The Battle Against the Keystone Pipeline

Environmentalists and landowners battle to stop the Keystone XL pipeline and its load of crude from flowing across Texas rivers and aquifers.

There is an unmoving ocean of oil in the north, the largest in the world outside Saudi Arabia. Canada's oil was always going to find an outlet; it was only a matter of where. By 2011, producers invested nearly $20 billion developing the oil sands, which shipped out 1.6 million barrels per day. In another 25 years, the industry plans to extract 5 million barrels per day from beneath the boreal forest — or roughly the same amount Gulf Coast refiners import from Mexico and South America.

The truth is, there isn't anywhere else it can go right now. Proposed pipelines west, to the British Columbia coast, are tied up by the same NIMBY resistance seen in the Nebraska Sandhills and the Texas pine country against the Keystone XL. Canada's First Nation aboriginal people have vowed to stop Enbridge's Northern Gateway pipeline through their territories. The path south, on the other hand, is already well-beaten.

In 2010, the Keystone XL's predecessor, Keystone I, connected Alberta to Illinois refineries, but its market was already contracting. Recession and improved vehicle fuel economy sapped demand. Meanwhile, hydraulic fracturing unleashed a flood of unconventional crude in North Dakota and South Texas. Canada's crude was piling up in the Midwest along with an American glut, driving the price per barrel in the heartland as much as $40 below the global market price. That was a boon for Midwestern refineries, which were running at full tilt, selling their refined gasoline and diesel at roughly the going rate while paying bargain prices for the unrefined feedstock.

Property owner Michael Bishop ran surveyors off his land, but TransCanada eventually won the rights to a strip of his land in Nacogdoches County
Brandon Thibodeaux
Property owner Michael Bishop ran surveyors off his land, but TransCanada eventually won the rights to a strip of his land in Nacogdoches County

For Canadian producers, this was a disaster. Because Western Canada crude is so expensive to extract and refine, the break-even price for a barrel of the stuff can be as high as $100. At the moment, Canadian producers are getting $45. Industry experts use the word "crisis."

Keystone XL is the salvation of the oil sands, able to carry massive volumes of oil and providing access to a vast Gulf Coast refinery complex.

As in other refining regions, gasoline production on the Gulf Coast declined by half since the recession. Yet it was replaced with an even more valuable fuel: diesel exported to Latin America and Asia. Exports of diesel from this region have grown by 60 percent since 2006, according to U.S. Energy Information Administration data. In 2011, for the first time in more than half a century, the United States became a net exporter of petroleum products, largely thanks to the Gulf Coast ­refineries.

Crude supplies from Mexico, South America and the Middle East, meanwhile, are waning. Valero, the largest refiner in the country, believes Canadian crude will fill the void. It recently installed two $1.5 billion hydrocracker units designed to process the diluted bitumen and extract high diesel yields at its Port Arthur and St. Charles refinery in Norco, Louisiana. They'll pay less for the heavy Canadian stuff and sell the diesel it produces at a premium in the developing world.

"Other parts of the world, South America and Asia, are taking up that distillate [diesel] demand," Valero spokesman Bill Day says. "The Gulf Coast refineries used to ship gasoline to the Northeast and middle parts of the country. Now they can also send products for export to other countries. That's becoming increasingly important. It keeps refineries open, and it keeps workers on the job."

Canada's National Energy Board is betting the pipeline will raise the price of Canadian crude in the United States, netting an additional $4 billion annually for producers. The weight and expectations of a Canadian industry worth trillions are bearing down on a single 36-inch pipeline.

Because the pipeline is international, the State Department was left to determine whether the project serves the national interest. "The indication was that the pipeline was headed toward approval," says former Energy Information Administration chief Richard Newell, who retired in 2011 to take a position at Duke University. "There was some pretty clear signaling that went on at that time," most notably from Secretary of State Hillary Clinton.

The pipeline ran into resistance from the Environmental Protection Agency, however, which characterized the State Department's environmental assessment as "inadequate." The pipeline would cross the Nebraska Sandhills, a 20,000-square-mile sand dune blanketed in native grasses and underlain by the Ogallala Aquifer, the source of more than 80 percent of the country's irrigation water. As far as the EPA was concerned, the State Department hadn't weighed the threat to water supplies posed by a large-scale diluted bitumen spill.

