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home : opinions : opinions May 28, 2016


4/13/2013 1:01:00 PM
Letter: Some clarifications by the Keystone pipeline

Editor:

Online comments to a recent letter by Jim Barber included misperceptions regarding the Keystone XL pipeline. Here’s some clarification.

Something rarely mentioned in the news about the Keystone XL pipeline is that a Keystone pipeline carrying Canadian crude to the United States already exists. It received presidential approval in 2008 and was completed in 2010. It runs from the same source as the proposed XL shortcut, but is much longer as it crosses Saskatchewan and Manitoba before jogging down into North Dakota. The Keystone and Keystone XL routes converge at Steele City, Neb. From there crude flows east to refineries in Illinois and south to Cushing, Okla.

Since the southernmost leg of the pipeline from Cushing to the refineries in the Foreign Trade Zone of Port Arthur is approved and under construction, it won’t be long before piped tar sands crude is being refined in Texas for export to Mexico, Denmark, and even back to Canada. The new ‘shortcut’ would simply allow more crude to be piped rather than being transported (in a more CO2-producing manner) via Warren Buffett’s Burlington Northern Railroad.

Some opponents claim there is no tax benefit to the U.S. from piping Canadian crude to Texas. That is not true. The tar sands crude will not be exported until it is refined, and the refining takes labor. Texas refinery workers pay income tax, and so do corporations profiting from the refining. Income in U.S. Foreign Trade Zones is not exempt from taxes.

There is, however, a tax loophole that needs to be closed. There is an excise tax on piped crude oil that is a form of insurance for spills. Since tar sands crude is officially ‘bitumen’ and not crude oil, it is currently exempt from the excise tax.

When numerous heavily funded special interest groups are spewing propaganda, it’s hard to find the facts to make an informed opinion.

But one thing is clear: there is a world market for refined Canadian tar sands crude, and impeding its transport to Texas is not going to stop it from being mined.

David Perrell

Clarkdale


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Reader Comments

Posted: Thursday, April 18, 2013
Article comment by: nutso fasst

Ah, the truth is out...I send letters under a pseudonym.

Peter, refining capacity in Texas and the Midwest has already been expanded. Canadian tar sands crude is already being piped and that which isn't is being shipped by train. Fuel refined from that crude is being increasingly used in the United States as imports from Venezuela and Mexico decline.

It's long past time to worry about bringing "this crap" to market.


Posted: Thursday, April 18, 2013
Article comment by: Peter, Yavapai County

Nutso, (I mean David),
I agree with your closing statement. But if the Canadians need to build a pipeline across Canada, and a refinery in Canada to ship their profitable tar to China, so be it. Let them take the risk of future spills and let them invest the additional money required to build the infrastructure to bring this crap to market.

America doesn't need this dirty energy, so we should not help make it more profitable for private Canadian billionaires but most importantly, we should not bear the risk and burden of the inevitable ruptures in OUR country.

The Canadian billionaires don't need our help. American energy jobs should be for American energy.


Posted: Thursday, April 18, 2013
Article comment by: nutso fasst

Peter, you're ignoring my closing statement. Stopping the Keystone XL pipeline will not impact Canadian tar sands development. By saying "let's do [ whatever] instead", you're being as silly as our local spokesperson for the mutely invisible.

By all means, let's get our crony-corporatist government to stop taxpayer giveaways to dead-end solutions and figure out better ways to produce clean energy without subsidies. Once we do that, the tar sands will cease being valuable. Until then, the environmental degradation will continue.

"Tar sands oil yields 12 times less [ than high-quality crude] ."

Even onsite synthetic crude production from tar sands uses less energy than you claim, but regardless of the production cost, petroleum products refined from tar sands crude are still profitable. Crude that exceeds pipeline capacity is being shipped by train. Trains burn diesel fuel. Trains derail.

The dilbit is also being piped through old pipelines, and there your concern makes sense. Instead of pumping $millions into fighting Keystone XL, which is designed for dilbit, anyone truly concerned about pipeline spills should demand more information regarding the risks from repurposing pipelines from light crude to dilbit and from reversal of flow. The 60+ year-old Pegasus pipeline in Arkansas burst just 7 years after flow was reversed to bring Canadian dilbit from Illinois to Texas. Was the pipe already past retirement age before reversal? Was it tested for increased pressure resistance? Hopefully an investigation will produce some answers.

