New York Times Editorial on Keystone – Details Matter.

In an editorial today, the New York Times renewed its calls for the State Department to say no to the Keystone XL pipeline.  Unfortunately, this editorial is not very careful with respect to language and buys into some of the rhetoric put forward by opponents of the pipeline, while doing a good job at correcting some inconsistencies in arguments put forward by proponents, in particular jobs figures.

The editorial states that:

What pipeline advocates — including big-oil lobbyists and House Republicans who have tried to force an early, favorable decision — fail to mention is that much of the tar sands oil that would be refined on the Gulf Coast is destined for export. Six companies have already contracted for three-quarters of the oil. Five are foreign, and the business model of the one American company — Valero — is geared toward export.

Most of this paragraph is accurate.  In fact, one of the refineries in Port Arthur, where the Keystone XL line will terminate, is 50% owned by Saudi Aramco, which certainly came as a surprise to me.  The sentence, “much of the tar sands oil that would be refined on the Gulf Coast is destined for export,” is perhaps more clumsy than wrong, since it does seem to imply that oil would be refined in Texas, then exported.  The sentence is loosely worded enough to fit into the rhetoric on the relationship between the export of refined products from Texas and the impact of Keystone XL on US energy security.

Having excess production of refined products, with the excess available for export, will absolutely make the US more energy secure in terms of access to physical commodities.  In the event of a US refinery shutdown or limit to maritime access, the US would be able to re-direct domestic supplies to meet domestic demand.  If you disagree, challenge yourself to think about other energy export industries – is Quebec less energy secure because they produce much more electricity than they use and then export the balance to Ontario and the US?  I would think not.  In times when domestic consumption increases, as was the case in Q1-2011, Quebec simply exports less electricity. 

The same would be true in a market in which the US was exporting more refined products.  If US demand were to increase (as unlikely as that seems) or supply were to decrease for other reasons, the excess capacity would simply remain in the US, as it would no longer make commercial sense to pay transportation costs to export a product for which there was a scarcity at home.

To suggest that oilsands crude (dilbit or synthetic) would be exported on a sustained basis from the US makes no sense at all, as Michael Levi makes very clear in this piece.  As the US imports significant quantities of oil today (much of it heavy oil comparable to Canadian dilbit), you’d need to believe in a scenario where a tanker unloads heavy oil in Port Arthur, re-loads with heavy oil from Keystone XL, and sails out to another port.  The financial market would see a clear gain from re-routing the shipment into port to the market which would otherwise have been served by Keystone-XL-shipped oilsands crude, and the oilsands crude would remain in Port Arthur.  Unless you foresee a situation where US demand drops to the point where the US is within 700kbpd of being an oil exporter (a drop of 30% in domestic oil demand from current levels along with an increase in domestic production to 12 million bpd would do that), exporting oilsands out of Port Arthur makes no financial sense at all.

The editorial also states that:

“…while greenhouse gas emissions caused by tar sands production have declined over the last two decades, the extraction and production of tar sands oil still causes far more emissions than conventional crude.”

It seems that the NYT omitted the words per barrel from this statement.  GHG emissions per barrel from oilsands have decreased significantly over the past 30 years- this NEB report estimates a 53 percent reduction in carbon dioxide emissions per barrel for the period from 1990 to 2010. With the increase in emissions-intensive in situ extraction, it’s not clear that decline will continue or even that it won’t be reversed in the near future.  Absolute GHG emissions from oilsands have been increasing steadily, and are projected to increase further as production expands.

Unless we are talking about a per-barrel calculation, the extraction and production of oilsands produces approximately 40Mt/year of GHG emissions, while the extraction and production of conventional crude would exceed this several times over, simply because global production of conventional crude far exceeds Canadian production of oilsands.  Somewhat surprisingly, according to US IPCC inventory numbers, page 3-50, US emissions from crude oil production were 30.6Mt CO2e in 2009, even though US oil production rates are more than 6 times higher than oilsands. It seems th editorial would also be accurate if it stated that, “the extraction and production of tar sands oil still causes far more emissions than the extraction and production of US conventional crude.”

Am I nitpicking? Perhaps, but in this debate details matter.