By Robert Campbell
NEW YORK May 22 A casual observer familiar with
the Keystone XL saga would think the United States was making it
very hard to build any oil sands-related pipelines. But nothing
could be farther from the truth.
While TransCanada Corp's Keystone XL is mired in
seemingly endless studies, a competing project that could carry
hundreds of thousands of barrels of oil sands crude to U.S.
refineries every day is sailing through its own regulatory
Why the double standard? It's well known that Keystone XL is
a cause celebre for environmentalists who see defeating the
pipeline as a way to halt the development of Canada's oil sands
in the name of slowing climate change.
But what is really hurting Keystone XL is the lack of a
serious U.S. greenhouse gas policy and the need to go through a
far more stringent regulatory process than other projects.
Consider the plan hatched by gas-focused pipeline group
Energy Transfer Partners LP and Enbridge Inc,
the top shipper of oil sands crude, to convert part of ETP's
Trunkline natural gas pipeline to oil service by 2015.
ETP must first get the approval of the Federal Energy
Regulatory Commission (FERC) to remove Trunkline from service, a
formal procedure known as abandonment. Part of this process is a
environmental assessment. That study was published quietly in
April and comment from the public closes on Wednesday.
The word "climate" appears only five times in the Trunkline
environmental assessment, largely in a single paragraph where
climate change is dismissed as a significant factor that needs
to be considered in the scope of the review.
The study admits "Trunkline has indicated the future
operator intends to use the abandoned pipeline for oil
transportation, the eventual disposition of the pipeline ... is
not a key factor in the Commission's decision to grant
In other words Trunkline, which will facilitate the growth
of the oil sands business, need not face any formal study of the
broader implications of the conversion.
Indeed, the Trunkline draft environmental assessment goes on
to briefly discuss the planned conversion of the pipeline to oil
service while noting the future use of the line for shipping
crude oil is outside of FERC's jurisdiction.
But at no time is the proposal subjected to a rigorous
review on its potential status as a "facilitator" of the oil
sands industry and the greenhouse gas emissions associated with
increased oil sands crude extraction - unlike Keystone XL.
Political posturing has forced Keystone XL to go through an
exhaustive review of various greenhouse gas emissions scenarios
in an effort to show construction of the pipeline will not have
an effect on emissions from the oil sands. Others are held to a
far lower standard.
This omission comes even as Enbridge and ETP have been
forthright about their plans to ship Canadian crude oil on the
pipeline since they announced the project in February. The
question to be asked: why the double standard?
Even if the Trunkline project does not cross the border with
Canada and directly increase imports of oil sands crude, it
makes oil sands production more viable by increasing market
access and hence, improving oil sands crude prices. Furthermore,
the project directly facilitates Enbridge's own plans to
substantially increase the capacity of its own network to bring
in more oil sands crude into the United States.
The explanation for this is the fact that U.S. President
Barack Obama has not articulated a clear policy on climate
change and the use of energy in the United States. While it is
known that he backs measures to reduce America's greenhouse gas
emissions, political opposition to those plans has led him to
prefer administrative rather than legislative approaches to the
Thus, greenhouse gas standards are being gradually
incorporated into environmental regulations. But in the absence
of a formal policy, many measures are undertaken on an ad hoc
Many observers suspect Obama does not share the doomsday
concerns that opponents of Keystone XL have raised about the
climate change effects associated with the pipeline's
construction, but has chosen delay as a means of avoiding a
confrontation with his own core supporters.
Those suspicions are borne out when other cases, such as
Trunkline, are considered.
The converted Trunkline pipeline will move up to 600,000
barrels per day of oil from Patoka in southern Illinois to the
Louisiana Gulf Coast. The oil moved on the line will come from
Canada, where oil sands production dominates, and North Dakota's
Bakken crude, itself an emissions-intensive crude, given the
high rate of natural gas flaring associated with oil production
in North Dakota.
But we don't really know what the Obama administration
thinks about this issue. There has been no formal policy
articulated regarding America's consumption of carbon-intensive
oil. Indeed, such a policy would likely be deeply unpopular,
given that it would force a long, hard look at the gas flaring
associated with the shale oil boom.
Instead all we really know is that regulatory arbitrage on
those issues is the best way to get an oil pipeline built. That
means avoiding agencies where political considerations can be
brought to bear on the review.
This serves neither the efficient development of North
America's energy resources nor the longer-term fight against