A map showing U.S. refineries, and 170,000 miles of pipelines for crude oil and refined products:
http://www.api.org/oil-and-natural-gas-overview/transporting-oil-and-natural-gas/pipeline/~/media/Files/Oil-and-Natural-Gas/pipeline/US-Pipeline-Map-API-Website3.pdf

A map highlighting pipelines carrying Canadian crude oil:
http://www.capp.ca/getdoc.aspx?DocID=209479

A 2009 map showing 305,000 miles of major U.S. natural gas pipelines:
http://www.eia.gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/ngpipelines_map.html

The likely result of shutting down all U.S. pipelines during one winter would be the death of millions from cold, starvation, and social breakdown.


Posted: Wednesday, April 17, 2013
Article comment by: Mary Heartman

@ Peter, Yavapai County
Way back before the specious list of natural gas pipeline breaks, you were arguing for extending the clean-up surtax to bitumen--which seems to be an oversight by both Bush & Obama administrations.

But you also seemed to imply that adding the surtax would kill the shortcut pipeline project. Are you saying that the best way to stop commercial enterprises is to tax them?


Posted: Wednesday, April 17, 2013
Article comment by: verde voter

This is so wrong. And for who's profit? Who in this country wants a river of tar sands and pipelines polluting our soil, air and water? WHO? and Why? this does not benefit anyone in the USA. And the Jobs? NO. This is only for Koch bros profits. Fracking is causing earthquakes and trashing the land.

Posted: Tuesday, April 16, 2013
Article comment by: Peter, Yavapai County

A useful way to evaluate a liquid energy resource is the ratio of energy delivered vs. energy invested. High quality crude oil provides about 25 barrels to the market for each barrel burned to extract the oil.

Tar sands oil yields 12 times less. Tar is a very low quality liquid fuel. Because it is so thick, it must be diluted with a gasoline like liquid and pumped through the pipeline at high pressure, which increases the likelihood of a pipeline fracture.

Investing in tar infrastructure is a bad investment for everyone except the owners of the tar. Let's create sustainable jobs that we can proudly pass along to our children.


Posted: Tuesday, April 16, 2013
Article comment by: @...@... .

Obviously the point is that pipelines break... be they oil or gas. and to mere say there were 10, 20, or 30 events... would not be as weighty as a list including the data for the events and the time lines.

As far as the 'we'... well we are all around you as the voices of those that often go unheard or unseen. Existing to confound those that ask or demand for more...

Enjoy...


Posted: Tuesday, April 16, 2013
Article comment by: @...volunteer your backyard?

What was the point of your cut-n-paste--just to waste space? Discourage further reading? And what do you mean "We?" Was the post a joint effort, or are you a spokesperson for a group you'd rather not name?

Almost everything on your list relates to natural gas distribution. Most of us already have a gas pipeline into our home, and most of us would not want it removed.


Posted: Tuesday, April 16, 2013
Article comment by: you want to volunteer your backyard? .

We tried to get a list of pipeline breaks/spills... and it was too long to include just those from 2000 on. So here is the list from 2012 to present... seems simple... lines leak/explode, when was the last time a wind mill or solar panel leaked or exploded?

http://en.wikipedia.org/wiki/List_of_pipeline_accidents_in_the_United_States_in_the_21st_Century


2012 A gas pipeline exploded & burned in Estill County, Kentucky on the evening of January 2. Flames were reported reaching over 1,000 feet high. Residents up to a mile away from the failure were evacuated. There were no injuries.[266]
2012 A forest fire caused a gas pipeline to explode and burn in Floyd County, Kentucky on January 7. There were no injuries from this incident.[267]
2012 On January 9, a man was killed, and another person injured, in a fiery house explosion from a leaking 4-inch cast iron gas main installed in 1950 in Austin, Texas. Gas had been smelled in the area for several weeks prior to this. Gas company crews had looked along the affected property for a leak, but were unable to find it.[204][268]
2012 A Sunoco pipeline ruptured and spilled about 117,000 gallons of gasoline in Wellington, Ohio, late on January 12. Some residents were evacuated for a week.[269][270]
2012 On January 13, an 8-inch gas pipeline exploded and burned in a vacant agricultural field in Rio Vista, California. There were no injuries or evacuations.[271]
2012 A Tennessee Gas Pipeline gas compressor had a major leak "that sounded like a rocket" in Powell County, Kentucky, forcing evacuations of nearby residents on January 14. There was no fire or injuries reported.[272]
2012 A contractor excavating for a communications company caused a massive gas explosion and fire at a condominium complex on January 16 in West Haverstraw, New York, injuring 2 firefighters & 2 utility workers. Afterwards, it was found that the excavator's insurance will be insufficient to cover all of the property damage of the incident.[273]
2012 Workers in Topeka, Kansas were installing a yard sprinkler system on January 30, hit a gas line. Gas from the leak later on exploded in a nearby home, burning a 73 year old woman, who died several weeks later.[274][275]
2012 On January 31, a fuel pipeline to the Milwaukee, Wisconsin Mitchell International Airport was found leaking. Jet fuel had been smelled for about 2 weeks in the area, and was found in runoff water in the area.[276]
2012 A 30-inch gas transmission pipeline burst near Baton Rouge, Louisiana on February 13. Residents in the area were evacuated for a time, but there was no fire.[277]
2012 On February 15, 2012, in Arenac County, Michigan, oil was discovered in the soil around a 30-inch Enbridge crude oil pipeline.
2012 Two cars that were drag racing went off the road they were on, and crash through a fence and into a crude oil pipeline in New Lenox, Illinois on March 3. The pipeline was ruptured, and the crude oil ignited. Two men from the vehicles were killed, and 3 others seriously burned.[278][279]
2012 On March 5, a leak at an Enid, Oklahoma pipeline storage spread propane fumes in the area, forcing evacuations. There was no fire or explosion.[280]
2012 A crude oil pipeline leaked near Grand Isle, Louisiana on March 17, spilling as much as 8,400 gallons of crude oil. There were no injuries reported.[281]
2012 On March 29, an employee accidentally left a valve open during maintenance work on a Williams Companies gas compressor station near Springville, Pennsylvania. Later, gas leaked through the valve, causing alarms to evacuate workers in the compressor building. Later, the gas exploded and burned. There were no injuries. It was also found there are no agencies enforcing rules on rural gas facilities in that state.[282][283]
2012 A 12-inch gas pipeline exploded and burned for 5 hours near Gary, Texas on April 4. There were no injuries, but the rupture site was only 200 feet from that pipeline's compressor station.[284]
2012 On April 6, 2 gas company workers were mildly burned when attempting to fix a leak on a 4-inch gas pipeline leak in DeSoto County, Tennessee. The pipeline exploded & burned during the repairs.[285]
2012 A gas pipeline exploded and burned in Terrebonne Parish, Louisiana, on April 9. The accident was reported first by a satellite monitoring the area to the NRC. There were no injuries.[286]
2012 Two men escaped with only minor burns after a bulldozer they were using hit a 24-inch gas pipeline near Hinton, Iowa on April 25. Authorities later announced the men did not call 811 for an underground utility locate.[287]
2012 A 26-inch gas transmission pipeline ruptured on June 6 in a compressor station near Laketon, Texas. Gas escaped from the 50 foot long rupture, igniting, leaving a crater 30 feet in diameter, burning 2 acres of agricultural area & telephone poles. There were no injuries.[288]
2012 On June 8, near Canadian, Texas, a trackhoe operator suffered burns, after a fire from leaking 4-inch gas gathering pipeline that was undergoing maintenance. Fumes entered the engine of the trackhoe and ignited.[289]
2012 A contractor was killed and two others injured after an explosion at a BP gas compressor station in Durango, Colorado on June 25. BP, Halliburton, and the other contractors were fined $7,000 each for safety violations in that work.[290][291]
