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Keystone Pipeline Gets Key Permits But Recent Oil Spill Weighs Heavily

Despite an oil spill that could have dampened the prospects of the Keystone XL Pipeline, Nebraska regulators approved a key portion of the line that would go through that state. The 3-to-2 vote by the Nebraska Public Service Commission would allow TransCanada to build the line in a state that has been a roadblock, although opponents of it have vowed to stop it.

TransCanada, the developer of the line, is saying that it would bring in 900,000 barrels a day of tar sands that would be refined into crude — a pathway that leads all the way from Canada to Texas. That would help American industry by allowing this country to buy its oil from a friendly nation. But environmentalists are saying that the 5000 barrel oil spill that occurred last week would be all too common.

As for Nebraska’s approval, it is a big win for both the project developer and the Trump administration that has sought to streamline the permitting process for the line; in January, the president signed an executive order to do just that and in March, the US Department of State gave its approval.

A key question for TransCanada is whether the project would make economic sense at a time when oil prices are about $50 a barrel. It’s an expensive venture — one that would cost roughly $12 billion to complete.

“(G)reen groups can be comforted by the State Department’s 2014 Keystone XL study, which showed the pipeline will have no significant impact on whether Canadian bitumen is extracted or not, nor on global emissions,” the Institute for Energy Research said. “What it will impact is where that petroleum goes. By removing this last major regulatory obstacle, the Nebraska Public Service Commission ensures that American workers and their families will be the ones benefiting from this lucrative trade.” 

President Obama rejected the Keystone XL Pipeline, saying it would not create many permanent jobs and that it would lead to excessive greenhouse emissions. Reports show that while it would create thousands of temporary positions, only 50 or so permanent jobs would ultimately exist.

The entire Keystone pipeline system is a 2,600 mile oil transport system stretching from Canada to Texas, where it is refined. The Keystone XL portion of it begins in Canada and goes through Montana and South Dakota and ends in Nebraska.

“While today’s Keystone XL pipeline approval is an important milestone, it does to provide certain that the project will ultimately be built and begin operating,” Gavin MacFarlane, a Vice President of Moody’s Investors Service said, in a release. 

Economics aside, TransCanada has been trying to get this line built since 2008. But environmentalists have said it is their “line in the sand” in terms of greenhouse gas emissions. That is because they say that tar sands are thicker than standard crude oil and thus, it is both tougher to clean up and 17% dirtier.

TransCanada may thus decide to get going on the deal while the time is ripe; it has a friendly White House and possibly, all the necessary approvals.

Nevertheless, the oil pipeline company may decide to ship the oil via the rail lines, which has been the case. Oil moves by pipeline 70% of the time but also accesses trucks, barges and rails for the balance of the time, although the cost to do so is more expensive, say experts.

While the Pipeline and Hazardous Materials Safety Association reports that the rate of accidents on the nation’s networks has declined dramatically to less than a handful a year, those accidents still matter to the communities impacted by them. As for the Keystone line, it suffered a 400 barrel spill in 2016, or 16,800 gallons.

“We are angered and alarmed by today’s vote to enable this foolhardy pipeline, a monument to the disaster-prone fossil fuel systems that threaten public health, our environment, and the long-term livability of our planet. Canadian tar sands are one of the most environmentally degrading forms of energy known to man. That the Trump administration and the Nebraska Public Service Commission would choose to peddle this filthy substance is downright shameful,” Wenonah Hauter, Executive Director, Food & Water Watch, said in a statement.

“This pipeline is not just foolish, but also unjust. It threatens the lands and culture of numerous Indigenous communities, as well as scores of landowners that have been ignored and marginalized in the approval process,” she added.

What will Keystone’s affect be on the corporate community? When the line was first proposed, advocates said it would help keep down the price of oil while allowing this country to buy from friendly countries. But over the last decade, the United States has been able to access both unconventional oil and gas, or shale oil and gas. That means this country is able to supply more of its own needs and that it has less need to import oil.

However, oil is a global commodity and it travels to where the markets need it most. So, the United States is also an exporter of it. Furthermore, the pipeline network here doesn’t always permit oil to get to where it is needed. Hence, the need to import it very much is present.

 

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