Follow the money No. 97
A pipeline to …well, almost …eternity
Camouflaged by Congressional political badminton and Pres. Barack Obama’s demagoguery, the Keystone XL Pipeline Project represents solutions to economic and security issues far exceeding its general appreciation.
Half truths on all sides have obscured the project’s underlying fundamentals. Some are only emerging as additional research and technology is applied – most of it, for a change, good news in that it boosts estimates of access to available North American new fossil fuels reserves even if at higher prices.
Contrary to claims of Congressional proponents, the project is not an immediate positive economic bonanza. Like all natural resource development projects, construction employment will be temporary and jobs minimal when the pipeline is actually functional. Of course, given the current environment, any new jobs of any duration not added to the public payroll — the project is funded privately at something over $7 billion — is a godsend.
Its importance lies in its contribution to what should be a longer term U.S. energy strategy, a consideration often missing in heated partisan debate.
First of all, direct access to the Canadian tar sands affords fallback access for the almost bottomless U.S. energy maw – developing rapidly long- term whatever the short-term diminished demand of a temporarily crippled economy. Scandal after scandal is proving the Obama Administration’s so-called green energy strategy corrupt as well as wasteful and ineffectual. Keystone, on the other hand, would put crude into the Texas petrochemical refinery complex already absorbing Venezuela’s similar heavier oil – those reserves recently reestimated upward with spectacular finds on the Orinoco River.
That would give the U.S. not only an emergency alternative to the Venezuelan crude, fourth largest of our import sources, but leverage against the machinations of gringo-baiting Venezuelan Pres. Hugo Chavez. Given that country’s long troubled history, necessary insurance is needed even in a post-Chavez Venezuela [soon perhaps with reports the fiery demagogue may soon fall victim to cancer largely untreated so he could continue exercising his one-man rule].
The expanded pipeline proposal also now would pick up on its way the more attractive sweet crude from the Bakken strike in North Dakota, already one of the largest in U.S. history and apparently linked by new successful prospecting and new shale recovery technologies to huge neighboring regional deposits. With Bakken already having added an estimated 10% to American reserves, these could turn into the largest petroleum find in U.S. history.
As the pipeline travels south, it also aims at untangling a crude gathering traffic jam in Oklahoma and expanding the tanker delivery scene on the Texas coast.
But radical environmentalists had chosen – with the help of the usual Hollywood suspects assuaging their guilt for their gratuitously huge earnings – to make Keystone a major test. That was despite three years research by experts for the State Dept. had not turned up sufficient environmental issues to block the project. When local interests in Nebraska – ignoring the relatively clean record of the country’s vast pipeline networks – argued spills might threaten a critical local aquifer, the Canadian company countered with a $100-million-dollar detour around it.
Washington rumors are Sec. of State Hillary Clinton was not only not consulted but not forewarned when Pres. Obama, anticipating the 2011 election, threw a bouquet to enviromentalistas who had been increasingly jaundiced at his 2008 promises. But with even normally loyal trade unionists joining the outcry against the White House postponement to go ahead until after next year’s election, it was inevitable the issue would become a cudgel for the Republicans.
Canadian threats to transfer their affections to the Chinese market might have some validity – although even Chavez is arranging swaps with Iran for his Chinese sales with Venezuelan crude supposedly sold Beijing flowing into Texas. But level-headed Canadian Prime Minister Stephen Harper – an economist and native of Canada’s provincial giant oilwell, Alberta – may have overestimated American common sense. [Recent hints suggest Ottawa feels it is dealing with an overburdened, troubled U.S. and has to demonstrate inordinate patience for both their sakes. One has to wonder what the two chief executives talk about in frequent and what appear to be pleasant meetings!] But, in fact, Canada’s role as No. 1 foreign energy supplier to the U.S. – something forgotten in much of the talk about “American energy independence” – probably, rightfully, isn’t going away in the near future. The Republicans may be seeing to that.