Monday, September 8, 2014

Mary Landrieu, Keystone Phase IV, and Louisiana

Note: This blog post is adapted from background research done by request; it does not read like my typical blog posts. :)

Background: Louisiana and the Oil and Gas Industry

Louisiana's industrial base is diverse, including shipping, shipbuilding, general manufacturing, commercial fishing, tourism, agriculture and forestry-related products. However, out front is mineral production, mainly centered on production and processing of oil and natural gas.

Louisiana contains just under 10 percent of known US oil reserves, making the state the third largest producer of petroleum in the US. Louisiana produces over one quarter of all US natural gas. Additionally, home to 16 refineries, Louisiana is the nation's third leading refiner, and ranks second in the nation in primary production of petrochemicals.

These statistics are available at Info Louisiana; for more historical background, see Louisiana Mid-Continent Oil and Gas Association.

Some further information of interest includes these facts:

Industrial Capacity Louisiana has the greatest concentration of crude oil refineries, natural gas processing plants and petrochemical production facilities in the Western Hemisphere.

Petroleum and Petroleum Refining Louisiana is America's third largest producer of petroleum and the third leading state in petroleum refining.

Offshore Oil Production Louisiana pioneered offshore oil and gas exploration and drilling. The first well ever drilled out of sight of land was off the Louisiana coast. Most of the techniques used in offshore oil exploration around the world today were developed in Louisiana.

The bottom line is that oil and gas are big to Louisiana, and Louisiana's oil and gas are important to America.

Background on the Keystone Pipeline Project

The Keystone Pipeline is a four-phased project designed to transport crude oil from Alberta, Canada, to refineries in the United States.

Phase I runs from the Hardisty Terminal in the Western Canadian Sedimentary Basin in Alberta across the southern part of Canada, then down eastern North and South Dakota to Steele City in southern Nebraska. From there, it turns east to Wood River and later Patoka, Illinois. It was completed in the summer of 2010.

Phase II runs south, connecting Steele City, Nebraska, to Cushing, Oklahoma. Also known as the Keystone Cushing Extension, it was completed in February, 2011.

Phase III continues southward from Cushing to Port Arther in eastern Texas. Opening in January, 2014, Phase III brought oil all the way to the refineries on the US Gulf Coast. However, the Houston Lateral Project, known as Phase IIIb, is still under construction. Begun in 2013, and scheduled for completion in mid-2015, it will stretch 48 miles to oil refineries in the Houston area. By reaching these refineries, refining capacity will increase to better meet the supply being made available by the Keystone Pipeline project.

The current political polemic surrounds Phase IV of the project, which is essentially a shortcut from the Hardisty Terminal in Alberta directly to Steele City, Nebraska. Also known as Keystone XL (which stands for eXport Limited), Phase IV was proposed in 2008. Though approved by the Canadian government in September, 2009, and by South Dakota in February, 2010, questions arose regarding the impact the pipeline would have on the environment and on cultural resources, and whether the additional pipeline capacity was actually needed.

Environmental Concerns

One key question regarding the Keystone XL pipeline is a proposed path through the Sandhills region in Nebraska. Early economic development of this region tried unsuccessfully to make it into productive cropland. By the 1930's, however, the move had been made from using it as crop land to using the area for grazing cattle. Currently, the region supports over half a million beef cattle, though this industry is fading away as the older generations of cattle ranchers die out and the younger generations move to the cities.

Far more significant, however, is the fact that this grassland sits atop the Oglalla Aquifer, which is a major source of water for plains and western states. The main part of this aquifer is centered in Nebraska - in fact, most of Nebraska sits above it - but the aquifer reaches from southern South Dakota all the way to the Texas Panhandle, western Texas and eastern New Mexico. Not only is the Oglalla Aquifer a major source of water for such a large area, but it is a shallow water table aquifer, which could make it more vulnerable to surface contaminants. Spanning eight states, the Oglalla Aquifer provides drinking water to 2 million people and supports $20 billion in agriculture.

Most current government studies indicate that, if the proper environmental safeguards are followed, the potential negative impact of Keystone XL to the aquifer would be minimal to non-existent. In fact, Professor Emeritus James Goeke, a research hydrogeologist at the University of Nebraska - Lincoln, who has spent 40 years studying the Oglalla Aquifer, had this to say:

During the past 40 years, my colleagues and I at the Conservation and Survey Division of the University of Nebraska have focused our research on this aquifer. I personally have drilled more than 1,000 test holes into and through its complexities; I have analyzed the volume and behavior of the waters it holds. Here are several important findings.

