Seeking Alpha

Keystone pipeline loses support from key customer

  • Continental Resources (CLR) CEO Harold Hamm, an early champion of fracking and other tight oil techniques, has turned against Keystone XL (TRP), saying the controversial pipeline which would link Canada’s oil sands production to Gulf of Mexico refiners is no longer needed.
  • CLR is one of a handful of U.S. producers to sign up to use the pipeline, but shipping crude by rail has been a very effective way of getting its oil to market, and Keystone may not be needed for the industry in the U.S., Hamm says.
  • That's why Keystone is needed, Canada’s ambassador to the U.S. says; pipelines are both safer and cheaper than shipping crude by rail, and release less carbon dioxide than rail, Amb. Gary Doer says.
Comments (14)
  • It is amazing the "greenies" do not see that the oil WILl be delivered ! It seems that the blocking of the pipeline will create MORE green gasses by rail and truck delivery than the pipeline. Then the chances of accidents etc!,
    How shortsighted and naive by Obama and his greenies.
    17 Dec 2013, 12:38 PM Reply Like
  • I can see that you have not been around the greenies. They think that all we need to do is conserve and then we will not need more oil. They ride around on bicycles and think I should sell me American made truck and buy a bicycle!
    17 Dec 2013, 03:50 PM Reply Like
  • My daughter is a greenie tree hugger. Like is said they do believe that stopping the pipeline means less oil coming to the USA. Thereby less emissions etc. they naively believe that the oil will not be produced by Canada for anyone who wants it (China for example). They can't imagine it being now shipped by train lol
    Yes they also believe we need to conserve. That is admirable, but they are very often naive in their methods.
    18 Dec 2013, 08:44 AM Reply Like
  • Is the issue not also that due to US own oil finds now there is less need for Canadian oil sands so why build a pipeline for it?
    17 Dec 2013, 01:12 PM Reply Like
  • Partly true. The need is for a delivery system to get Bakken oil from North Dakota and Montana to refiners. Presently that oil is selling at a discount due to access. KXL will end that with on ramps to deliver Bakken oil. The US will be energy self sufficient in a few years. The problem is - natural gas on the east coast. - new generating capacity in the north east and mid west - sweet crude in North Dakota/Montana basins. What is needed is to get the energy to the users. Expect Natural gas to be liquefied and exported; transmission lines to move electricity; pipelines to move oil. It's either that or move to the location of the energy production.

     

    Harold does not need KXL due to being able to use truck and rail for his company's oil. What about everybody else?

     

    I always believed it is good for US foreign policy to be an energy exporter. Selling refined (Canadian if necessary) products abroad enables the state department to use a carrot and stick approach rather than the stick only approach presently used by the White House. (my view only!)
    17 Dec 2013, 02:09 PM Reply Like
  • Tight oil is very expensive to produce (twice as expensive as the lowest cost oil sands producers). So if oil goes down to the $70/ barrel area, a lot of this type of oil becomes uneconomic. It is always best to ensure as many sources of supply for a product as possible as this ensures that it will always be available and keeps prices competitive. For these reasons, Keystone makes sense. As for Hamm, I suspect that at $70 oil his company may be in deep du-du! ;-) JMO
    17 Dec 2013, 03:18 PM Reply Like
  • Build the pipeline just do not build the section that crosses the boarder to Canada.
    17 Dec 2013, 03:52 PM Reply Like
  • Bobby44 great comment!
    17 Dec 2013, 03:54 PM Reply Like
  • Note that CLR said (above) that they are getting their oil by rail so hey don't need the pipeline. Hover pipeline I'll do it more efficiently. Bottom line , they are saying that if Obama does not approve the pipeline they are getting it via rail which IMO is more dangerous nd expensive way to ship.
    17 Dec 2013, 03:28 PM Reply Like
  • I've heard some folks say the "Buffett Burlington Northern and Obama TransCanada Pipeline Veto" contract expires at the end of 2016.
    17 Dec 2013, 04:35 PM Reply Like
  • ya, but will approval in 2017 be too late if the rail infrastructure is already in place??
    18 Dec 2013, 08:46 AM Reply Like
  • When you can save $10 - $20 plus dollars a barrel by switching from rail to Pipeline, it will never be to late. ;-)
    18 Dec 2013, 04:34 PM Reply Like
  • There is a piece or two of the puzzle missing here. The reason CLR signed up for the pipeline was to ameliorate the $20/barrel cost for rail. (The $20/barrel for Burlington Northern was the same reason Buffet told Obuma to oppose the pipeline.)
    17 Dec 2013, 05:36 PM Reply Like
  • If you actually listen to Mr Hamm, that's not what he says and he refutes it on camera. He says CLR has made other arrangements to get their oil into production, they were forced to. They are currently using trucks and rail to deliver oil and gas products but a pipeline would be much more efficient but since it's at least 7 years down the road, CLR had to get their product to market so they did what they had to. He still hopes for a pipeline in the future and supports it.
    22 Dec 2013, 11:17 AM Reply Like
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