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Oil Flowing Through Keystone’s Texas Pipes

Trump reverses Obama’s order on Keystone’s pipeline into Canada, and that could have an impact on supplies for Texas refineries.

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President Donald Trump signs one of five executive orders related to the oil pipeline industry on January 24, 2017.
Photo by Shawn Thew-Pool/Getty Images

This week, President Donald Trump signed executive orders reviving the construction of the Dakota Access and Keystone XL pipelines, projects that had been blocked by President Obama, but the orders likely have a greater impact on long-term supplies for Texas refineries than any short-term gain. That’s because the Texas portion of the Keystone project has been operational since last August, bringing light crude in from midwestern U.S. production sites.

After several years of confrontations with East Texas landowners, the pipeline’s owner, TransCanada, completed a 487-mile pipeline from Cushing, Oklahoma, to Nederland, Texas, between Beaumont and Port Arthur. The $2.3 billion pipeline project included a storage facility in Oklahoma that could hold 2.25 million barrels of crude in Oklahoma. The company’s initial projection was for the pipeline to ship 520,000 barrels per day to Gulf Coast refineries, with the potential to carry up to 830,000 barrels a day through the 36-inch pipeline.

A Houston lateral pipeline was completed and began operation last August at a cost of $400 million and a capacity of 700,000 barrels a day.

The Keystone XL pipeline had been supported by business interests and Republicans who believed it would create secure energy sources on the North American continent, while environmentalists and Democrats believed the pipeline would promote the exploitation of oil sands in Canada, environmental hazards of a ruptured pipeline, and would encourage the continued consumption of fossil fuels for energy. But the fight was almost symbolic on both sides.

Studies showed that the pipeline would not have a momentous effect on jobs or the environment, but both sides made it into a symbolic test case. The State Department estimated that Keystone would support 42,000 temporary jobs for two years — about 3,900 of them in construction and the rest through indirect support, like food service — but only 35 permanent jobs. Similarly, the government concluded that Keystone’s carbon emissions would equal less than 1 percent of the total greenhouse gas emissions in the United States.

Bill McCoy, president of the Port Arthur Chamber of Commerce, said the pipeline is safe and necessary to maintain a supply of crude oil to the area refineries. He said there are 20,000 jobs locally that are directly or indirectly dependent on the refineries.

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  • jake

    I appreciate the write up on the fight being mostly symbolic. I have often heard that this is a “both sides are not completely right” discussion. However it does seem that the other issue that neither side really cared about was the abuse of eminent domain in this and the Dakota pipeline.

    • jake

      Would also like to better understand if this actually helps or hurts US oil dependency. It does not seem that it will help at all?

      • St. Anger

        No this is strictly about oil company profits.

        With any luck, if the price goes low enough, it won’t be economically feasible to build these pipelines.

        • jake

          Well yes I would wager that most companies act in order to make profits, but to do so they have to serve a customer which was what my question was about.

          • St. Anger

            Sorry I thought your question was whether it hurts or helps us oil dependency.

          • jake

            No it was my question. The oil and natural gas are being sold to someone. But I was not asking if they were doing this for a profit or not, I already assumed they wanted the pipe to expand productions and thus expand revenue and profits. So my question was is this being used domestically and if so how, or is it destined for Asia or another market and thus not actually helping North American oil needs. I have heard both so wondering if someone had a link or some facts that showed one or the other.

          • St. Anger

            I believe the answer to that is both. The pipeline will be for oil to use to transport their product. What they do with it after that is up to them. Free market and all.

            The reason I initially said it would have no effect on us oil dependency is because of the volume and cost. As oil gets cheaper, the extraction technique they are using up on the Canadian end of keystone, for example, is too expensive.

          • St. Anger

            If energy indepenence was ever seriously the goal, the us would have nationalized the oil supply.

            There is plenty underground, but those companies keep selling it out from under us. Literally.

          • John Johnson

            Have any of you ever looked at the pipeline network running through the U.S.? Most run out of Texas and, if linked together, look like they would stretch around the world several times over.
            What harm will one more do? It is better than hauling it down here by rail. I have posted my thoughts on the ruse being perpetrated on us with regards to a goal of total energy independence on RG’s new thread. We are an ignorant lot.

          • jake

            Oh I understand. Yeah agree on volume and cost. Although I wish I understood OPEC a bit better and now they still play a big role in world markets.

            I guess my real question with the depenandcy is because I remember 8 years or so ago one part of the discussion was that the government, in granting approval, should also include that some percentage of the oil must stay domestically. I have recently heard however that part of the agreement with xl pipeline did not include this language and in fact the company has already made arrangements at least in the short term to send to Asian markets.

            I wonder cause as someone who is against eminent domain, especially for private business, I wondered if this was actually doing what government said it would when they argued that eminent domain was OK if it advanced economic interst for the US. While I don’t doubt the potential to tax the infrastructure, if the oil is not staying here I would say that is a far cry from helping the US. Not to mention xl pipeline is a Canadian company. Not that I’m against foreign companies, but make the argument harder to say it is in US interst.

          • St. Anger

            There is no way to argue that these pipelines are in the us interest.

            Our new Secretary of State is from Exxon. You get one guess who will benefit from everything he does (two guesses if one of them was “tillerson”).