Oil from proposed Keystone pipeline could end up exported

McClatchy NewspapersApril 25, 2013 

— Whether the proposed Keystone XL pipeline would boost American energy independence is a key part of the debate over the pipeline, the biggest environmental battle in recent history. Keystone promoters say the $7 billion project is vital for the nation – but there are signs much of the oil coming through it would be exported.

The United States increasingly exports refined petroleum products such as diesel, heating fuel and gasoline from the same Gulf Coast refineries where Keystone oil would be headed.

There is no reason oil from Keystone would be treated differently, according to energy analysts.

Disputes rage over how much is currently exported. A recent State Department analysis of Keystone says less than half of the Gulf Coast’s refined products go into the U.S. market.

The United States is on the path to energy security and is forecast to become the world’s leading oil producer in just four years, a different world from its past desperation to secure stable energy.

But Canadian Natural Resources Minister Joe Oliver said this week that the United States still will need foreign oil in the coming decades, and it is better if it comes from an ally. The 1,700-mile Keystone pipeline would go from the Alberta oil sands in Canada to the U.S. refineries on the Gulf Coast.

Oliver said the oil would be used in America and that Keystone is not an export pipeline.

Oil Change International, a group fighting the Keystone pipeline, argues that is clearly not true. The group used census and U.S. energy data to figure out how much is now exported from the Texas refineries expected to handle the majority of Keystone oil.

They found 60 percent of the finished gasoline produced last year in those refineries was exported.

“Keystone XL proponents are saying this is about energy independence and obviously it’s not,” Oil Change International executive director Steve Kretzmann said in an interview.

The American Fuel and Petrochemical Manufacturers trade group responded that export figures are being misused. Charles Drevna, president of the group, said the figures are nowhere near 60 percent when all gasoline produced to blend with ethanol is accounted.

Drevna asserted that the real Gulf Coast refinery export figures are only “probably around 11 or 12 percent.” That figure will remain the same after Keystone is built, he said.

Keystone is not for exports, he said. “Anyone who believes that either has to understand this industry better or they are just trying to mislead the public and Congress,” he said.

Some influential members of Congress, including Senate Energy and Natural Resources Committee Chairman Ron Wyden, question how much American consumers would benefit from Keystone.

Wyden, an Oregon Democrat, said the State Department needs to deal with the export issue before approving the pipeline.

“The State Department needs to explain how it is in America’s national and economic interests to facilitate Keystone XL’s completion, especially if the pipeline is simply a conduit for oil and refined products to go elsewhere,” Wyden said in a recent email.

Other members of Congress say the U.S. needs the pipeline.

"Keystone XL is good for American jobs, good for our economy and good for national security," said Washington Republican Rep. Doc Hastings, the chairman of the House Natural Resources Committee.

Charles Ebinger, an energy expert at the center-left Brookings Institution in Washington, said it is possible much of the Keystone oil flowing to the Gulf Coast could be exported. It would carry Canadian oil so isn’t covered by the U.S. law forbidding exports of American crude, he said.

And it could be exported as refined products the same as American oil already is, he said. “You can’t keep oil. It’s going to move to where market conditions direct it to move.”

But Ebinger said it shouldn’t matter much if it ends up exported, since oil is a global market.

“Any oil that goes into the world market as petroleum products or as crude will have an effect on the market and very likely drive prices down if it contributes to a glut,” he said.

It’s an issue, though, for members of Congress such as Rep. Eliot Engel, a New York Democrat and member of the House Energy and Commerce Committee, who said this month he is torn over the Keystone pipeline.

“I’d like to know that if we take the risk,” he said, “we get the benefit.”

Email: scockerham@mcclatchydc.com; Twitter: @seancockerham

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