Keystone vs Enbridge: race or stratagem?
We noted earlier this year that the Canadian government is holding out the threat of selling the Alberta tar sands oil to China through the Northern Gateway pipeline that Enbridge Inc hopes to build to the British Columbia coast as a stratagem to pressure the US for rapid approval of TransCanada's Keystone XL pipeline, which would export that same oil to stateside refineries as far south as Texas. In January, President Barack Obama denied a permit (for the time being) to the main trunk that would bring the oil down from Canada (to Republican outrage). But in March, he announced he would approve construction of the southern leg, from Cushing, Okla., to the Texas coast—a move blasted by enviros as a betrayal and (natch) by Republicans as inadequate. (LAT, March 22; see map from the Washington Post) The southern leg is, of course, contingent on the northern leg, thus establishing greater pressure for it. Now, as work commences on the southern leg, it emerges that Enbridge, in addition to fighting Canada's own enviros to win approval of the Northern Gateway, is quietly but rapidly expanding its own pipeline network south of the 49th parallel. Is this bet-hedging—keeping access to US markets in case Canada's greens prevail over the Northern Gateway? Or are Enbridge and TransCanada throwing each other a wink—divvying up the US market between them while cultivating the "China card" to lubricate access to that market? We recall the famous admonition of Calouste Gulbenkian, the Armenian oilman who brokered the post-World War I carve-up of the Middle East among US and European companies: "Oilmen are like cats; you can never tell from the sound of them whether they are fighting or making love." Exhibit A, from the LA Times, Aug. 16:
Keystone XL pipeline construction begins amid protests
The Canadian pipeline company TransCanada has quietly begun construction of the southern leg of the controversial Keystone XL pipeline, installing segments near Livingston, Texas, company officials confirmed Thursday.
"Construction started on Aug. 9. So we’ve now started construction in Texas," TransCanada spokesman Shawn Howard told the Los Angeles Times.
The southern section of the pipeline received government approval in July.
The first in a series of protests also was launched Thursday as opponents of the pipeline, designed to eventually carry diluted bitumen from the tar sands of northern Canada to refineries on the Texas Gulf Coast, unfurled protest banners at two equipment staging yards in Texas and Oklahoma.
"We just wanted to demonstrate that although they might be ready to begin, we would be ready to meet them," Ron Seifert, spokesman for Tar Sands Blockade, said in an interview.
He said citizens are prepared to stage sit-ins and other civil disobedience actions to halt the effort of "an international bully" to begin building a pipeline that has spurred widespread protests across the U.S.
TransCanada hopes to construct a pipeline from the Canadian border to Texas. But President Obama in January rejected the company's application for an international permit to build the entire structure, saying it needed further study—particularly of any route through the sensitive Sandhills of Nebraska, which lie atop a massive agricultural aquifer.
TransCanada has agreed to reroute the northern portion of the pipeline in Nebraska and has launched a new application. In the meantime, the company, with Obama’s endorsement, has moved to begin construction of the southern half, from Oklahoma to Texas. This portion does not require an international permit.
That construction was imminent became clear in late July, when the U.S. Army Corps of Engineers approved the last of three key permits needed to build the southern section...
Even without the northern section, company officials have said putting the southern section in place will help alleviate a bottleneck of crude oil at the giant terminal in Cushing, Okla., that has helped depress prices for crude oil generated in North America...
If the U.S. State Department approves the revised permit application for the northern segment, that construction could begin in early 2013, company officials said.
Pipeline opponents, who say the tar sands bitumen is an especially toxic form of oil that poses a hazard to farms, ranches and residential drinking water across the U.S. heartland, are regrouping to fight the revised international permit and to try to slow construction on the southern route, where some landowners still are fighting TransCanada's attempts to gain access to their property.
Now Exhibit B, from the LA Times, Aug. 18:
Keystone XL rival Enbridge avoids scrutiny of oil pipeline plans
ANN ARBOR, Mich. — A major rival to the controversial Keystone XL oil pipeline project is vastly boosting its U.S. pipeline system, but it's avoiding the same scrutiny that federal regulators, environmentalists and landowners are giving Keystone owner TransCanada Corp.
Enbridge Inc. is proceeding largely unencumbered with plans to spend $8.8 billion in the U.S. to transport greater volumes of petroleum to the Gulf Coast and other markets than TransCanada would with its Keystone XL pipeline project from Alberta, Canada, to the Gulf Coast.
Rather than building a single new pipeline, Enbridge is replacing smaller, existing pipeline with bigger pipes, adding pumping capacity and installing new supply lines alongside existing ones.
