The energy industry is preparing to move beyond Keystone XL — and that’s no eco-lobby victory

posted at 12:41 pm on December 17, 2013 by Erika Johnsen

If there is one overarching lesson to be found in yesterday’s Energy Information Administration report on the United States’ relatively newfound and positively dizzying energy abundance largely unlocked by the auspices of the private sector and recent drilling innovations, it’s that fossil fuels are not going anywhere for quite awhile — which makes it rather unfortunate for the radically progressive eco-contingent that they have worked so very hard to manufacture the Keystone XL pipeline as the major politicized issue on which to hang their climate-change hats. The oil-and-gas industry is awash in resources, and while the Keystone XL pipeline would have been the most cost-effective, energy-efficient, safest, cleanest way for Canadian and North Dakotan companies to transport those goods, it is still perfectly profitable for them to find other ways around the bottlenecks that the relative lack of available pipeline infrastructure is creating — namely, railroad.

The eco-lobby’s biggest argument throughout this entire painfully drawn-out episode has been that allowing the pipeline to proceed would exacerbate the onslaught of climate change by allowing Canada to more readily develop their oil sands; President Obama himself tried to reassure them on that score by directing the State Department not to issue their approval unless they determined the project would not cause a net increase in greenhouse gas emissions. As sane, rational people everywhere have been trying to impress upon these determinedly single-minded eco-radicals, however, the permanent absence of the Keystone XL pipeline will do exactly nothing to stop these companies from developing those resources. Where there’s a will, there’s a way, whether that means using more railroad or shipping their products by sea to the ever-eager buyers in China.

The entire fruitless exercise, however, has been an apt lesson in how not to pick your battles. Oil companies have been acting pragmatically as it’s become increasingly clear that the administration is deliberately slow-walking the endeavor, and Reuters reported yesterday that Continental Resources, one of the companies that has committed to shipping crude via the Keystone pipeline’s proposed northern extension, thinks that energy companies will be able to equip themselves to cope without it:

Continental has signed on to ship some 35,000 barrels of its own oil from the Bakken field of North Dakota on the 1,179-mile, $5.4-billion Keystone XL line. But construction of the pipeline has been delayed for years as TransCanada has sought regulatory approvals, and Continental has since turned to railroads to get its crude to oil refineries.

Harold Hamm, chief executive of the independent oil producer, told Reuters that his company and the U.S. oil industry in general are no longer counting on Keystone XL. …

When asked whether Keystone XL is still needed, Hamm said “not for our Bakken (crude). And is it needed for the industry? I don’t think so … not in the U.S.” …

Continental now ships 90 percent of its crude oil by railcar, Hamm said. Rail transport can be more expensive, but it allows shippers more flexibility on where the crude is shipped.

The only victory that these self-fancied “green” fanatics will have secured here, in the eventuality that the administration does reject the pipeline, is in thwarting the most cost-effective and environmentally-friendly form of transport. (…Way to go, guys.) Reuters’ headline of above is that the pipeline has “lost support” from a major U.S. customer, but that’s not really an accurate representation; energy companies (not to mention, the general public) are still pulling for the pipeline and hoping to secure some capacity therein for those very cost-effective and environmentally-friendly reasons, but they are no longer counting on it and are planning on doing work with or without it.

I’ve covered the self-righteous antics of “green” activist and progressive billionaire Tom Steyer’s campaign to derail (heh) the Keystone XL pipeline, and Matthew Continetti had a nice summarizing piece over at the Washington Free Beacon last week all about Steyer’s well-funded personal effort to consign the pipeline to “bureaucratic purgatory” in conjunction with the White House’s recent hiring of longtime progressive insider John Podesta as a ‘special energy counselor’:

The recusal controversy is a joke. There isn’t any need for Podesta to “work” on the “Keystone Pipeline issue” because everyone in the White House, which he has visited some 130 times since 2009, knows where he stands on it. His work is already done. And it was good work—if you are part of the 30 percent minority that disapproves of laying the pipe. Fearing his wealthy environmentalist donors, President Obama has consigned Keystone to bureaucratic purgatory. This is one decision point he is unlikely to reach, allowing Podesta to spend more time on his pet cause of declassifying files of UFO sightings.