1. The slope of the regional water table is from west to east; the deep waters within the host rocks move persistently downhill eastward. Approximately 80 percent of the Ogallala Aquifer lies to the west of the proposed alignment, "uphill" of the pipeline's route. Spilled oil could not move upward against gravity.

2. Along much of the alignment, the depth to water is over 50 feet. Sediments above the top of the aquifer contain fine-grained deposits like silts and clays. In a 25-year study of an oil spill near Bemidji, Minn., the Geological Survey reported that "apparently fine-grained layers impeded the infiltration and redistribution of oil."

3. If areas of the Ogallala were exposed to leaks from the pipeline, the highly varied layers within the rock formation itself would serve to localize the impact of a spill.

4. In places along the pipeline's route, there are locations where the water table is near or at the land surface. It is my understanding that in these areas, TransCanada will encase the pipeline in a waterproof covering and cement jacket.

All this comforts me with the knowledge that a leak from the XL pipeline would pose a minimal risk to the aquifer as a whole. However, we should require TransCanada to post a bond for any cleanup in the event of a spill.

However, to address ongoing concerns, options have been put forward, including eight impacting Nebraska, of which six would reduce pipeline mileage crossing the Sandhills or Oglalla areas, and one would supposedly have avoided this entire part of Nebraska. In 2011, the Nebraska legislature unanimously passed two bills for the governor's signature that enacted a compromise path for the pipeline, agreed upon by the builder TransCanada.


1) other pipelines (the Pioneer and Pony Express pipelines) have crossed the Oglalla Aquifer for years, and

2) (from TransCanada in eye of the storm, September 8, 2011) TransCanada CEO Russ Girling:

notes that TransCanada has built similar pipelines in North America for half a century, there are 200,000 miles of similar coil pipe in the United States today, that with the 57 improvements above standard requirements demanded by U.S. regulators so far, Keystone XL will be the safest pipeline ever built.

Cultural Concerns

Cultural concerns center on the impact the pipeline might have to culturally significant locations, such as historical buildings or archeological sites, and environmental degradation that may impact the way of life of people in the area.

Native American protestors were arrested outside the White House in 2011 for protesting Keystone XL. Many concerns centered on the demolition or physical disturbance of Lakota archeological sites, quoting from TransCanada's application to South Dakota:

Construction and operation of the Project can potentially affect NRHP eligible sites. These can include prehistoric or historic archaeological sites, districts, buildings, structures, objects, and locations with traditional cultural value to Native Americans or other groups. Project impacts can include: the physical disturbance during construction of archaeological sites located within the construction ROW; the demolition, removal, or alteration of historic or architecturally significant structures/features; and the introduction of visual or audible elements (e.g., pump stations) that can alter a site's setting.

However, the concerns may have been taken out of context. The above passage explains what impact is possible, and serves as an introduction the remainder of paragraph, which details how negative impact on culturally significant features will be avoided:

Impacts to NRHP-eligible sites will be mitigated through avoidance or data recovery techniques approved by DOS in consultation with the South Dakota SHPO. Mitigation may include, but will not be limited to, one or more of the following measures: 1) avoidance through the use of realignment of the pipeline centerline, relocation of pump stations, or changes in the construction and/or operational design; 2) data recovery, which may include the systematic professional excavation of an archaeological site or the preparation of photographic and/or measured drawings documenting standing structures; and 3) the use of landscaping or other techniques that will minimize or eliminate effects on the historic setting or ambience of standing structures.

Similarly, it is conceivable that disruption of the surface ecosystem could impact surface water. Many Lakota consume the water and fish that can be obtained from the surface waters. However, again, in the application, means of mitigating, minimizing or otherwise addressing such situations are discussed.

Economic Issues

As mentioned above, there has been a bit of a glut of oil moved down from Canada to storage tanks along the currently-existing Keystone pipeline. Relieving this bottleneck by opening Phase IIIb so more oil can be refined in the Houston area is one solution.