2012 A petroleum products pipeline burst near Jackson, Wisconsin on July 17, releasing about 54,000 gallons of gasoline. At least one family self evacuated due to the leak. At least 7 water wells nearby were contaminated from benzine in the gasoline.[292][293]
2012 A 14-inch gas gathering pipeline exploded and burned on July 18 near Intracoastal City, Louisiana. There were no injuries or major property damage reported.[294]
2012 On July 23, a compressor station operated by Williams Companies in Windsor, New York was venting gas in a "routine procedure"—during a lightning storm—when the vent was ignited by lightning, causing a fireball "hundreds of feet into the air"[295][296]
2012 An Enbridge crude oil pipeline ruptured in Grand Marsh, Wisconsin, releasing an estimated 1,200 barrels of crude oil. The pipeline had been installed in 1998. Flaws in the longitudinal welds had been seen during X-ray checks of girth welds.[100][297]
2012 4 contract workers were injured during a flash fire at a Wyoming gas processing plant.[298]
2012 A jet fuel pipeline near Chicago, Illinois began leaking on August 27. The burst pipeline spilled an estimated 42,000 gallons of jet fuel into a ditch that empties into the Calumet Sag Channel in Palos Heights, Illinois.[299][300]
2012 On August 28, a Atmos Energy repair crew struck an 8-inch gas main in McKinney, Texas, causing a fire. 4 Atmos workers were treated for injuries. 1,000 Atmos gas customers lost gas service for a time.[301][302]
2012 On September 6, a 10-inch gas gathering pipeline exploded and burned near Alice, Texas. Flames reached 100 feet high, and caused a 10 acre brush fire. There were no injuries.[303]
2012 An explosion & fire hit a Crestwood Midstream Partners gas compressor station in Hood County, Texas on September 6. Heavy damage to a sheet metal building resulted, but, there were no injuries reported to crew there.[304]
2012 A Colorado Interstate Gas gas compressor in Rio Blanco County, Colorado caught fire on September 11. There were no reported injuries.[305][306]
2012 On November 20, about 38,000 gallons of crude oil spilled from an Enbridge pipeline at a tank farm in Mokena, Illinois.[307][308]
2012 Two men were injured in an explosion and fire at a natural gas production facility east of Price, Utah on November 20.[309]
2012 On November 23, a gas company worker looking for the source of a reported gas leak in a Springfield, Massachusetts strip club pierce a gas line. The gas later exploded, injuring 21, devastating the strip club, and damaging numerous nearby buildings.[310]
2012 A malfunction in a gas compressor caused a fire on December 4, north of Fort Worth, Texas. There were no injuries.[311]
2012 On December 5, a 16-inch gas pipeline at 500 psi of pressure exploded and burned near a natural gas plant in Goldsmith, Texas. A fireball 250 feet high was created after the explosion, destroying 12 to 15 utility poles, and caliche and rocks the size of bowling balls damaging a road. There were no injuries reported.[312]
2012 On December 11, at approximately 12:40pm, a 20-inch gas pipeline owned by NiSource Inc., parent of Columbia Gas, exploded along I-77 between Sissonville and Pocatalico, West Virginia. Several people had minor injuries, 4 homes were destroyed, and other buildings damaged. Early reports announced the NTSB was investigating as to why alarms in the Control Room for this pipeline did not sound for this failure.[313][314][315][316]
2013 An independent contractor installing fiber-optic cable for a cable company in Kansas City, Missouri inadvertently struck an underground gas line on February 19. Gas later caught fire, and created an explosion that destroyed a popular local restaurant, killing one of the workers there, and injuring about 15 others near the scene.[317]
2013 A tug towing a barge struck and ruptured a Chevron LPG pipeline near Bayou Perot, Louisianan on March 12. The tug Captain was severely burned when the escaping gas ignited, and died several weeks later from those injuries.[318][319]
2013 On March 18, a Chevron 8 inch petroleum products pipeline ruptured along a seam, spilling diesel fuel into Willard Bay State Park near Ogden, Utah. Wildlife was coated with diesel, but, the fuel was prevented from entering into water supply intakes. About 25,000 gallons of diesel were spilled.[320][321]
2013 Mayflower oil spill occurred when ExxonMobil's 20 inch Pegasus crude oil pipeline spilled near Mayflower, Arkansas on March 29, causing crude to flow through yards and gutters, and towards Lake Conway. Wildlife was coated in some places. Twenty-two homes were evacuated, due to the fumes and fire hazard. Some estimates say the total amount spilled could reach upwards of 300,000 gallons diluted bitumen were spilled.[322][323][324]
2013 On April 4, an explosion & fire occurred at a gas compressor station near Guthrie, Oklahoma. Nearby homes were evacuated. There were no injuries reported.[325]
2013 A flash fire at a pipeline gas compressor station broke out when natural gas liquids ignited in Tyler County, West Virginia on April 11, seriously burning 3 workers, one of whom later died. The workers were performing pigging operations.[326]


