For First Time, TransCanada Says Tar Sands Flowing to Gulf in Keystone XL South

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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 (โ€œheavy crude,โ€ in industry lingo), TransCanada CEO Russ Girling confirmed what many had alreadyย suspected.

โ€œI donโ€™t 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. โ€œI just donโ€™t 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 

โ€œOil 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 

โ€œAs youโ€™ve 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.

โ€œI 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.

โ€œTexas 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 โ€œTexas Bound and Flyin.’โ€ Anย April 17 Energy Information Agency communiquรฉ lays out the dirtyย details.

โ€œThe 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. โ€œIn 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.

โ€œCrude 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. โ€œOn 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.

โ€œIn 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. โ€œNow 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.

โ€œOur 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. โ€œIโ€™d 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.

โ€œIt is somethingโ€ฆthat we can move on relatively quickly,โ€ Girling stated. โ€œWeโ€™ve done a pretty substantial amount of work at the terminal end and mostly at the receipt and delivery points and thatโ€™s really what our key role in here wouldย be.

โ€œYou know a lot of the tankage is already in place so itโ€™s a matter of building rail sidings and those kinds of things which arenโ€™t 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, โ€œWhile the oil industry and their paid Representatives in Congress are likely to scream, it’s worth keeping in mind thatโ€ฆcrude 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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Steve Horn is the owner of the consultancy Horn Communications & Research Services, which provides public relations, content writing, and investigative research work products to a wide range of nonprofit and for-profit clients across the world. He is an investigative reporter on the climate beat for over a decade and former Research Fellow for DeSmog.

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