The question then arises: If there is a bottleneck within the United States, why would we need Phase IV to bring more oil in from Canada to the place where the bottleneck has developed? Again quoting from TransCanada in eye of the storm, September 8, 2011, wherein TransCanada CEO Russ Girling was being interveiwed:

The unhappiest lot will be refiners in the Gulf Coast, who are facing in the next couple of years expiring contracts for oil from Venezuela, and grim prospects to get it back, since China has already stepped in to grab it for its own use.

"The facts are that the U.S. needs 10 million barrels a day of imported oil," Mr. Girling said. "That is not going to change any time soon. This is not a debate of oil versus alternative energy. This is a debate about whether you want to get your oil from Canada or Venezuela or Nigeria. Our customers are telling us we are directly displacing barrels that would have come from Venezuela. The facts are that national security and energy security is enhanced by the building of this pipeline and delivering Canadian oil into this market place."

If Canadian oil doesn't reach the Gulf on an environmentally friendly buried pipeline, Mr. Girling said the alternative is oil that will be brought in by tanker, a mode of transportation that produces higher greenhouse gas emissions and that puts the environment at greater risk.

This, then, explains the need for the Keystone Pipeline Phase IV, especially along the Gulf Coast: should the US lose contracts for Venezuelan oil, a pipeline bringing in Canadian oil can help keep the refineries working, and this would impact jobs in Louisiana. Even if the pipeline does not go to Louisiana, tanker shipments could be diverted there, away from refineries serviced by the pipeline.

However, this may not be the case, either. From Keystone’s Impact on Venezuela Muted by Waning Imports, August 25, 2013:

It's an article of faith among supporters of the proposed Keystone XL pipeline: approving the project would allow the U.S. to use more crude from Canada and less from Venezuela and other unfriendly regimes.

The reality, according to analysts and others who watch global energy trends, is more complex. U.S. imports of crude from Venezuela have been falling for decades, though TransCanada Corp. (TRP)'s proposed pipeline may hasten the trend.

Moreover, the refineries in Texas and Louisiana that would process Keystone's oil have expanded their capacity and may simply absorb the additional stock to feed markets here and abroad for fuel, especially diesel that is in high demand in Brazil and other Latin American countries.

Consequently, there is legitimate concern that the real issue is whether US refineries are expanding their capabilities in order to supply products, especially diesel, to Latin American markets, and, thus, whether the Keystone XL pipeline might merely be a means of meeting this need.

Regardless, it seems pretty clear that if the oil is not moved via the Keystone infrastructure, including the increased capacity of the XL pipeline, then it will be moved via less-environmentally-sound means to the same refineries. Canada is currently looking into building increased pipeline capacity to get the oil to its Pacific ports, and there has already been an increase in movement of oil into the United States from Canada via trains with tanker cars. From 'Trains or pipelines,' Doer warns U.S. over Keystone, July 28, 2013:

Canada is telling the U.S administration it will see a sharp increase in cross-border crude-oil shipments by rail if President Barack Obama fails to approve the controversial Keystone XL pipeline.

In a telephone interview from Washington, Canadian Ambassador Gary Doer said oil companies are increasingly turning to trains – and even trucks – as the construction of pipelines has failed to keep up with the boom in North American crude production, and that trend will grow if the President turns down Keystone XL.

"His choice is to have it come down by a pipeline that he approves, or without his approval, it comes down on trains. That's just the raw common sense of this thing, and we've been saying it for two years and we've been proven correct," Mr. Doer said Sunday. "At the end of the day, it's trains or pipelines."

Thus, the delaying tactics of Obama and the Democrats are actually serving to prejudice the environment, by forcing oil to be moved via railroad, maritime tankers, and even highway tanker trucks. These all burn fossil fuel and pollute the atmosphere moving the oil; furthermore, these have an increased chance of an oil spill.

In the face of this, the oil industry is having to move forward. From U.S. Refiners Don't Care if Keystone Gets Built, September 5, 2013:

But [Valero Energy Corporation] says it no longer considers the pipeline critical to its business. The company is now expanding rail terminals at its refineries in Benicia, Calif.; St. James, La.; and Quebec to receive more crude oil shipments, including heavy Canadian crude. Part of the reason is the long wait for Keystone. "If we just sat around and waited for Washington, we'd never get anything done," Valero spokesman Bill Day said.

Nearly 200,000 rail cars in Canada carried crude oil or fuel during the first seven months of 2013, up 20% from the year before, according to the latest data from the American Association of Railroads.

