TransCanada admitted for the first time that tar sandsย oil is now flowing through Keystone XL‘s southern leg, now rebranded the Gulf Coast Pipeline Project. The company confirmed the pipeline activity inย its 2014 quarter one earnings call.
Asked by Argus Media reporter Iris Kuo how much of the currentย 300,000 to 400,000 barrels per day* of oil flowing from the Cushing, Oklahoma to Port Arthur, Texas pipeline is tar sands (โheavy crude,โ in industry lingo), TransCanada CEO Russ Girling confirmed what many had alreadyย suspected.
โI donโt have that exact mix, but it does have the ability to take the domestic lights as well as any heavies that find a way down to the Cushing market, so it is a combination of the heavies and the lights,โ said Girling. โI just donโt know what the percentageย is.โ
The Keystone Pipeline Systemย โ of which Keystone XL‘s northern leg is phase four of four phasesย โ is and always has been slated to carry Alberta’s tar sands to targetedย markets. So the announcement is far from aย shocker.
Image Credit:ย Wikimediaย Commons
More perplexing is why it took so long for the company to tell the public that tar sands oil now flows through the half of the pipeline approved via a March 2012 Executive Order by President Barack Obama.ย
โOil isย Oilโ
When DeSmogBlog reported TransCanada had begun injecting oil into the pipeline’s southern leg in December, the company would not reveal what type of oil itย was.ย
โAs youโve likely seen me quoted before, oil is oil and this pipeline is designed to handle both light and heavy blends of oil, in accordance with all U.S. regulatory standards,โ TransCanada spokesman Shawn Howard told DeSmogblog at the time.
โI am not able to provide you the specific blend or breakdown as we are not permitted (by our customers) from disclosing that information to the media. There are very strict confidentiality clauses in the commercial contracts we enter into with our customers, and that precludes us from providingย that.โ
Now, though, it appears the company has let the proverbial cat out of theย bag.
โTexas Bound andย Flyin’โ
In the first quarter of 2014, Keystone XL‘s southern half has opened up the floodgates for what was once a glut of oil in Cushing to reach Gulf Coast refineries at recordย levels.
To borrow the title of Jerry Reed’s 1980 country song classic, it’s โTexas Bound and Flyin.’โ Anย April 17 Energy Information Agency communiquรฉ lays out the dirtyย details.
โThe main driver of the recent crude oil inventory builds on the [Gulf Coast] is start-up of TransCanada’s [Gulf Coast Pipeline] which runs from the Cushing, Oklahoma storage hub to the Houston area,โ explained the EIA. โIn late January, TransCanada completed the first delivery of crude oil via [Gulf Coast Pipeline] to [Gulf Coast]ย refineries.โ
Chart Credit: U.S. Energy Informationย Agency
In short, the glut of oil has teleported from Cushing to Texas in the aftermath of Keystone XL‘s southern leg opening for business in January, as explained in another EIA March 27ย update.
โCrude oil inventories at Cushing, Oklahoma, the primary crude oil storage location in the United States, decreased 13 million barrels (32%) over the past two months,โ the EIA wrote. โOn March 21, Cushing inventories were less than 29 million barrels, more than 20 million barrels lower than a yearย ago.โ
Chart Credit:ย U.S. Energy Informationย Agency
Northern Leg andย Rail
Keystone XL‘s northern leg, or what many know simply as Keystone XL, also came up on the earningsย call.
Girling voiced frustration with how long the process has taken and withย President Obama’s April 18 announcement to delay a decision on the northern leg until after the 2014 mid-termย elections.
โIn our view this delay is inexplicable. The first leg of our Keystone system took just over 600 days to review and approve,โ said Girling. โNow after more than 2,000 days, five exhaustive environmental reviews and over 17,000 cases of scientific data, the review process continues to beย delayed.โ
The prospect of moving tar sands oil by rail to Cushing was also discussed on theย call.
โOur customers have asked us to look at a rail bridge between Alberta and U.S. points,โ Bill Taylor, TransCanada’s Executive Vice-President and President of Energy, said on the call. โIโd say that since the delays, the intensity of those calls has gone up quiteย substantially.โ
Girling echoed Taylor in discussing his company’s tar sands oil-by-rail chessย move.
โIt is somethingโฆthat we can move on relatively quickly,โ Girling stated. โWeโve done a pretty substantial amount of work at the terminal end and mostly at the receipt and delivery points and thatโs really what our key role in here wouldย be.
โYou know a lot of the tankage is already in place so itโs a matter of building rail sidings and those kinds of things which arenโt overly complicated and we have spent some time engineering thoseย things.โ
Debate Continues, TransCanada Forgesย Ahead
The debate over TransCanada’s Phase Four (Keystone XL‘s northern leg) continuesย apace.
But, TransCanada’s quarter one earning’s call makes one thing clear: the company is firing ammo from many angles to move tar sands to market with or without the oft-discussedย pipeline.
As Oil Change International executive director Steve Kretzmann put it in a press release after President Obama punted on the pipeline decision until after the 2014 elections, โWhile the oil industry and their paid Representatives in Congress are likely to scream, it’s worth keeping in mind thatโฆcrude oil inventories on the Gulf Coast are at recordย levels.โ
*Correction: An earlier version of this stated 530,000 barrels per day of tar sands now flow through TransCanada’s Gulf Coast Pipeline Project. We regret theย error.
Photo Credit: Christopher Kolaczanย | Shutterstock
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