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Oilsands executives lay out Keystone XL alternatives, ...say other options exist
Calgary Herald ^ | November 4, 2011 | Rebecca Penty

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, who’s betting on U.S. approval. That’s about one-fifth of the company’s current total production of oil and gas.

Laut, speaking on a conference call, said if the up to 900,000 barrel-per-day line doesn’t win approval south of the border, it’s “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 it’s 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 it’s 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, we’ll get the crude moved around one way or the other. There is and there will be a Plan B in case this doesn’t go forward.”

Production from northern Alberta’s 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 pipeline’s route through that state over fears any oil spill would pollute a water aquifer in the line’s 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.

Canada’s Natural Resources Minister Joe Oliver has said if Keystone XL isn’t approved, Canada will ramp up efforts to sell oilsands bitumen to Asia.

“What will happen if there wasn’t approval — and we think there will be — is that we’ll simply have to intensify our efforts to sell the oil elsewhere,” Oliver said.


TOPICS: Canada; News/Current Events
KEYWORDS: energy; keystonexl; oilsands; pipeline
...if Keystone XL isn’t approved, Canada will ramp up efforts to sell oilsands bitumen to Asia
1 posted on 11/04/2011 7:26:06 AM PDT by thackney
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2 posted on 11/04/2011 7:27:22 AM PDT by musicman (Until I see the REAL Long Form Vault BC, he's just "PRES__ENT" Obama = Without "ID")
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To: thackney

If Keystone XL isn’t approved, we will have literally shot ourselves in the foot.


3 posted on 11/04/2011 7:30:22 AM PDT by Old Retired Army Guy
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To: thackney
Let's see. Which large Asian country do you think will be happy to see another pipeline built over the Rockies to the Pacific? Anyone?

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?

4 posted on 11/04/2011 7:31:29 AM PDT by Former Proud Canadian (Obamanomics-The government gets rich, you get poor.)
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To: thackney

bump.


5 posted on 11/04/2011 7:31:31 AM PDT by ken21
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To: thackney
"CNRL has 120,000 barrels per day “locked up on Keystone for 20 years,” said Laut, who’s betting on U.S. approval. That’s about one-fifth of the company’s current total production of oil and gas.

Laut, speaking on a conference call, said if the up to 900,000 barrel-per-day line "

I'm a bit confused? Keystone will handle 120,000 or 900,000 barrels per day?

6 posted on 11/04/2011 7:31:57 AM PDT by avacado
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To: Old Retired Army Guy

No, Old Retired Army Guy, you will have shot yourself in the chest.


7 posted on 11/04/2011 7:33:59 AM PDT by Former Proud Canadian (Obamanomics-The government gets rich, you get poor.)
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To: thackney

Let me guess, it’s either choo choo (Buffett) ro Chinese.


8 posted on 11/04/2011 7:37:30 AM PDT by Lockbox (`)
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To: avacado

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.

http://www.transcanada.com/5732.html


9 posted on 11/04/2011 7:42:41 AM PDT by thackney (life is fragile, handle with prayer)
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To: avacado
CNRL has contracted to use 120K of the 900K capacity. CNRL is just one of several Canadian oil sands companies, who presumably would use the rest of the capacity.
10 posted on 11/04/2011 7:44:54 AM PDT by PapaBear3625 (Civilization is unnatural. It is a whim of circumstance. Barbarism must always ultimately triumph.)
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To: thackney

Thanks for the info thackney!


11 posted on 11/04/2011 7:45:59 AM PDT by avacado
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To: PapaBear3625

Thanks for the info!


12 posted on 11/04/2011 7:48:28 AM PDT by avacado
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To: PapaBear3625
Note the Chinese company Sinopec.

They would be happy to take product rather than just profits from their Canadian investment.

13 posted on 11/04/2011 7:51:27 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney
oilsands producers have several alternatives

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.

14 posted on 11/04/2011 7:54:42 AM PDT by Reeses (Have you mocked a Democrat today?)
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To: thackney

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.


15 posted on 11/04/2011 7:59:59 AM PDT by CarmichaelPatriot
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To: Reeses
Using gravity to ship it down the Mississippi is very cost competitive.

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.

16 posted on 11/04/2011 8:04:15 AM PDT by thackney (life is fragile, handle with prayer)
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To: CarmichaelPatriot
Rather than transporting the bitumen, why not build enough oil bitument fired boilers near the source and export the electricity?

Because the bitumen is not used for electricity. It is far more valuable refined into transportation fuel like gasoline and diesel.

It’s 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
http://www.eia.gov/totalenergy/data/annual/pdf/sec8_3.pdf

17 posted on 11/04/2011 8:10:19 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

The last thing the Canadians would want is competition for their exported hydro power.


18 posted on 11/04/2011 8:15:20 AM PDT by Eric in the Ozarks
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To: Eric in the Ozarks

The cost of electricity generated by burning bitumen would be no competition at all.


19 posted on 11/04/2011 8:17:01 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

Obama is literally running out of space to vote “present” on this one


20 posted on 11/04/2011 8:21:12 AM PDT by Buckeye McFrog
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To: thackney

No kiddin !


21 posted on 11/04/2011 8:23:40 AM PDT by Eric in the Ozarks
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To: Eric in the Ozarks

Like gold competing with stone for ballast on old sailing ships.


22 posted on 11/04/2011 8:28:58 AM PDT by thackney (life is fragile, handle with prayer)
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To: thackney

“We believe Keystone will go ahead, ultimately, although obviously it’s running into choppy waters here, but we believe it will happen.”

.......in 14 months it will!


23 posted on 11/04/2011 8:29:17 AM PDT by Recon Dad ("The most important rule in a gunfight is: Always win and cheat if necessary.")
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To: Buckeye McFrog
He absolutely is. Obama has been kicking this can down the block for too long. Political expediency or the United States of America, for Obama this is a paralyzing decision.
24 posted on 11/04/2011 8:44:03 AM PDT by Obadiah (I owe a lot to my parents, especially my mother and father.)
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To: thackney
Lifting 200 tons per minute to 40,000 feet is an insane cost.

A Boeing 747-8 Freighter lifts 154 tons and currently has the lowest ton-mile cost of any cargo aircraft. An airplane gets its maximum fuel economy flying at its best glide speed, although airliners do not fly that speed because of the other costs such as labor. A freighter flown by robots could be built much differently since it doesn't need to fly at 570 mph, doesn't need a pressurized cabin. Flying is the most energy efficient mode of transportation for a given speed. Automation can open new doors such as sky freight trains.

25 posted on 11/04/2011 11:29:36 AM PDT by Reeses (Have you mocked a Democrat today?)
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To: Reeses

Speed is not necessary.

Compare the cost of air freight to a train.

Pipelines are about half the cost of trains.

What you suggest is a waste of resources and expense.


26 posted on 11/04/2011 4:26:46 PM PDT by thackney (life is fragile, handle with prayer)
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