Senator Landrieu and Keystone XL

It is in this context that we have to consider Louisiana Senator Mary Landrieu's efforts to get the Keystone XL project moving forward.

Maneuvering in the Republican-controlled House of Representatives has a goal of taking President Obama out of the loop for approval of this project. The Northern Route Approval Act passed in the House on May 22, 2013 (see House votes to override Obama on Keystone). That, of course, sends the act to the Senate where, in February of this year, Senator Landrieu took over as chair of the Senate Committee on Energy and Natural Resources. The expectation was that, with Senator Landrieu's support, it might be possible to get the bill through the Democrat-controlled Senate. However, so far, this has not been the case. In fact, Senator Landrieu's explanation of why is interesting.

In 16 questions for Mary Landrieu from May 27 of this year, Senator Landrieu talks about how much "clout" she has in Washington, clarifying that the clout belongs to the State of Louisiana. Implicit in this is the need for Louisiana to keep her in the US Senate in order to keep that clout. However, when asked about moving Keystone XL forward, her response seemed to "crawfish":

Post: "You mentioned Keystone. How, if you're chairman of the committee and you look ahead to the next two years, how do you get anything done there when the president and his administration have not green-lighted the Keystone pipeline? And indeed, there's a lot of hostility to that in your party."

Landrieu: "I'm helping to lead the building of the Keystone pipeline, but it's going to take a lot of Democrats and Republicans at every level from other parts of the state to come together. My goal right now is to get this presented in the Senate, to get it voted on in the Senate. The president could veto it. I mean, it's his right. I would argue that he shouldn't."

Post: "How to convince him to change his mind when he hasn't changed it already?"

Landrieu: "Well, that's not my job. I wish I could. And I'm going to do everything I can to try. But, you know, [Senate Minority Leader] Mitch McConnell has more power than I do and he hasn't been able to. The Chamber of Commerce has a tremendous amount of power; they've not been able to change the president's mind. The president knows that there's some Democrats and some Republicans that are really strong for the Keystone pipeline. We've presented so much evidence to him, we think. But, you know, he's got a job to do, I've got a job to do and the Senate's got a job to do and I hope that we can eventually get that pushed through. But it takes time. It's been five years, I think it should've been done three years ago. But we're going to continue to push. And I'm going to push for additional infrastructure."

When asked how she would convince President Obama to change his mind, Senator Landrieu responded by saying: "Well, that's not my job."

As I see it, here is the crux of the whole issue.

I left that quote in its context, with a link to the article, so what she said can be considered in the context in which she said it.

But, as I see it, this is the crux of the whole issue: Senator Landrieu believes that changing Obama's mind on this matter is not her job. And this is obvious when considering the situation in its entirety.

Senator Landrieu is a Democrat trying to survive in a state that leans Republican. The only way she can do so is to bury her own personal beliefs, as she does with same-sex marriage (which she personally supports), and vote in a manner more consistent with what her electorate expects.

Similarly, her state is a big refiner of oil, and the Keystone XL pipeline would be good for her state's economy. So, she has to support the project. But, in the end, she is still a Democrat. How far will she go to fight her own Democrat President and her own Democrat colleagues in Washington? Instead, she makes a show of fighting the battle, but she is not committed. This way, she can put on a good show for the voters back home, secure in the knowledge that it's all a show, and the Democrats in Washington will continue on the course they are on.

The fact that we have demonstrated that Democrat policies regarding Keystone XL hurt the environment by forcing oil to move by sea, by railway and by highway, in an environmentally unsound and even dangerous manner, jeopardizing the very environment Democrats claim to be protecting, is just icing on the Democrats' hypocritical cake. The issue is as it so often has been: a question of politics over principle, an issue of sacrificing the very things they claim they are trying to protect - in this case most notably the environment - all for the sake of pandering to extremist groups who themselves are, at best, uninformed and misinformed.

Perhaps the people of Louisiana would be better served by a Senator whose core beliefs are in line with policies that will reflect the best interests of Louisiana and of America, a Senator who actually sees eye-to-eye with the electorate, rather than one who thinks one way but votes the other for political expediency.

Perhaps the people of Louisiana would be better served by a Senator who gets to Washington and fights to change the President's mind or to go around him, rather than one who says that doing so is not her job.

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