Skip to comments.Oilsands executives lay out Keystone XL alternatives, ...say other options exist
Posted on 11/04/2011 7:26:03 AM PDT by thackney
Amid growing suggestions the U.S. State Department will delay or potentially reject the Keystone XL oil pipeline, oilsands executives counting on ramped up exports of bitumen said Thursday there are other options.
Canadian Natural Resources Ltd. president Steve Laut said oilsands producers could pursue other markets, if the U.S. denies a presidential permit needed for construction of the proposed 2,700-kilometre crude oil pipeline from Alberta to the Texas Gulf Coast.
CNRL has 120,000 barrels per day locked up on Keystone for 20 years, said Laut, whos betting on U.S. approval. Thats about one-fifth of the companys current total production of oil and gas.
Laut, speaking on a conference call, said if the up to 900,000 barrel-per-day line doesnt win approval south of the border, its pretty clear U.S. markets are not in favour of Canadian oil.
If it does not happen, I think you will see industry in Canada, which as you know is very resilient and very innovative, move very quickly to find other outlets to get our heavy oil production and our synthetic oil production likely off the West Coast and into Asian markets, he said.
We believe Keystone will go ahead, ultimately, although obviously its running into choppy waters here, but we believe it will happen.
Calgary-based TransCanada Corp. is awaiting approval to build its $7-billion cross-border project and says its confident a decision will come by year end, despite that the State Department backed away Wednesday from a commitment to meet that timeline, a day after U.S. President Barack Obama told a Nebraska television reporter he expected the review within the next several months.
Obama has been pushed to reject Keystone XL by environmental groups, a few recognizable film actors, various Nobel laureates and wealthy Democratic donors worried about the greenhouse gas impact of increased oilsands growth. Business groups have called for its approval on job creation and energy security merits.
Suncor Energy Inc. CEO Rick George said Thursday that oilsands producers have several alternatives to consider if Keystone XL startup is delayed.
This industry is very inventive, George said on a conference call. If you see a differential large enough, well get the crude moved around one way or the other. There is and there will be a Plan B in case this doesnt go forward.
Production from northern Albertas vast bitumen resource is set to double by 2020 and triple by 2035 to 3.3 million barrels per day, according to the International Energy Agency. Keystone XL is viewed as an essential conduit to get that crude to market.
TransCanada executives warned earlier this week that extended delays for Keystone XL could force producers and refiners with contractual commitments to look at other options.
Nebraska Gov. Dave Heineman has proposed changing the pipelines route through that state over fears any oil spill would pollute a water aquifer in the lines right-of-way.
TransCanada president of pipelines Alex Pourbaix said that if Nebraska senators are successful in introducing legislation that would give the state regulatory oversight of pipeline routing and force TransCanada to reroute its project around the Ogallala aquifer that could add two to three years of delays tied to new environmental study.
On Thursday, Nebraska lawmakers wrapped up submissions of five proposals that could make it into law. Public hearings on the proposed legislation are to begin next Monday, with several hundred people hoping to testify, sources told Reuters.
What I do expect is maybe that in the end what we will get before us on the floor (of the legislature) will be parts from all of these bills, said Sen. Bill Avery, who introduced a proposal for TransCanada to create a $500-million so-called indemnity fund to make the company responsible for spills and damage to roads, land and infrastructure during construction. The firm has offered a $100-million fund.
Final action is not expected until later in the month.
TransCanada has cited legal analyses to back up its argument that any pipeline siting legislation from Nebraska narrowly targeting Keystone XL instead of the entire oil and gas industry would be unconstitutional.
Canadas Natural Resources Minister Joe Oliver has said if Keystone XL isnt approved, Canada will ramp up efforts to sell oilsands bitumen to Asia.
What will happen if there wasnt approval and we think there will be is that well simply have to intensify our efforts to sell the oil elsewhere, Oliver said.
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If Keystone XL isn’t approved, we will have literally shot ourselves in the foot.
If Obama vetoes this, the oil sands production will go straight to America's biggest rival/strategic enemy. America will have fewer jobs and less access to a secure petroleum supply. How smart is that?
I'm a bit confused? Keystone will handle 120,000 or 900,000 barrels per day?
No, Old Retired Army Guy, you will have shot yourself in the chest.
Let me guess, it’s either choo choo (Buffett) ro Chinese.
Canadian Natural Resources Limited (CRNL) has committed 120,000 BPD to the Keystone pipeline. That is the amount of the product they own they will move through the pipeline.
TransCanada owns the Keystone Pipeline and is proposing the XL expansion.
The first leg of the Keystone Pipeline from Hardisty, Alberta to Wood River / Patoka, Illinois has throughput capacity of 435,000 barrels per day.
Phase II of the project to Cushing will be completed in late 2010 and increase capacity to 591,000 barrels per day.
The Gulf Coast Expansion will add an additional 500,000 barrels per day in late 2012.
When completed, the expansion will increase the commercial design of the Keystone Pipeline system from 590,000 barrels per day to approximately 1.1 million barrels per day.
With the additional contracts, the Keystone Pipeline has now secured long-term commitments for 910,000 barrels per day for an average term of approximately 18 years.
Thanks for the info thackney!
Thanks for the info!
They would be happy to take product rather than just profits from their Canadian investment.
Using gravity to ship it down the Mississippi is very cost competitive. Possibly robotic slow flying high fuel efficiency air freighters could be made competitive. Flying 100 mph in the thin air at 40,000 feet is extremely fuel efficient. It's the human pilot cost of flying 2,000 miles at 100 mph that's the problem.
Rather than transporting the bitumen, why not build enough oil bitument fired boilers near the source and export the electricity? They’d probably also be able to recapture some heat to use in processing and extracting the bitumen.
It’s a whole lot cheaper to build and maintain transmission lines than pipelines.
Barge traffic is not shipped without power. Power must be used to provide steerage as a minimum. Adding a slower rate of large traffic volumes would cause lots of problems.
Possibly robotic slow flying high fuel efficiency air freighters could be made competitive.
Only if you have figured out an extreme low cost anti-gravity system. We are talking about a mass of over 200 tons per minute of flow.
Flying 100 mph in the thin air at 40,000 feet is extremely fuel efficient.
Lifting 200 tons per minute to 40,000 feet is an insane cost.
It's the human pilot cost of flying 2,000 miles at 100 mph that's the problem.
The cost of the pilot would not even be in the margin of error of the cost of fuel.
Because the bitumen is not used for electricity. It is far more valuable refined into transportation fuel like gasoline and diesel.
Its a whole lot cheaper to build and maintain transmission lines than pipelines.
It would be a whole lot more expensive burning bitumen in place of coal.
I think you would be surprised about the line losses of electricity. Over seven percent of the electricity that currently leaves power plants is lossed in transmission/distribution traveling far less distance than you are suggesting.
Electricity Power Flows, 2010
The last thing the Canadians would want is competition for their exported hydro power.
The cost of electricity generated by burning bitumen would be no competition at all.
Obama is literally running out of space to vote “present” on this one