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Keystone XL prospects brighter after reroute

pipeline, keystone XL, protesters, Parliament Hill U.S. Rep. Tom Griffin, R-Ark., speaks during a news conference on Capitol Hill in Washington to urge U.S. President Obama to approve the Keystone XL pipeline on Tuesday, Nov. 15, 2011. (AP / Evan Vucci) Demonstrators gather during a protest against the Keystone XL Pipeline outside the White House in Washington on Sunday, Nov. 6, 2011. (AP / Evan Vucci) This map shows the proposed Keystone XL pipeline route, which originates in Hardisty, Alta., then cuts diagonally across the southwest corner of Manitoba before entering the U.S. (TransCanada) This map shows the proposed Keystone XL pipeline route, which originates in Hardisty, Alta., then cuts diagonally across the southwest corner of Manitoba before entering the U.S. (TransCanada)
pipeline, keystone XL, protesters, Parliament Hill

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Date: Tuesday Nov. 15, 2011 6:55 PM ET

WASHINGTON — Even though Nebraska is finally on-side with TransCanada Corp.'s Keystone XL crude pipeline, experts say oil producers who would use the proposed Alberta-to-Texas line should keep their options open.

The big oil companies shouldn't just rely on the planned megaproject as the only way to get the large amounts of oilsands crude coming from northern Alberta to markets in the next few years, the experts said Tuesday.

While the refining centres in the U.S. Gulf Coast are key, getting Canadian crude to the energy-hungry markets in China and other Asian countries is important as well, said energy consultant Lance Mortlock.

As well, finding markets by using rival pipelines, truck, rail or other means also provides more options.

"Dependence on one customer is a risky strategy in any industry that you look at, because if that customer changes its buying habits, you are exposed tremendously to those changes," said Mortlock, with Ernst & Young's oil and gas practice in Calgary.

Responding to news last week that the State Department would delay its decision on Keystone XL until early 2013, several Canadian politicians -- from the federal natural resources and finance ministers to the premier of Alberta -- stressed the need for a West Coast outlet so Canadian oil can be shipped by tanker to the U.S., China or other parts of Asia.

Even if the issue of getting Canadian crude to the Texas coast is resolved, Canada can't stand idly by while other countries manoevre to supply energy to booming Asian economies, Mortlock said.

"We need to be careful that we move quickly, but at the same time do the due diligence around the environmental impacts," he said. "But if we move too slowly then we may miss the boat. We need to be careful of that."

Enbridge is planning to build a line between Alberta and the northern B.C. port of Kitimat, though that proposal has run into vehement opposition. Thousands of people are set to speak at National Energy Board hearings beginning in January, signalling the regulatory process could drag on.

Kinder Morgan is looking to expand its Trans Mountain line to Vancouver and Washington State, though that proposal is in its early stages, too.

Mortlock said it's not an either-or choice between sending Canadian crude to Asian or U.S. markets.

"We need both. We need to diversify our supply base."

Keystone XL would be a vital conduit for Alberta oilsands producers who want to send their crude to the lucrative U.S. Gulf Coast market. But if the project is delayed for long enough, shippers may be forced to find other ways to get their oil to market.

Not only is oilsands production expected to rise in the years ahead as operators such as Imperial Oil, Canadian Natural Resources and Cenovus undertake major expansions to their projects.

But output is also growing in the Bakken region. The Bakken is an oil-rich zone that underlies parts of Saskatchewan, Montana and North Dakota.

Recently, landlocked North American crude varieties have been trading at a steep discount to water-borne crudes such as Brent from the North Sea. An outlet for oilsands and Bakken crude to the Gulf would supplant oil the United States imports from overseas, thereby improving the bottom line of North American producers.

TransCanada rival Enbridge Inc. (TSX:ENB) is planning two U.S. pipeline projects -- one from the Chicago area to Cushing, Okla., and one from Cushing to the Gulf Coast -- that together would compete with Keystone XL.

Enbridge CEO Pat Daniel said last week it's likely enough customers are interested in the proposals -- called Flanagan South and Wrangler, respectively -- for both to move ahead. He also said Enbridge's existing systems may be able to take on more oilsands volumes in the absence of Keystone XL.

"Ultimately, down the road, I think that there could be room for more than one pipeline project," said CIBC commodities strategist Katherine Spector.

Already, companies have managed to move crude out of the oversupplied U.S. Midwest to the Gulf by rail, barge and truck, Spector said.

"We all knew they could do a bit of that, but I think they've managed to get creative and do a lot more of that than people expected," she said.

