Still Awaiting the Keystone Decision, Oil Moves On

Oil industry types and environmentalists alike have been arguing about the Keystone XL Pipeline for years now. Oil people wanted the Transcanada line put in because it would tote barrels worth of bitumen, the sticky black tar sands crude, thousands of miles from Canada to the Gulf Coast. But now, despite the eagerness of Canadian officials to get the Keystone running, "Texas tea" is providing an easy distraction for the lack of that Keystone crude.

Texas refineries were outfitted specifically to process this type of crude, and environmentalists and landowners living along the proposed route of the pipeline were all set to oppose the whole thing, and that's pretty much where things have been as the president has dodged making a decision for a while now and the State Department's evaluation keeps getting delayed (State has to approve the line because it crosses the U.S. border.)

The scuttlebutt is that a decision will be made by the end of this year or early next year, but the oil industry - like time and office doughnuts - waits for no one. Thanks to shale plays in Texas and across the country, U.S. oil is filling in that Keystone shaped hole in their production, according to Thomas Tunstall, director of the University of Texas at San Antonio Institute for Economic Development, the outfit that comes out with economic impact reports on the Eagle Ford Shale play in South Texas. Due to combined techniques of horizontal drilling and hydraulic fracturing,the shale plays were just getting going when the Keystone idea first started rolling a few years back. Since then shale plays have created an unexpected oil renaissance in the U.S. in general and in Texas in particular, Tunstall said

After waiting a while, some Gulf Coast refineries have turned back to the light sweet crude being produced in Texas after the Keystone glut of oil failed to materialize, Tunstall said. Meanwhile, the Canadian side of production has stopped waiting on the pipeline to go online and has started shipping oil out by rail, which is still more expensive than using the pipeline but less expensive than using an 18-wheeler.

And there's still so much Texas oil to deal with. Between the Eagle Ford Shale in South Texas and the Cline Shale in West Texas, there's plenty of oil being supplied right in the Lone Star State's backyard. There are also concerns about water use and possible earthquakes over slant drilling and fracking, but that's been an issue since the Barnett Shale in North Texas started the whole shale thing more than a decade ago. The Keystone decision will get made or it won't, but either way it looks like the oil industry has moved on. At least for now.

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