s equivalent to closing a Keystone XL every three years.
The $45 billion annual revenue anticipated to be generated by the pipeline in the U.S. could be tripled by just reversing the sequester alone. The pipeline is not a make-or-break deal for the American economy or even our energy security.
But it is for Canada.
Canada’s Conservative government, led by Prime Minister Stephen Harper, has its power base in the oil-rich province of Alberta. Harper went so far as to officially withdraw Canada’s support for the Kyoto Protocol on climate change, which was agreed to by a previous Liberal Canadian government (NYTimes).
The pipeline decision represents an historic moment in Canada’s relationship with its most vital ally, the United States, and the key legacy of Harper’s tenure.
In the U.S. the situation seems reversed. The President wants to support addressing climate change but the economic issues seem to be pressing him to approve the Keystone XL as well (Matt Wald, NYTimes). These two seem mutually exclusive. If the President does not approve the pipeline, or puts the decision off, it will become a major issue in the next round of elections, especially for the 2016 Presidential campaign.
As Ian Austen puts it in the NYTimes, President Obama faces a lose-lose choice between alienating environmental advocates who overwhelmingly supported his candidacy or causing a deep and perhaps lasting rift with Canada.
The proposed northern extension of the nearly 2,000-mile Keystone XL pipeline would connect Canada’s tar sands to refineries along the Gulf of Mexico, moving almost the equivalent of America’s total import of similar crude from Venezuela. This would seem to be a positive for the U.S.
If most of that oil actually stayed in the U.S.
The Keystone XL is designed to promote exports of Canadian tar sands oil and its refined products to non-U.S. markets, especially China and Latin America. China is now the largest foreign investor in Canada’s tar sands, representing 52 percent of all foreign investment since 2003. Ironically, the XL pipeline may increase gasoline prices for Americans and reduce national energy security – not bolster it, as promoters claim (Public Citizen).
Of course, the pipeline would still make huge profits and there would still be significant jobs in the U.S. during construction and refining. But the U.S. would carry the greatest share of the risk while getting the smallest share of the benefits (Kevin Grandia).
And then there’s the properties of this oil itself that enter into the risk portion of the analysis. Compared with conventional crude, heavy oil extracted from tar sands has to be at higher temperatures and pressures in order to flow. And still the tar sands have to be boiled to separate the heavy oils, and then diluted with light hydrocarbons and methane to flow. Since this mixture is the most viscous, sulfurous and acidic form of oil produced today, it may just be a bit hard on the pipelines. Again, riskier to the United States.
Which may be no problem at all if the pipelines are installed as designed, with epoxy coatings and other corrosion-reducing technologies. But we keep installing crappy pipe and cutting corners.
All in all, the cost/benefit is not in America’s favor.
The tar sands are also a contentious issue within Canada (John Richardson, Esquire). Building a pipeline that takes the tar sand crude to the Canadian Pacific Coast is meeting fierce citizen resistance. The Canadian government is employing rather draconian tactics in squashing this opposition, including destroying scientists careers if they discuss scientific results that do not support the tar sands development (Thomas Homer-Dixon). This is a different kind of cost to that country.
I’m not sure why Canada doesn’t just build refineries near the tar sands and then move the refined products to the coast where new port facilities would be built to handle the super-tankers from China. It would be a lot more lucrative for Canada in the long-run, and less environmentally risky. But it would require more up-front capital and construction and take a bit longer than using our refineries.
We could actually help with that. A dialog between Canada and the U.S. about this alternative could be the beginning of a win-win solution to both the political and economic issues.
The pipeline battle is a nasty, brutish fight whose technical and economic aspects are totally overshadowed by political wrangling. I care about Canada and China, but first we need to get this right for America.
Original Article
Source: forbes.com/
Author: James Conca
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