Engrossed in a technical and superfluous discussion of the meaning of “recusal,” the press, as usual, has missed the real story. It is this: Podesta is the vehicle through which a radical billionaire’s energy policies are about to enter the Oval Office. I am speaking of Tom Steyer, the incredibly wealthy hedge fund manager who retired from his firm, Farallon Capital Management, in the fall of 2012 for a second career in political activism. Long a donor to Democratic campaigns, like many liberals Steyer has become obsessed by global warming, and sees the Keystone Pipeline as a metaphor for whether Americans are serious about, and are committed to stopping, the rise in global temperatures.

Man oh man, was that a mistake.


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And who benefits from shipping by rail? Warren Buffet!

Proper last word?

Bwwwaaahhahaaaaaaa (evil laugh)
or
And now you know the rest of the story (nice guy paul harvey like)

Rich on December 17, 2013 at 12:44 PM

If there is one overarching lesson to be found in yesterday’s Energy Information Administration report on the United States’ relatively newfound and positively dizzying energy abundance largely unlocked by the auspices of the private sector and recent drilling innovations, it’s that fossil fuels are not going anywhere for quite awhile — which makes it rather unfortunate for the radically progressive eco-contingent that they have worked so very hard to manufacture the Keystone XL pipeline as the major politicized issue on which to hang their climate-change hats.

Eighty-five word sentence!

Akzed on December 17, 2013 at 12:45 PM

it blows my feeble mind to know people that are capable of making billions in this economic system are swayed by gorebull warming histrionics

DanMan on December 17, 2013 at 12:48 PM

The only victory that these self-fancied “green” fanatics will have secured here, in the eventuality that the administration does reject the pipeline, is in thwarting the most cost-effective and environmentally-friendly form of transport.

And who benefits from shipping by rail? Warren Buffet!

Proper last word?

Bwwwaaahhahaaaaaaa (evil laugh)
or
And now you know the rest of the story (nice guy paul harvey like)

Rich on December 17, 2013 at 12:44 PM

The future fun part here is there really are enviros who will take this to the next step, which will be demanding that rail transport of oil in tanker cars be banned. That’s when the situational liberals like Buffett — who want to use big government to create rules that favor their companies — run up against the hard-core far left greenies, who simply want to shut down U.S. oil production and industry in general by making it impossible to ship oil to refineries.

That’s really a battle Obama doesn’t want, and will punt that decision all the way to 1/20/17 (Hillary, on the other hand, would come down firmly on the side of big government cronyism, and would keep the pipeline blocked while OKing BNSF oil tanker transports, as long as the Berkshire-Hathaway donations keep coming in).

jon1979 on December 17, 2013 at 12:54 PM

But I thought the greenies loved choo-choo twains. They’re spending $100 billion to build them in California, where nobody rides them!

One problem the greenies have with freight railroads is that they already exist–unless they get Madame Sebelius to undo the grandfather clause…

Steve Z on December 17, 2013 at 1:11 PM

it blows my feeble mind to know people that are capable of making billions in this economic system are swayed by gorebull warming histrionics

DanMan on December 17, 2013 at 12:48 PM

It was never about saving the planet or anything else like caring about future generation, etc. It has always been about taking money from one group and distributing it to a “preferred” group. The groups change over time, but it is all still just B$.

I have seen quite a few scams like this in my almost 60 years on Earth.

1. Nuclear Winter. Based on one single non peer reviewed paper, the entire world panicked.
2. Acid Rain. Based on some idiot and his research on the Canadian boreal forests we crippled US industries and set up Asia to out produce us in a single decade.
3. Global Cooling. Led by the CIA, the media and numerous governments got on board in the middle 1970s and spent billions on ridiculous preparations for something that was never studied let alone proved.
4. DDT ban. Rachael Corrie is arguably the largest mass murder in the history of the planet. Her book Silent Spring led to the banning of DDT in the US and the world followed. The death toll in Africa, mostly young children, resulting form the ban of DDT is over 50 million and counting. All based on political whims and not a shred of science at the EPA.
5. African Killer Bee’s. Not sure where this one came from, but it caused a panic in the Southwest and made some bee keepers destroy perfectly good bee colonies.
6. Peak Oil. One paper by Hubbard has been hailed as definitive proof and settled science (sound familiar?) that the world was running out of oil. The Peak Oil crowd made prediction after prediction on when the oil would run out, and they were wrong every single time. Scams and vast amounts of money changed hands into trying to come up with a solution to a non existent problem. Today the world is awash in a virtual sea of oil.
7. Y2K. Once again, billions spent on a non-event. Public panics and nothing happened at midnight.
8. Global Warming/Climate change. Enough said.

