More options for crude export in Canada may help Keystone XL’s case in U.S., consultant says

12 Apr

By Dave Cooper, Edmonton Journal April 9, 2013

EDMONTON – The push for tougher greenhouse-gas rules in Canada and plans for a new crude pipeline to Atlantic Canada may help make the case for the Keystone XL pipeline, says a Washington-based energy consultant.

In a research note, Robert Johnston of the Eurasia Group, said he expects approval of the northern leg of the Keystone XL between Alberta and Nebraska by late summer, despite the recent spill of Alberta heavy crude in Arkansas, which has been highlighted by critics of the proposed Keystone line.

Johnston said the bitumen spill on the ExxonMobil Pegasus pipeline “created significant headline risk and could generate further delays” for U.S. federal approval. But this is balanced by recent proposals for stricter greenhouse-gas emission rules in Canada which are being pushed by the Alberta government, and further progress on TransCanada’s proposed “Energy East” pipeline which will deliver oilsands output to Atlantic Canada.

Johnston noted the Arkansas spill “has driven a strong response by the environmental community in Washington, which is virtually united in opposing Keystone XL.” He adds the spill “is being used to re-engage the administration following public comments by President (Barack) Obama in San Francisco last week that were interpreted as more favourable for Keystone XL approval.”

Johnston notes the Keystone will have a number of new “smart” systems to detect and respond to leaks, and will be built with better materials than those used in the 60-year-old Pegasus pipeline.

And the push for an eastern outlet, with TransCanada’s plans to convert one of its underused natural gas pipelines to carry crude and extend the line from Montreal to Saint John, N.B., with its large Irving refinery, has shown there is another option to Keystone XL.

That, in combination with Enbridge’s plans to reverse its existing line to Montreal so western light crude can reach the Suncor refinery there, will weaken the environmentalists’ argument that stopping Keystone will halt oilsands development.

“The Keystone XL alternatives are crucial as they underpin the argument that the GHG (greenhouse gas) impact of KXL itself will be neutral, as the oilsands will be produced and brought to market with or without the KXL project,” said Johnston.

However, using rail or the TransCanada line to the east are still not the best choices for many producers, since those options will be more expensive than using the Keystone line.

Eurasia notes the 45-day comment period on the draft of the U.S. environmental impact statement is set to expire on April 22 unless it is extended. If it expires, it will take an additional one to two months to prepare the final statement, which would then have to undergo an inter-agency review of up to 90 days.

“Sources contacted by Eurasia Group are divided over whether the White House would use most or all of that time. On balance, while approval remains highly likely, timing now looks more likely to be late summer versus late spring,” said the report.

Republished from the Edmonton Journal: http://www.edmontonjournal.com/business/energy-resources/More+options+crude+export+Canada+help/8218564/story.html

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: