Sparks fly at US House hearing on Keystone XL pipeline proposal
Washington (Platts)--2Dec2011/536 pm EST/2236 GMT
A US congressional hearing on the proposed Keystone XL pipeline
extension grew somewhat testy Friday over the issue of keeping the
products refined from Canadian oil sands within the US.
The House of Representatives' Subcommittee on Energy and Power held the
hearing to highlight the job creating potential of the 1,700-mile
pipeline that would carry diluted bitumen from Alberta, Canada to
refiners on the US Gulf coast.
Alex Pourbaix, president of Energy and Oil Pipelines at TransCanada, the
company that wants to build the pipeline, testified that another issue
the pipeline would address is energy security.
"When you boil down the debate on this project, I believe it comes
down to a simple question for Americans: do they want secure, stable oil
from a friendly neighbor in Canada or do they want to continue importing
high priced conflict oil from unfriendly regions such as the Middle East
or Venezuela?" Pourbaix said.
That sparked a series of comments from Democrats on the panel and a
representative from a Nebraska anti-pipeline group about the eventual
destination of the diesel fuel and other products that would be refined
from the heavy Canadian oil.
"If this oil is meant for the United States, then attach that to a
bill," Jane Kleeb, executive director of Bold Nebraska said. "Make it
clear that this oil is guaranteed for the United States. Because right
now, there are no guarantees. We know that TransCanada and other tar
sands companies need to get to our ports ... They want access to our
ports in order to sell their commodity on the international market."
Pourbaix said that diesel oil refined on the Gulf Coast has a ready
market overseas, where demand runs high. The US, which has a huge need
for gasoline, imports some of the product, he said.
"The US produces about 5 million b/d and consumes about 20 million b/d
of refined products," Pourbaix said. "It is natural that the vast
majority of this product will stay in the region with the highest
demand."
Distillates, which are more easily refined from heavy crude, also is in
demand overseas. Data released this week by the Energy Information
Administration showed that total US exports of crude and products rose
87,000 b/d month-on-month in September to an all-time high 3.158 million
b/d, driven by record distillate exports.
Distillate exports climbed to 931,000 b/d in September from 895,000b/d
in August, the data showed. Finished motor gasoline exports fell 7,000
b/d to 529,000 b/d in September, but remained near August's all-time
high level. The bulk of the gasoline exports -- 322,000 b/d -- went to
Mexico.
As a result of the high exports, and a reduced dependency on imports, US
net imports of crude and products fell to 8.051 million b/d in
September, the lowest level since September 2006, when net imports were
at 8.038 million b/d.
And it was not just product exports leading the decline. The US is
importing fewer barrels of crude. Imports fell 18,000 b/d
month-over-month to 8.97 million b/d in September, led by declines in
Iraqi and Nigerian imports.
Representative Edward Markey, Democrat-Massachusetts, pressed Pourbaix
on whether TransCanada would back legislation that would require that
products refined from Canadian oil sands remain in the US.
"Would TransCanada support legislation that ensures that the product can
only move forward if the diesel or other refined fuels from the pipeline
are only sold in the United States so that this country realizes all of
the energy security benefits your company and others have promised it
would bring?" Markey asked.
"TransCanada does not produce one barrel of oil," Pourbaix replied. "Our
entire business is safely transporting that oil. That is a question
better put to our shippers, who are largely refiners and producers and
largely American companies."
"Would you agree that there would be no net difference?" Markey asked.
He suggested that TransCanada require from its customers that any
products exported from Canadian oil be offset by the exact same amount
of imports. The result, Markey said, would be that the US would receive
the full benefit from the oil transported through the pipeline.
"I can't do that because I am merely a shipper of that oil," Pourbaix
said. "We've already agreed to our shipping arrangements."
--Gary Gentile,
gary_gentile@platts.com
--Jeff Mower,
jeff_mower@platts.com
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