Posted: Tuesday, April 16, 2013
Article comment by: David Perrell

Peter, YC:

The excise tax (initially a funding source for the Superfund) was enacted in 1980 when technology hadn't matured enough to profitably extract bitumen from tar sands. In 1990, after the Exxon Valdez spill, the tax was funneled into the new Oil Spill Liability Trust Fund. The tax expired in 1994, was reinstated in 2006, and increased by Congress from $.05 to $.08 per barrel in 2008, when the first Keystone pipeline was approved. Congress could've expanded applicability to bitumen then. Obama could make applicability a condition for Keystone XL. But I'm not seeing much enthusiasm. Perhaps that's because these pipelines do not transport only diluted bitumen. They are also used for low-sulfur crude from Canada and the Bakken oil fields in Montana and North Dakota. The pipeline operators do not limit their transport business to specific oil companies.

The Oil Spill Liability Trust Fund is used for first response and federal oversight of spill cleanup. The responsible party must clean the spill and pay back the fund, plus any penalties. More on that here:
http://www.uscg.mil/ccs/npfc/About_NPFC/osltf.asp

Applying the excise tax to bitumen wouldn't inhibit its transport. As noted, it is currently being transported by rail (which explains why Warren Buffett opposes the pipeline). Rail transport is more expensive than transport by pipe.

Less than 1% of electricity generation in the U.S. is powered by oil. No relevance to Canadian oil sands and crude oil pipelines. Conversion from coal to natural gas is already underway.

As for converting "internal combustion engines to use natural gas," do you have any idea how much it would cost and how long it would take to convert every vehicle and every gas station to LNG? To build additional natural gas pipelines and liquefaction facilities? How much federal subsidies would be involved?

LNG has only 64% of the energy of the same volume of gasoline and 57% of the energy of the same volume of diesel fuel. And about 600 cubic feet of natural gas is required to make 1 cubic foot of LNG.

Although it makes a fine vehicle fuel for urban use in vehicles optimized for it, LNG would almost certainly raise intercity transport costs for food and consumer goods.


Posted: Sunday, April 14, 2013
Article comment by: Peter, Yavapai County

Thanks David for your clarifications. The tar tax loophole you mention is very important. If the loophole were suddenly closed, would the economics of this project still make sense?

If I were a Canadian tar exporter, I would put pressure on the U.S. to build the pipeline. I would invest money to hire lobbyists and attack Keystone opponents. Once it is built, it would be counterproductive to close the tar tax loophole since the total cost (extraction, transport, refining, and export, plus a tax) would be too high to deliver large enough profits to the folks who are sitting on the Canadian sea of tar. We should close the loophole, then reevaluate the plan.

In his April 6 letter, Jim Barber said, “This country is awash in energy, and the technology to recover and produce it, that the rest of the world is craving. We have natural gas in quantities to make us energy independent and a net energy exporter.”

I don’t often agree with Mr. Barber (or even follow his train of thought), but this statement has been proven to be true in the last five years. Mr. Obama, (Mr. Barber’s personal nemesis), has not “punished” or even stood in the way of the dramatic rise in the production of energy since 2009.

All Americans have been reaping the benefits of dramatically lower natural gas prices and many thousands of jobs have been created in this industry. So why not convert all power plants and internal combustion engines to use natural gas? Everyone who uses natural gas will be better off and the tar can stay where it belongs, in Canada.


Posted: Sunday, April 14, 2013
Article comment by: Peter, Yavapai County

Thanks David for your clarifications. The tar tax loophole you mention is very important. If the loophole were suddenly closed, would the economics of this project still make sense?

If I were a Canadian tar exporter, I would put pressure on the U.S. to build the pipeline. I would invest money to hire lobbyists and attack Keystone opponents. Once it is built, it would be counterproductive to close the tar tax loophole since the total cost (extraction, transport, refining, and export, plus a tax) would be too high to deliver large enough profits to the folks who are sitting on the Canadian sea of tar. We should close the loophole, then reevaluate the plan.

In his April 6 letter, Jim Barber said, “This country is awash in energy, and the technology to recover and produce it, that the rest of the world is craving. We have natural gas in quantities to make us energy independent and a net energy exporter.”

I don’t often agree with Mr. Barber (or even follow his train of thought), but this statement has been proven to be true in the last five years. Mr. Obama, (Mr. Barber’s personal nemesis), has not “punished” or even stood in the way of the dramatic rise in the production of energy since 2009.

All Americans have been reaping the benefits of dramatically lower natural gas prices and many thousands of jobs have been created in this industry. So why not convert all power plants and internal combustion engines to use natural gas? Everyone who uses natural gas will be better off and the tar can stay where it belongs, in Canada.




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