Why the Keystone XL Pipeline Is Already Dead

Fiscal Times ^ | 12/04/2014 | Susan McGee

[SeekAndFind]

The Keystone XL Pipeline project is almost certainly dead.

No, not because a bill that would have finally given the go-ahead to begin construction fell one vote short in the lame duck Senate last month. Sure, that halted the legislative approval process in its tracks, but only until January, when a new Congress arrives and is sworn in. Republicans, who will have a majority in both the House of Representatives and the Senate, have pledged to bring it back for another vote in the next session.

The next vote may well bring a different result, but will the pipeline ever be built? That is something else altogether.

A lot has changed since TransCanada Pipelines first proposed building the nearly 1,200 mile-long extension to its existing pipeline network delivering Canadian crude oil to refineries in the Gulf Coast of Texas. The oil in question would come from the so-called oil sands projects in northern Alberta, ventures that high oil prices have made economically viable. The explosion in the oil sands developments has transformed Alberta’s Fort McMurray into “Fort McMoney,” a boom town where houses and salaries can be higher than those in Canada’s largest city, Toronto — and where crime rates and drug usage rates are higher, too.

The extensive delays — prompted by the requirement that the U.S. government sign off on the project, since it crosses an international border, and the fierce battle waged by environmentalists to stop that from happening — have driven up the project’s costs. TransCanada says building the Keystone link across Montana, South Dakota, and Nebraska would now cost some $8 billion, up from the originally estimated $5.4 billion, with shippers covering much of the additional charges.

[Sacajaweau]

http://lastrealindians.com/the-great-sioux-nation-obama-administration-meet-to-address-renewable-energy-and-alternatives-to-the-keystone-xl-pipeline/

[YankeeReb]

Saudi Arabia has taken aim at making Canadian oil sands output too costly in the American marketplace. That’s why Saudi Arabia has initiated a price war, slashing prices to the U.S. and pressing OPEC to keep production at its current levels.

Yes but these price drops are only temporary. What happens if the project is scuttled? The Islamonazis cut production again and Canadian oil becomes viable again. If our gvt was smart they'd take advantage of this time to stock up on oil for when the rainy day comes back.

[DaveA37]

“.......cost some $8 billion, up from the originally estimated $5.4 billion, with shippers covering much of the additional charges.”.....

Take the gubmint out of the picture all together and the price will more than likely be LOWER than the original 5.4 billion. Turn the project over to oil construction companies who have the “know how” and get the bureaucrats out of the way altogether. It would come in under budget.

[woodbutcher1963]

So, instead they will build the pipeline to the British Columbia coast. This will still lower the cost of shipping the oil somewhere outside of Canada. Even then the refineries in WA, OR and California will end up buying a lot of this oil just because their proximity will give them a freight advantage over other destinations.

However, it also lowers the cost of shipping it to Asia and the Gulf Coast refineries through the expanded Panama Canal. Keystone would have given a major freight advantage to the refineries in LA, OF & TX. This would allow them to pay more FOB Alberta than anyone else. If it does not get built, and the BC pipeline does, it more evens the freight and they will have to pay more to get the product. It will still be less than it is today.

[woodbutcher1963]

I would think that all the railroads, airlines and any other company that relies on oil based fuel for their profit margin would be buying futures contracts as far out as possible to lock in todays lower cost.

Even small businesses that use heating oil should lock in a futures contract as a hedge of their fixed costs for next year.

This price reduction is temporary. Two years from now, we will look back and say, todays prices were cheap.

[Texas Eagle]

Canada’s oil sands projects will continue to operate, and will continue to generate emissions.

but the demise of Keystone XL isn’t going to have a dramatic impact on climate change — unfortunately enough.

Ah. There we go.

[thackney]

A lot has changed since TransCanada Pipelines first proposed building the nearly 1,200 mile-long extension to its existing pipeline network delivering Canadian crude oil to refineries in the Gulf Coast of Texas.

Yep, they publicly proposed the Keystone XL pipeline back in Feb 2005. Back then oil was $48 a barrel and we were importing 2.1 MMBPD from them.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=rclc1&f=m

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMUSCA2&f=M

Since then the Canadian imports have climbed by ~1.4 million barrels a day and oil prices are certainly higher.

[thackney]

Not instead, in addition to the Keystone XL.

[woodbutcher1963]

I stand corrected.

Mea Culpa

[Zenjitsuman]

The GOP can’t afford to pass amnesty and not pass the Keystone XL pipeline.

As Ted Cruz said “Do what you promised” in the campaign.

Almost every GOP winner promised if the GOP were in charge they would pass it.

I have to think there are enough votes to overide the Obama veto.