"And you can see why -- if you get US$15 more per barrel down in the Gulf, then you're going to think real hard about how to move those barrels."

The U.S. State Department was expected to decide on Keystone XL by the end of this year, but said last week it would delay its ruling to find a new route that avoids the ecologically sensitive Sand Hills region.

TransCanada and Nebraska legislators said Monday they would work out a new route together, with the state conducting its own review. While TransCanada believes the move will expedite the process by as much as six months, the State Department is sticking to its early 2013 time frame for now.

Lanny Pendill, an analyst with Edward Jones in St. Louis, said the development was positive, but not overwhelmingly so.

"Officially it has not changed the time line and this extended time line is what's putting the project at risk to competing proposals," he said.

The Cushing, Okla, storage hub is brimming with crude, and a way to get that down to the Gulf is sorely needed now, he said.

"I think it's going to take more than one pipe. So to the extent, let's say, the decisions are delayed and shippers decide to jump to a competing proposal, I don't think that means that TransCanada doesn't build this pipe," he said.

"It may just mean that they're not the first pipe, because I think we're going to need more than one major pipe going to the Gulf coast anyway."

Comments are now closed for this story

Stewie
said

Rather than trying to give away the oil now, sit on it until world supply runs low, profits would be much higher when everyone else is out.


Vancouverite
said

I always laugh at the green movement demanding we stop things like this pipeline which creates a lot of employment and revenue for the provincial and federal coffers (schools, health etc.)....but the hypocrites are always the first to protest when there are no monies for health and education etc when mega projects like this are cancelled. Guess what people, sitting around a tree singing Kumbaya, smoking drugs is not going to create jobs and revenue. The resources are there for a reason...to be used.


Cynical
said

The Alternative "we build the pipeline to the brand new refinery in Manitoba" would work well, given the abundance of oil in South West Manitoba and South East Saskatchewan. Except there is no "brand new" refinery in Manitoba. There is, however, a good clean energy supply to power such a plant. Build such a plant near the Pipeline center at Cromer, MB, routing any new pipeline to that place for refining into whatever, then ship value added product and keep the profits - and the jobs - in Canada. Too bad NIMBY will prevent that happening.


Wageningen
said

GO environmentalists go! This project needs to be stopped!Furthermore we shoudn't need the pipeline itn eh first place. lets refine our own oil, while we continue to do research to design and produce clean energy


Glenn in Winnipeg
said

the impact of removing the oil from oil sands from the daily US supply will mean the Americans will have to import from an additional 1.5 million barrels of oil a day, today and 3 million barrels in several years. They will have to turn to their mid eatern sources. Some of that money used to purchase these mid esatern volumes goes to fund the terrorists that the UN/NATO is fighting. How does the environmental movement rationalize funding the deadly acts of the terrorists on innocent civilians around the world? acts like those that occurred on 9/11 on American soil? The government has legislation that makes contributing to terrorist organizations a criminal offense. These oil purchases fall into supporting criminal activity.


Doug On
said

Now that Nebraska is letting Obama off the hook we'll see if he is willing to show real leadership or not. Since the Republican party is shifting to the political right he was not going to lose the votes of environmentalists and lefties anyway. The stupid decision to delay the project was actually going to cost him the support of unions and independants. Is he not clued in enough to want this issue behind him before hext year's election? If not the GOP will nail him on the issue of security of supply and employment; not to mention the nations dependance on Arab oil.


Dixie from Alberta
said

We can always sell it elsewhere if these enviro's would rather have conflict oil over a safe and reliable source from Canada. China & India I here needs lots more!! Its coming out of the ground and we are going to sell it somewhere...take your choice.


Don in Edmonton
said

I guess all these second-rate movie stars and envronmentalists endorse and condone the use of their military and the loss of these young lives so that they can drive their hummers and heat their mansions to get that great clean mideast oil. Hey people there is no clean oil. oil is oil, and it is dirty.There is enough oil in the oil sands to supply north america at todays rate of consumption (25 Mil/day) for over three hundred years. If the U.S. put as much effort into tring to appease the middle east as it could in the enhanced production of the oil sands, we could supply them with about 10 million barrels a day. This is all a result of a spineless and weak President. All you occupiers go occupy a JOB!


Adam
said

Environmentalists would not be happy unless we were all back to horse and buggy in a state of peasanthood. Oops... sorry my mistake....we would not be allowed to make use of a horse for work.


Doug
said

Oil and methane gas seep continually from the ground in California including the Pacific beaches and in downtown LA. All of these so-called environmentalists look over top of what is happening in their 'back yard' and only see the issues of others.

