I don’t, but unless you’re shutting down the production in the oil sands I’m not really seeing a scenario where growth in extraction doesn’t continue. The Keystone XL would be an engine for growth, but absent it there are other engines that will fill the void. It’s simple economics, as long as the price per recovered barrel is high enough to make it profitable there is no reason to stop extracting it, let alone slow down production.
Plus, I’ve followed this from both a business and environmental perspective. The business community by and large has “moved on” from Keystone. They’ll be thrilled if it happens, but they’re already years into alternatives and the oil has kept on coming.
That’s not true actually, you can build a pipeline but that doesn’t guarantee higher production. I can name several economically failed pipelines because the production that had been lined up to give the pipeline business fell through. Any pipeline that is utilized at much under capacity the transportation company isn’t thrilled, and some are utilized so little that the whole project is a loss.
Only supply, demand, and specific demands/needs of customers along the pipe can drive growth and production. The pipeline itself cannot create demand nor can it create production.
More generally, if a lower cost method of production or distribution is permitted, the benefits tend to be dispersed among consumers, employees and shareholders, with the slice to the latter typically not exceeding 10%. Taxes are also a factor.
(hijack) What might be the scope for re-purposing a pipeline? I figure all those land use waivers have to be worth something.
Well if you could show me that connection between KXL and 100 billion dollars into Koch brother’s warchests (as the Other 98% claims), I’d oppose the KXL on “defense against tyranny” grounds. But its looking more and more like the Other 98% is just full of shit and trying to fool people who are mad about how our democracy is getting hijacked into supporting stupid environmental causes.
No it won’t. production drives the economics for building pipelines. Pipelines never drive productions. It will make some marginal production economically feasible today instead of a few years from now when the price of pil is high e enough to cover the higher cost of transportation.
KXL has an onramp in Montana for Bakken shale oil. I don’t know how much of the pipeline capacity will be devoted to bakken oil but I thought it was somewhere between 20 and 30%.
Its marginal, not MUCH higher increases in production. The production is going to be driven by the price of oil. Its pretty simple.
I just wish the people on my side wouldn’t be so deceptive or crazy. I have gotten used to the other side being full of liars and maniacs.
The world’s first high capacity maple syrup pipeline? Whiskey pipeline?
IIRC there is a town in Germany where there is a townwide pipeline for beer.
During the 1950s-1970s there was a more healthy crazy balance: both sides did it! Today, the left and the Democrats suffer from a substantial hack gap. Your dollars can help remedy the situation, strengthen the crazy, and shift the Overton window to where it belongs.
I don’t think the other 98% are crazy on this point: denying the pipeline works similarly to a carbon tax, with the proceeds flowing to railroad companies (which are publicly owned). Pick your plutocrats.
Actually I imaged stringing a natural gas pipeline alongside it. Though for segments, maybe telecoms would be interested.
Because this project is not different simply on scale, it is different in kind. We approve crude oil pipelines all the time, sure, but this is not a crude oil pipeline. This is a dilbit pipeline.
You saw the links to the dilbit spill and cleanup on the Kalamazoo river. The EPA initially estimated a $5 million cleanup- they used numbers for a crude oil spill. Turn out that the true cost has been over 150x that (not 150%, 150x). This isn’t the same kind of problem.
The Canadians, once they looked at all the information, decided they didn’t want this pressurized Angel of Death snaking across their land, literally under high temperature and friction, like a malevolent genie relentlessly seeking any and every exit from its 2000-mile-long bottle.
There is no reason why America ought to act as Canada’s sewer. The economic argument isn’t there- the disaster in a train or truck is limited to that vehicle. A KXL spill will spout the whole she-bang. It’ll be a disaster, and a disaster of a different kind, a risk everyone along the route is being asked to take, in return for nothing.
We need to prevent this class of disasters before they happen. The answer is to build a refinery in Canada, near the oil sands, and export the refined product via a giant pipeline. That would still be problematic, but it wouldn’t be the threat that a dilbit pipe of this size would be.
The redundancy in refining will make some people upset. Since this is essentially a looming disaster, the United States could pony up much of the money for this refinery, and maybe to make some amends for the lost business near the Gulf. In return, they could take a proportionate share of the profits and deposit them in an American sovereign wealth fund. Or a tarriff on every gallon. Feed it with unconventional oil- fracking and oil sands.
This isn’t necessarily an environmental argument. The money saved by pipe transport will be lost and more after the first major incident. It isn’t crude, it is dilbit.
Thanks, Snowboarder Bo, it is nice to be appreciated.
I want to add that I think the Koch Brothers angle to this argument is bogus. If you have an axe to grind with those guys, fine, but stick to the law. They’re unpopular to be sure, but AFAIK they aren’t criminals (not technically anyway, which is what matters with billionaires). To make a law/policy motivated by ‘stick it to the Kochs!’ sounds a lot like a bill of attainder to me.
Diluted bitumen spills are only materially different for cleanup when they are in water, like in the Kalamazoo River. For this reason most of the length of the Keystone XL will not be a concern in terms of cleaning up a spill. Leaks/accidents of various sizes are going to happen with any pipeline system, pipeline operators are expected to maintain insurance and even “price in” this reality when they are given approved FERC rates for transportation. But aside from areas where KXL would cross a body of water, its contents would be of no particular concern versus other pipelines. Where it does cross water–I agree, those areas of the pipeline need to be much more robustly built and much more vigorously maintained than the parts that cross miles of endless prairie.
Plus, the dilbit is coming over rail if not over pipe. There have already been very costly and environmentally damaging rail accidents carrying dilbit. Since rail is less reliably and more prone to accidents and spills, you’re trading the certainty of many small spills by rail for the rare chance of a major pipeline accident near water, which can factually be mitigated with proper design and maintenance to within acceptable standards.
As of last year diluted bitumen components were considered a trade secret so their constituents were not released to regulators. I imagine it’s more challenging to do disaster preparedness and recovery when you don’t know what you’re cleaning up. As of 2011 there had already been 12 2-50 gallon spills along the completed portion of Keystone pipe.
I think corporations should be allowed to build the Keystone pipeline and they should be able to keep the bitmen formula a secret. I also think regulators should not permit them to transport materials inside the pipeline without disclosure of contents. But if the pipeline operators want to create a long piece of inert sculpture, they should be granted permission. Freedom!
Isn’t tar sands oil exempt from paying into the oil spill liability trust fund? I’m not at all comfortable with the statement that oil companies “are expected” to pay for cleanup. If they don’t have to, they won’t. Does anyone seriously dispute that?
In the United States at least pipeline operators are not allowed to set rates as they please, they are a “rate-regulated” industry and FERC controls their rates. As part of this oversight, when a pipeline operator wants to get a rate increase FERC will require it to show why they need more money. Usually “mo profit” isn’t a suitable answer, they instead have to show that they are going to spend x amount on maintenance, x amount on safety etc. Of course it’s understood that the regulated rates also should provide for safe profit margins, thus being an interstate pipeline operator is very similar to being a natural gas delivery company with essentially guaranteed profits in exchange for regulatory oversight from the local public utilities commission where you operate.
Even aside from the control of the operations FERC gets through its rate setting there are also regulations on pipeline maintenance that are enforceable regardless.
For major catastrophes, most likely the taxpayers will always be paying for cleanup. Even if you have “spill funds”, the taxpayers are ultimately paying for cleanup because pipeline operators are rate regulated. That means they get a guaranteed profit margin and regulators will allow them to raise their rates to remain in the green.
The trade off is they are limited in how often they can raise rates and their rate raises have to be approved by a government agency. The government has seen fit to regulate them so that they can’t jack up prices in line with the free market. In exchange for not being able to set prices freely, they’re given essentially guaranteed profit on their pipeline operations.
So as a matter of example if a pipeline operator is guaranteed to say, generate a 5% margin and it’s deemed they need to put 2% into a spill fund, they will just be allowed to increase their rates to recoup this.
If there is an unexpected accident, they’ll generally be allowed to increase their rates to recoup the costs of repair. This is the same as the power company being able to raise rates after major storm damage.
While it’s rate payers that directly pay for these, in a sense that does trickle down to everyone (even non-taxpayers) who is paying energy bills of any kind.
Interesting and thanks for sharing your knowledge. What’s the projected life of these pipelines? Is there a dismantlement fund? What if the pipeline is retired and the spill fund has extra funds? Or is this a fund for any sort of spill anywhere?
ISTM that it might be justified to put a dedicated pool of funds in escrow.
I guess my next question is whether it’s easier on taxpayers to clean up the occasional train spill or to clean up after a pipeline spill. Train accidents are more frequent, but pipelines spill much more. That could be truly catastrophic to the Great Plains Ogallala Aquifer.
You realize that we have a legal system that allows you to sue people for stuff, right? What is the risk of the whole pipeline having the sort of catastrophic failure you are talking about? Its not like they don’t have circuit breakers along the pipeline.
Hey, you get the money to build that refinery together and I’ll buy some stock in your company. What do you propose we do until then?
And yet the people who are running the pipeline think they can make money on this pipeline and they are putting billions behind that belief.
So a couple of billionaires buy enough congressmen to pass laws that favor them and teeny tiny little ole me wants to prevent the government from doing another thing that might favor them and that’s like a bill of attainder? Pfft.
Is trying to get rid of the special tax treatment for carried interests in hedge funds is also like a bill of attainder.
Didn’t BP do exactly this? They paid more than they were legally obligated to in order to pay for the entire cleanup. They could have hid behind the law and paid the cap but they didn’t.
Seriously? Some of those are like 2 gallon leaks due to leaky valves.
I think bad things can happen but our country is criss crossed with pipelines and some of them transport dilbit (which is bitumen diluted with lighter crude), but the examples in that story seem pretty weak.
And that is why the new pipeline goes around the aquifer (I think it might cross a corner).
Well yeah, that’s why I included that info in the post. Fifty gallon spills don’t sound too catastrophic either. That said, I’m glad this stuff is subject to regulation.
I honestly don’t know the consequences of not informing the authorities about the contents of the dilbit. It seems like something worth looking into though. And it seems like something reasonable to demand for testing and environmental evaluation purposes. The best formula would reflect both private cost and public risk considerations: the latter is being effectively shut out. I don’t see a problem in pushing for this change in the context of a high profile and deep pocketed project.
As for lawsuits- paperwork can’t cover up every problem. Some problems simply can never happen, like a massive dilbit spill or a nuclear exchange.
Risk of a catastrophic failure? Eventually, about 100%.
The point is that the US government pays for it, as an act of common defense and promotion of the general welfare. This creates a kind of corporate person whose profits go into a public trust. The dilbit simply can’t flow as planned. The tar sands projects aren’t going to just stop. Therefore, a refinery must be built in Canada to stop the flow of dilbit at the source. TransCanada builds infrastructure in our country, Uncle Sam dictates and builds infrastructure in Canada. Its called compromise. Continue to transport the dilbit by rail until then, unless it goes kablooey, in which case we ban that too.
Seriously, proponents of this plan seem to think that Americans just have to get screwed one way or other, and I disagree.
I’m not sure on projected life, long ago pipelines were actually made of wood, and I believe some of those were kept in operation into the 70s or maybe even 1990s. Additionally, certain rules only apply to newer pipelines. There was a pipeline rupture along I-77 in West Virginia a few years ago and the central pipeline control staff were unaware of it for 30 minutes. Newer pipelines have to have electronic monitoring along the entire length of the pipe, so that a central operator would see an alert immediately if such a thing were happening, and they could then issue a remote command to turn off the flow of gas along the pipe to starve the fire of fuel. Since neither monitoring or remote control were enabled on this section of pipe, it was awhile before anyone knew the pipe had burst and basically turned into a giant lighter literally melting the interstate. It was also awhile before an employee of the pipeline company could get to the shut off valve which had to be closed manually.
This was a natural gas pipeline by the way, not an oil pipeline. I just remember it because the pictures of the fire were pretty amazing, it was basically like a giant wall of flame burning across all four lanes of interstate until the company was able to shut the gas off. (Link to pic)
But general rate regulated companies have to make periodic upgrades. An electric power company for example is expected to keep trees trimmed and maintained along their line’s routes, and if a storm comes and lots of trees knock out lines, and the regulators determine that the company wasn’t properly trimming trees then the company can get in trouble for it and may even be disallowed some portion of recovery costs from a single bill rate increase (meaning they might actually suffer a loss briefly.)
I’d say part of the problem with answering that question is there are of course, different levels of train and pipeline accidents. You can have a derailment where the locomotive jumps the rails and then just kind of coasts to stop and tips over, and maybe 2-3 cars might rupture. Or, you could have a catastrophic train accident where dozens of cars are destroyed and rupture.
Pipelines are the same, you can have a minor leak that just gets patched, or a major rupture.
