Thursday, July 29, 2010

U.S. Department of Energy questions Keystone XL pipeline ‘facts’

WASHINGTON – The U.S. Department of Energy (DOE) on July 26 posted its comments on the State Department Draft Environmental Impact Statement (DEIS) on the Keystone XL pipeline.
The TransCanada Keystone XL Pipeline would carry up to 900,000 b/d of bitumen in a high-pressure pipe from Alberta, Canada, to the U.S. Gulf Coast.
Earlier, the U.S. Environmental Protection Agency posted its reservations about Keystone XL.
DOE, in a series of pointed questions, has asked State to “clarify or qualify” numerous statements made in support of the pipeline
• DOE questions that global and domestic oil supplies are unlikely to decrease substantially over the next 30 years, pointing out that the reports of the EIA (which is a branch of the DOE), upon which that statement is based, are not forecasts but reference cases that assume that technology, demographic trends and other factors - under current laws and regulations - do not change. “Outlooks produced by the EIA are not forecasts and do not imply a probabilistic assessment of the future,” DOE states.
• DOE states that suppliers of crude oil from Canada already have access to two existing pipelines and that “in addition, the recently approved Alberta Clipper and Keystone pipelines will ensure that there is enough pipeline capacity from Canada to the U.S. for some years.” DOE says: “Recognizing that Canadian producers have four pipelines available for exporting WCSB to the U.S., it would be helpful to clarify or qualify the following two statements” that (a) without Keystone XL, there is no ready conduit for this oil, and (b) that the U.S. would remain dependent on unstable sources of oil from “the Mideast, Africa, Mexico, and South America.”
• DOE states that the pipeline will not shield the U.S. from global price shocks, stating “The Keystone XL pipeline would also not eliminate U.S. demand in the international market or its exposure to price shocks propagating through that market, which affect the prices charged for supply from Alberta producers as well.” DOE continues: “When the world experienced an oil price shock in 2008, Canada sold crude to the U.S. at a price linked to a global market price, not at below market rates.” I.e. the pipeline would not reduce the volatility or price of oil overall, nor would it regulate the price of the oil coming through the pipeline itself. DOE asks State to clarify its statements that (a) Keystone XL will lower crude oil prices and price volatility to the Gulf coast refineries and that (b) without Keystone XL, crude oil prices will increase.
• DOE states that arguments that crude oil will go to Asia if Keystone XL is not built are not accurate because building a West Coast pipeline is not mutually exclusive with building Keystone XL. DOE says “it seems that issuance of a Presidential Permit for the Keystone XL pipeline will not foreclose an option others may be pursuing to establish a pipeline to the West” and asks for State to clarify its statement that if the pipeline is not built, much of the oil will be “exported to Japan, China and India.”

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