Its fears were not without justification. At around 6 p.m. on July 25, 2010, a pipeline owned by Enbridge, another Canadian company, shut down automatically because of a sudden drop in pressure. Within hours, callers flooded the Marshall, Michigan, 911 dispatch, complaining of a nauseating petroleum odor. Three times Enbridge stopped and restarted the pipeline because of pressure alarms. It was nearly noon the next day when oil was sighted by a utility worker in Talmadge Creek, which feeds the Kalamazoo River. By then, the operator had pumped diluted bitumen through an 80-inch-long gash in the pipeline for two hours. More than a million gallons of it had gushed into the creek before moving downstream to foul some 30 miles of river. The spill was finally contained 80 miles upriver from Lake ­Michigan.

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16 comments
Miles Yao
Miles Yao

Can we pull a Castle Law here? Get yer shotgun out!

Mary Urech Stallings
Mary Urech Stallings

State Law? Didn't the Supreme Court uphold anybody taking your land for whatever they want to pay for whatever reason? Now, that's effed up.

Na Li
Na Li

it's always been that way - they want they get - landowner gets too but screwed isn't that much financially

Craig Wilkins
Craig Wilkins

Where are all the "Don't Tread On Me" people now? Or is it socialism to stand up to businesses? Jesus. I hate everything sometimes.

captainmike81
captainmike81

Might as well refine Canadian bitumen is Texas as Texas is the largest polluter in North America. Most people don't know that the US exports crude oil. Next is natural gas in LNG to foreign countries. Most people are taken being taken for suckers by everyone from government to energy companies. 

Jake Rawls
Jake Rawls

Affects the Texans? Does this mean Arian Foster won't do well tomorrow?

Hugh Bishop
Hugh Bishop

It's just a couple of miles from my house. I have several friends in the area that have it running right behind their property line.

keystonelonestar
keystonelonestar

Conservative protecting private property rights by seizing private property?  Reminds me of how they make government smaller by passing laws that expand government power; how they spend less money by spending more money; how they discredit science by making shit up; and how they stop frivolous lawsuits by filing frivolous lawsuits against the NCAA.

Mudrake2
Mudrake2

Oh, please not again. When will you liberal scientific illiterate "journalists" stop tauting the discredited (by actual scientists without an agenda) man-made global warming. If you had half a brain, you would realize the contradictions in your story. First, the sands "crude" is so thick it poses little or no risk to anything. If it is being pumped at 150F to keep it "liquefied" what do you think will happen in event of a spill? I will immediately cool and turn into something akin to asphalt. Then bring out the front end loaders and shovel it up. I guess we are ringing our hands over all those asphalt roads criss crossing the state too? As an environmental consultant for 8 years and a geoscientist of some 33 years’ experience, I have seen enough enviro-hysteria to make me want to vomit. This is not about the environment, its about politics. These ass clown kids are nothing more than pawns and useless pawns at that. They have no lives and are seeking to bring some kind of meaning to their worthless existence. They undoubtedly moved to the unsuccessful occupy movement to this. They are a few missed meals or picket lines from being homeless. One man's protest is another man's criminal trespass. Barry's gambit to halt the pipeline is just another step in his attempt to cripple the US and its oil industry. Its okay to drill offshore Brazil but not here, why? It’s not the environment, its transfer of wealth.

WRUPPELT
WRUPPELT

@Hugh Bishop Hu is giving them the Permit, to Du what ever they ( Keystone ) want?

                          The property rights in Texas has been taking away by our so called

                           Law makers and Mr. not so smart Governor Perry! Or shall we say

                           the Tea Party of Texas!!!    

Mudrake2
Mudrake2

Turn Brazil into an oil exporting nation and we'll have to send more of our dollars their increasing their standard of living while slowly lowering ours. Biofuels gives him a hard on, not because it is green but because it puts money in his friends pockets. Biofuel production actually uses more fuel than it saves. If you knew how heat and fuel extensive distillation of alcohol is, you'd know that. The only way its economic is with government subsidies that would make you cry. So ethanol probably costs way more per gallon to produce than the gasoline it is purported to save. Americans are such scientific illiterates that this kind of nonsense is pushed right under their noses by their elected officials and they don't have a clue. It is really and truly pathetic. If the first oil discoveries made in Texas were done so today, they would undoubtedly would have been no Spindletop, East Texas Field, or Permian Basin. They would all have been protested into oblivion on environmental grounds. Do you see any lingering effects of those efforts back when oil ran on the ground like water when it was being produced?

poeducker
poeducker

@Mudrake2 You are stupid.  Global warming is gonna kill your grand kids dead.  The US & other industrialized countries have screwed off over global warming for so long it looks like it will  kill humanity dead.  Then the planet can hum along for several million years & try something new besides humans.  Serves us right.

 
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