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As leaked earlier the State Department's assessment (full report) of TransCanada's (TRP)...

As leaked earlier the State Department's assessment (full report) of TransCanada's (TRP) Keystone pipeline project  finds little to criticize as far as environmental impact, calling it "very unlikely" any releases would affect groundwater quality. The report also doesn't see much climate impact nor "significant adverse" impact on Canada's environment. There's now a 45-day comment period and then things move to the White House.
Comments (44)
  • So the administration currently occupying the WH has 45 days to figure out another way to delay it's decision on the project...
    1 Mar 2013, 04:20 PM Reply Like
  • Another 45 day delay, amazing! And yet, they quickly approved billions in loans to the Brazilian oil interests largely owned by Soros very early in the first term.
    3 Mar 2013, 09:02 AM Reply Like
  • This should be seen as a so-called concession to the GOP on Sequester Day. The 45-day WH Bargaining period lines up with other scheduled manufactured "crises" in D.C. Will be interesting to watch this play out (while Rome burns...).
    1 Mar 2013, 04:29 PM Reply Like
  • It is past time to approve the kpl. Why send the oil to the Chinese?
    1 Mar 2013, 04:30 PM Reply Like
  • So the State Department has been spending time and money studying the impact to Canada's environment??? Like the Canadians aren't capable of making their own determinations?

     

    Its this kind of thinking that alienates our allies and considering that we can't even pass a budget in the USA - make us look like overbearing idiots.
    1 Mar 2013, 04:47 PM Reply Like
  • Do you know what your commenting about? They are looking at the groundwater and potential spill damage in Nebraska and the US. Sheesh
    4 Mar 2013, 07:49 AM Reply Like
  • Do you?
    4 Mar 2013, 08:26 AM Reply Like
  • Good news for America, North American energy independence, jobs and the economy! I am sure that the "greentards" will make a lot of noise. They may even fly to Washington for another protest! They will never get it because blind ideology defies any and all common sense! Obama has no reason not to approve this pipeline!
    1 Mar 2013, 04:47 PM Reply Like
  • With Kerry's approval, chances are looking up. Should be good for the pipeline contractors like CBI.
    1 Mar 2013, 07:14 PM Reply Like
  • The irony is that Keystone XL should be finished right at the point (mid 2015) that the US will no longer be able to absorb Canadian production--meaning Keystone oil may get loaded up and exported.
    1 Mar 2013, 10:42 PM Reply Like
  • Why not refine the tar sands in North Dakota? Crazy to pipe it down to Texas, refine it there, then export it.
    2 Mar 2013, 02:42 AM Reply Like
  • There are no tar sands in North Dakota.

     

    There is the Bakken Shale oil, and we are already extracting it just about as fast as possible.

     

    It is being railed to Texas, and being exported (after refining.)
    2 Mar 2013, 06:35 PM Reply Like
  • Bitumen not tar sands. Those saying tar sands oppose Bitumen.
    2 Mar 2013, 06:37 PM Reply Like
  • Obama's buddy Buffett owns the railroad the transports the oil to Texas. I expect the White House to delay...... so more $$ can be funneled in the Dems' pockets.
    2 Mar 2013, 10:44 PM Reply Like
  • Me thinks BNSF is an east-west line, not a north-south line and that's why Kansas City Southern has been going parabolic in the past several months. KSU also has more than a thousand miles of track
    extending into Mexico which has a huge trade surplus with the USA since many manufactures are finding it cheaper to operate in Mexico than in Asia.
    3 Mar 2013, 05:21 PM Reply Like
  • Have you ever been to North Dakota?? If not, go there and your question will answer itself.
    3 Mar 2013, 08:55 PM Reply Like
  • bigbenorr, Never been there myself. They must be going nuts with gathering lines going every which way.
    3 Mar 2013, 09:00 PM Reply Like
  • The easiest way to describe it is : total clusterf**k
    Anyway, I think there are a couple small refineries in the state, not enough to even handle its own crude production. And to get canadian crude they would still need a pipeline crossing an international border which requires federal approval.