Johnnyreb on December 17, 2013 at 1:14 PM

Rich on December 17, 2013 at 12:44 PM

Not on 80% of what Keystone XL was to ship, Canadian crude blend.

Kermit on December 17, 2013 at 1:17 PM

Want to make the Gorical’s head explode? Put a lump of coal in his Christmas stocking!

lfwest on December 17, 2013 at 1:24 PM

it blows my feeble mind to know people that are capable of making billions in this economic system are swayed by gorebull warming histrionics

DanMan on December 17, 2013 at 12:48 PM

I think it’s mostly because they think it’s good business sense. It makes them seem to care about something they are being told the majority of people believe.

Dr. Frank Enstine on December 17, 2013 at 1:30 PM

Doesn’t this automatically mean that without the XL pipeline CO2 exhaust will increase?

astonerii on December 17, 2013 at 1:40 PM

Pipeline, rail, either way I profit. Cha-ching! Life is good. (Except for the whole health insurance thing.)

Good analysis Erika. I know these threads don’t get many comments, but it’s good stuff.

WhatSlushfund on December 17, 2013 at 1:57 PM

Johnnyreb–pretty much agree with you re all the phony scares, but Rachel Corrie, whatever her other faults, wasn’t responsible for millions of preventable deaths. That would be Rachel Carson.

SacredFire on December 17, 2013 at 2:00 PM

All well and good. Union Railcar is booked for 2 years building tanker cars to haul the crude. And railyards are upsizing their capacities around junctions and refineries. Jobs have been created at this level anyway.

Robert17 on December 17, 2013 at 2:04 PM

Robert17 on December 17, 2013 at 2:04 PM

Hi Robert. Are you talking about UTLX? If so, it wouldn’t surprise me in the least.

WhatSlushfund on December 17, 2013 at 2:12 PM

To quote Nazi Pelousy “we will go over them around them under them if necessary”. Only in this case its a good thing. If you can’t beat these libs go around them.

neyney on December 17, 2013 at 2:46 PM

7. Y2K. Once again, billions spent on a non-event. Public panics and nothing happened at midnight.
Johnnyreb on December 17, 2013 at 1:14 PM

Actually the threat posed by Y2K was quite real. Hundreds of thousands of old COBOL programs could not handle the rollover. The impact of malfunctioning financial, manufacturing, and order processing systems would have been severe. The solution was that (a) lots of COBOL programmers were called out of retirement to fix programs and (b) thousands of companies deployed new ERP solutions to replace the old programs.

Y2K “never happened” because a heck of a lot of people spent a lot of time remediating and replacing those programs.

SunSword on December 17, 2013 at 2:52 PM

Johnnyreb on December 17, 2013 at 1:14 PM

You mean Rachael Carson, not Rachael Corrie, don’t you. We all have that problem as we get older.

Old Country Boy on December 17, 2013 at 2:57 PM

Old Country Boy — You mean Rachel Carson, not Rachael Carson, don’t you?

SacredFire on December 17, 2013 at 3:03 PM

That would be Rachel Carson.

SacredFire on December 17, 2013 at 2:00 PM

Old Country Boy — You mean Rachel Carson, not Rachael Carson, don’t you?

SacredFire on December 17, 2013 at 3:03 PM

The first correction was funny. Now it’s getting tiresome.

BillH on December 17, 2013 at 3:46 PM

Continental now ships 90 percent of its crude oil by railcar, Hamm said. Rail transport can be more expensive, but it allows shippers more flexibility on where the crude is shipped.

War on rail from the administration in 3…2…1…

OccamsRazor on December 17, 2013 at 3:51 PM

If the greens are really interested in saving the planet, they should drop their objections to the pipeline. But they won’t, because they’re not REALLY interested in saving the planet – they just want to control people.

hawksruleva on December 17, 2013 at 3:54 PM

but Rachel Corrie, whatever her other faults, wasn’t responsible for millions of preventable deaths….

Nope, just responsible for one preventable death….

ScottG on December 17, 2013 at 5:01 PM

Why is the State Dept trying to figure out if the XL will increase green house gas? I thought that was the job of those at the EPA. They should only get involved if a treaty is needed and that’s just a piece of paper. Then, again, we don’t need a fed epa since each state has their own dept. Duplication and waste runs rampant at the DC level.

Kissmygrits on December 18, 2013 at 9:31 AM