The Keystone XL Pipeline and Canadian Oil Sands or Politics Make Strange Bedfellows

Flopping Aces ^ | 08-31-11 | Warren Beatty

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Despite environmentalist protests, President Obama is about ready to approve the "jobs creating" Keystone XL pipeline. TransCanada Corporation, the project owner, estimates that 20,000 jobs can be created from the pipeline itself over the two-year project development period. There are other jobs associated with development of the resource in Canada that have economic impacts on U.S. employment. So, with that in mind, let's look at the Keystone XL pipeline, and at Canadian oil sands.

The Keystone XL Pipeline Project

The State Department is responsible for issuing permits for cross-border pipelines. Oil sands opponents, however, are pressuring the State Department to oppose the proposed Keystone XL pipeline, and are encouraging residents along its intended route to oppose the project based on unrelated issues, such as eminent domain and potential impact to aquifers. The Keystone XL pipeline will ensure a supply of Canadian crude to U.S. refineries on the Gulf Coast. Only refineries in the Midwest and Rocky Mountain regions rely upon Canadian crude. This link provides a map of the Keystone XL pipeline and its proposed expansion.

Measures restricting the use of oil sands products would not limit oil sands production, but cause output to be diverted to more distant markets. For example, China, with a growing appetite for oil, is ready to spend the dollars for a piece of Canada's oil sands. Alberta, Canada, has more oil than Russia or Iran. Only Saudi Arabia and Venezuela have more. Canada's only major oil export market is the U.S., but with oil sands and pipeline delivery to the U.S. under environmental objections, and with Asian demand growing, Canada wants to diversify its market, and China is eager to oblige. Sinopec, a Chinese state-controlled oil company, has a stake in a $5.5 billion plan drawn up by the Alberta-based Enbridge company to build the Northern Gateway Pipeline from Alberta to the Pacific coast province of British Columbia. Besides having a stake in the $5.5 billion in the Northern Gateway pipeline plan, Sinopec paid $4.6 billion for a nine percent stake in Syncrude, Canada's largest oil sands project. And in 2009 PetroChina, Asia's largest oil and gas company, bought a $1.7 billion stake in Athabasca (also in Canada) Oil Sands Corp.

In a further, political wrinkle, the Koch brothers are poised to reap big profits if the Keystone XL pipeline is approved. The Koch brothers have been accused of "waging a war against Obama." They have financed the Tea Party movement, climate change skepticism and right-wing think tanks, such as the Cato Institute, the Heritage Foundation, the Competitive Enterprise Institute and the National Center for Policy Analysis. BTW, Rich Mitchell at CDN sarcastically had this to say about Obama and the Koch brothers: "Oh Mr. Collinson (which would be such a great name if your first name was Collin), you can't blame Libya on Obama, clearly the Koch brothers, Bush, or George Washington are to blame." And from a CDN press release we learn, "Chief among those who are pushing conservatives in Congress to drop their support for the NAT GAS Act are the Koch brothers. Charles Koch has been loudly vocalizing his opposition to the misguided suggestion that the natural-gas industry should receive enormous new subsidies."