The Calgary, Alberta, energy pipeline and storage company is forging ahead even though it has been bedeviled recently by high-profile oil spills.
TransCanada's Keystone XL plan, and its additional 830,000 barrels a day, snagged on the so-called presidential permit process, in which the State Department conducts environmental and other reviews of infrastructure projects that cross American borders.
But Enbridge, which runs the longest pipeline system in Canada and the U.S., can proceed without new presidential permits—and the rigorous review they bring—because the company already has permits from the initial construction years ago and because the physical work will take place in the United States.
"We can increase the capacity crossing the border by anywhere from 800,000 barrels a day to 1 million barrels a day without the need for a new presidential permit," Steve Wuori, president of the company's liquid pipeline division, said during a March 7 investor conference call.
"And I think that's very important in the politically charged environment in which we find ourselves," he said.
The task of determining the safety or wisdom of Enbridge pipeline routes falls on a patchwork of local, county and state jurisdictions through the Midwest and East, most of which lack intensive pipeline expertise.
Isn't that convenient?
Enbridge, which earned nearly $1 billion last year, has not attracted the national attention of the Keystone XL project largely because of the piecemeal—and still early—nature of its upgrades. Only a few environmental groups have raised alarms thus far.
Yet some of the projects would be significant.
The company aims to build a larger line alongside its pipeline from Flanagan, Ill., to Cushing, Okla.; add a line alongside a newly acquired pipeline that runs from Cushing to the Texas Gulf Coast, a project that it's splitting with another pipeline company; and increase the capacity of a line from northwest Indiana through Michigan. Smaller projects are planned as well.
Most of the changes are expected to be finished in 2014. Once completed, they would push an additional 310,000 barrels a day through Michigan toward Ontario and take 850,000 barrels a day to the Gulf Coast.
Enbridge spokeswoman Lorraine Little said the company's upgrades aren't an attempt to avoid the scrutiny that fell upon Keystone XL; they're driven by surging oil demand in different parts of North America.
"The process is what it is," she said. "We have to abide by what's been laid out for us in order to complete a project. And so if it means going state by state and complying with their regulatory requirements, that's what we have to do."
"It is what it is" is the favored meaningless tautology of those who seek to minimize concerns without actually addressing them.
Enbridge's recent spills raise questions about its safety record.
The company was recently fined $3.7 million for a Marshall, Mich., spill that dumped 20,082 barrels of oil in the Kalamazoo River in 2010, the biggest penalty ever from the nation's pipeline authority, the U.S. Transportation Department's Pipeline and Hazardous Materials Safety Administration.
In July, an Enbridge pipeline in Wisconsin spewed 1,200 barrels of oil, and U.S. pipeline regulators reiterated "long-standing concerns" about the company's "pattern of failures."
According to company data collected by the Polaris Institute, a left-leaning Canadian think tank, Enbridge has leaked 161,475 barrels of oil in 804 spills from 1999 to 2010.
Enbridge said it has learned from the Marshall spill.
"We as a company have taken a look to see what we can do to prevent that from happening again," Little said. "I would say that's the No. 1 goal — to prevent another Marshall incident. We've undertaken a lot of initiatives since that incident occurred."
Forgive us if we are less than comforted.
The company said its plans to boost the Michigan line's capacity—the same line that spilled into the Kalamazoo River — from the current 240,000 barrels a day to 500,000 barrels a day doesn't require a new presidential permit even though the line sends oil into Ontario.
"Liquid pipelines don't really have any of the federal oversight on routing that natural gas lines do," said Carl Weimer, executive director of the Pipeline Safety Trust, a watchdog group in Bellingham, Wash. "This seems to be one of those big holes in the system."
Again very convenient.
The responsibility for determining what can and can't be done now falls on often highly constrained or inexperienced local authorities.
Landowners and environmentalists have held up TransCanada's Keystone XL pipeline primarily by objecting to its northern segment from Canada through the sensitive Nebraska Sand Hills and over the Ogallala Aquifer, the main source of potable water for much of the Midwest.
The State Department's decision on that segment is expected by early next year. Meanwhile, TransCanada is proceeding with a 485-mile southern segment from Oklahoma to the Gulf Coast and can avoid State Department permission, much as Enbridge has done.
Note that both the Keystone pipeline and Enbridge network would go through Cushing and continue to the Gulf Coast (contrary to the implication of the second LA Times piece), so the two companies must have been intimately exacting in avoiding stepping on each other's toes. Let's hope this story will alert stateside greens that there are battles to be fought here other than Keystone—and that common cause can be made across the border with the struggle in Canada.