There state of the Ogallala aquifer is in jeopardy due to overuse and pollution from intensive farm and cattle activity, the recharge is continually negative year after year; pipelines have no effect on this.



Tom M
said

Calm down i garantee as soon as we make a deal with someone else the US will be knocking on the door beside's do you think america want's China next door think about it.And if the US want's it there just going to take it who's going to stop them.


Brian
said

I say cut off the U.S. to Canadian oil, period. There are enough people in China starting to drive we could have a market there for years to come.


Jerry
said

Is it more enviromentally friendly to ship oil accross the oceans?


cleaneroilthanyouthink
said

hey "a whole..." check your facts, talk about blowing things out of proportion. Have a look at open pit mines in the world, the oil sands don't even come close to that damage, the Amazon deforestation - look at what is done after the mining is done it is reclaimed... do some homework and stop relying on misinformation to make your points.


JP
said

Environmentalists are the enemy of humanity, and of the planet.


Rich
said

TCPL should have anticipated stiff opposition from Nebraskan's when they first proposed the route. The Nebraskan's had a legitimate concern with not wanting to risk their main water supply with the installation of this pipeline. Many of them said they were not against the pipeline they just thought that by putting it through the aquifer, the risk was too high. Now that the pipeline has been rerouted opposition from groups other than hard core fanatic environmentalists should subside. Personally, I don’t blame the Nebraskan's as I would not want my water supply at risk, just to save some multinational corporation a few bucks, when there is a viable alternative. However, the environmentalists are still on of Obama’s biggest supporters and I am sure he is not going to risk re-election by fast tracking the pipeline. If TCPL hadn’t tried to push through this original controversial route the environmentalists may never have gotten the traction they now enjoy.


George Thompson
said

Who knows? We may be at a watershed moment when finally we stop enabling greenhouse gas producing fossil fuels and turn to enlightend transit plans, alternative energy sources and a very slow recovery and healing for the planet earth. Future generations will thank us for the right decision today. Take the long view people. Stop future pipelines.


KK Calgary
said

TO: A whole lot of planet rape going on: Not sure where you are getting your information from but I would check the accuracy of it as you blew any credibility when you called it the "tar sands" it is the "OIL Sands"



mike
said

You enviormentalists and goofballs should think about how you are going to heat your caves or cook. Remember that the trees will only last until your fire goes out.


Lz in Edmonton
said

Why NOT build the refineries here? Answer: Alberta would need more of and cause more: Power plants, more water usage, more carbon emmissions, require a larger workforce, build more roads/bridges/hospitals/schools. There are perfectly fine refinaries in the US that can handle the raw product. I am NOT against building pipelines or refinaries, but one has to understand, to have VALUE added products, one MUST invest in the infrastructure to the tune of about $100 billion to $500 Billion. Does anyone have some spare change right now? Anyone? I didn't think so. Alberta also has a 5.5% unemployment rate. we would need to import hundreds of thousands of workers along with their families. Do you not think that would cause some stress to the system? Do we want that? Personally, we need two pipelines: One to the west coast, one south. Whomever offers us the most, its yours. there is enough oil between Peace River and Saskatchewan for 200 years. No joke.


jesperson
said

I visualize these pipe lines as giant drains going from Canada into the US; draining all our resources out of our country and unto the theirs. How very symbolic......


Len
said

I consider the environment. These, however, are the same people that accept the coal-fired electricity plants in the States that spew SO2 into the air that reaches Canada; who accept the dirty oil from the California tar pits; who accept the off-shore oil rigs. Tit for tat! I wish we didn't have the tar sands also and the oil was to be found underground like most places but it is what it is. The American environmentalists don't really know what they want.


A whole lot of planet rape going on
said

It's funny how the people who's only interest is their bank account are labeling the opponents of this grotesque misadventure 'yahoos'. Oh well, I guess they're doing what their bosses have told them to do. Believe it or not folks, the US has a right to say no to any foreign country who want's to build a pipeline on their territory. There's a fundamental shift in philosophy happening in America. They don't want to be the major planet rapists they've been for the past century. The Alberta Tar Sands is planetary rape on a scale unprecedented since the destruction of the Amazon Rain Forests for cattle farming. It's Chernobyl and The Exxon Valdez cubed. Drilling a hole in the ground and extracting crude is one thing...destroying millions of acres of Planet Earth and using 5 times the energy recovered to steam tar out of sand is another. Most of the world will reject Alberta's dirty oil the way we reject killing whales for sport. Even China would rather buy Saudi oil than tar oil.


More insanity
said

Do the world a huge favour and FIRE AN ENVIRONMENTALIST and force them to earn an honest living for a change.


Scott (Alberta Party country)
said

How many of these "environmentalists" wear clothes made with some sort of petroleum product, Drive a car or ride a bike to get to the protest or use anything whatsoever that has a lubricant? Hypocrites all of them.


Bruce T.
said

Of course, Pipelines that cross the U.S. currently would be spilling 'Clean' oil. No environmental damage there . . .


NM from AB
said

I have to say I don't support the environmentalists but I do support killing the project .......... Why because we should be building refineries and selling them refined oil .... or at least upgrading it here and then shipping it to the states. By sending raw bitumen to the USA we lose billions in potential revenue and 1000s of VERY high paying jobs ..... Build the upgraders and refineries here and then sell it to the states !!!


Lz in Edmonton
said

Time for us to put up billboards all over the US that show pictures of dolphins dying in the gulf of mexico, or pictures of the women of the middle east, or pictures of the oppressed in Nigeria, or pictures of WAR in Iraq, or pictures of the people in Venezuela. Then finally pictures of the people of Alberta and ask; "What is True dirty oil? We at least take our responsibilities seriously; Can we say the same for the rest of your OIL supply?"


Steve T
said

When are Canadians going to stop exporting our resources and instead build facilities that create jobs here and provide tax revenue to produce end product? Why do we need to export the oil to the US when we could just as easily (after infrastructural investment) create the end product in OUR country and export the finished product??????


G
said

Who gave environmentalists a voice anyway?


TEA from Sask
said

We need our friend America now more than we ever did...


baeto
said

And while the American environmentalists are attacking the tar sands they should also focus on their own coal burning energy sources. The State of California produces more CO2 than the tar sands. Maybe the pampered Hollywood crowd can remind us of this deplorable situation!


The Alternative
said

How about this, we build the pipeline to the brand new refinery in Manitoba, then truck/rail the finished product to you at 5 times the price.

How many of these same protesters will be calling for Obama's head for not creating new jobs come election time?

Where celebrities speak, the sheep will gladly follow...


Wes Sask.
said

How do the protesters get to Washington? Do they use the horse & buggy or did they fly on airplanes or drive in autos?


bcmapleleaf
said

MikeW, the oil piped through Keystone isn't even going to supply "hundreds of millions of Americans" ... it's going to the Gulf to be shipped elsewhere


CD from AB
said

Hugh - spot on.If they want to freeze in the dark (heavens they wouldn't want to cut down tree or mine that dirty coal) then we will find other markets.It just such a stupid thing to watch a President who lacks vision. Doesn't sound like he is the same guy at his inaugural speech.


Elizabeth
said

I love the sign "Occupy Earth"...isn't that what humans have been doing for the past thousands of years? Perhaps this group and the whole Occupy group need a new motto. How about Occupy Mars? That way they can set up their new community without the corporations they hate so much..I hear the space shuttles are available. Have to go now and Occupy My Kitchen. I have kids to feed.


Jack @ Ottawa
said

It would appear that these enviromentalists are blinded by their short-sighted ideals & seem to have their collective head in the sands.Hopefully, it might be the tar sands & ...............


URU
said

I think we should occupy those protest occupying public places. Lets occupy their homes and private properties to make it fair. Occupy the occupiers or the occupants.


cleaneroilthanyouthink
said

So it is better to risk the oceans of the world (how much green house gas is generated by shipping by the way), instead of a minor risk to a break in the pipeline where the oil will flow - oh, maybe 100 feet because it is so thick??? What a bunch of yahoos!


Hugh
said

Tell the Americans to freeze in the dark. We don't need them.


MikeW
said

Go ahead fight till the death of the project. Let a few thousand disgruntled idiots dictate the supply of oil for the remaining hundreds of millions of Americans.Advice to Trans Canada, build the pipe line to the west coast. Have China and India line up for well beyond the 700,000 barrels you would have supplied the U.S.When the Israelis or Americans strike Iran over the nukes, the U.S. oil supply will be cut off from the middle east. When you come begging for our oil we will simply say you had your chance we are now supplying our fine customers from AsiaNext time don't take Canada for granted


bob
said

all the environmentalists are right, the crude from the oilsands is far worse than the oil the comes from the gulf of mexico, except it didn't contaminate the water for, how long was that? america uses far more oil than any other country on the planet, if they don't want or need our oil, we will just keep it and see how long it takes for them to change their minds


Lindsay
said

And yet they love the "clean oil" from Saudi Arabia? Lol, give me a break.


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