     

    Also, gathering lines are apparently a luxury for them, they prefer clogging an overloaded highway system with big slow ass trucks.
    3 Mar 2013, 09:22 PM Reply Like
  • This is why Warren is supporting Obman's tax plan. Warren gets a delayed or killed pipeline, which helps the rails he owns and Obman gets a creditable business man to support his tax plan. Nice and cozy.
    3 Mar 2013, 09:30 PM Reply Like
  • Canadian crude is shipped by rail and pipe now to the US refineries in great quantities. The pipelines transporting Western Canadian crude oil to US markets are full to overflowing. Space on the main lines is being rationed. As much as 250 Mb/d of new production is expected online during 2013. The price of Western Canadian Select heavy crude fell to nearly $40 under NYMEX WTI during the first week of January 2013. The pressure is on to build new takeaway capacity to Canada’s west coast.

     

    Canada exported 2.3 MMb/d of crude oil during the third quarter of 2012 up 4.5 percent from the same period a year earlier according to the National Energy Board. Ninety eight percent of Canadian crude exports go to the US – the vast majority by pipeline.

     

    The Northern Tier refinery in Minnesota uses 40% WCS.

     

    In 2002, Canadian crude accounted for just less than 16% of all U.S. imports, a figure estimated to have reached 28% by the end of 2012. While overall U.S. oil imports have declined, Canadian crude shipments south of the border have risen by a third.

     

    “Growing Canadian imports from oil sands projects effectively pushed out waterborne imports of heavy crude oil from less stable regions, such as Mexico or Venezuela,” said Sabine Schels, analyst at Bank of America Merrill Lynch.

     

    This is bittersweet for Canadian companies. Cornering the U.S. market has come at a heavy price in the shape of depressed prices fetched by the Western Canada Select, the heavy Canadian crude.

     

    The discounts on Canadian heavy crude are forcing companies including Suncor Energy Inc. to delay plans worth billions of dollars and depressing their bottom lines.

     

    The U.S. Gulf Coast will be a critical part of the future for oil sands
    In a desperate effort to escape the dreaded $30 discount they must offer U.S. refiners, Alberta-based companies are seeking ways to ship their crude out of Alaska, Atlantic and B.C.

     

    But Canadian producers know their biggest market remains the United States.

     

    “Overall the U.S. Gulf Coast is a huge crude oil market — nearly equivalent to all of China today,” IHS CERA, an energy research consultancy, said in a report. “Consequently, the U.S. Gulf Coast will be a critical part of the future for oil sands, particularly for bitumen blends.”

     

    TransCanada Corp.’s CEO Russ Girling knows this, which is why proposes a pipeline to the Atlantic to take Alberta crude not just to global markets, but back into the United States.

     

    “It’s not a Plan B, it’s a Plan A, and it will go if the market supports it, along with Keystone,” Mr. Girling told Bloomberg. “Once you get on tidewater, you can get anywhere, and you don’t need a presidential permit to bring oil into the Gulf Coast.”

     

    IHS expects oil sands volumes to the Gulf Coast to increase considerably as more than two million barrels per day of new pipeline capacity planned is expected to connect Western Canada to the Gulf Coast in the next three years — that is assuming it is approved and gets built.

     

    Clearly, Canadian producers are caught in the U.S. orbit and will remain in its vortex for the foreseeable future.

     

    It could have been much worse.

     

    Unlike their natural gas counterparts who have been dealt a double blow of plunging exports to the U.S and plummeting prices, Canadian crude is popular among U.S. refiners and there’s more to it than just being the cheapest crude on earth.

     

    Many U.S. Gulf Coast refiners are addicted to heavier crudes, and don’t have a taste for the lighter crude churned out from Texas and North Dakota shale plays.

     

    Which is why while light blends from places like Nigeria and Angola have declined dramatically, Canadian heavy has been in the ascendancy.

     

    John Powell, senior petroleum analyst with the U.S. Department of Energy, expects more sweet crude to be replaced by home-grown blends from places like Eagle Ford, but heavier crude imports will hold their own. “In 2013, we see imports, wherever they come from, probably going to get heavier, ” he said.

     

    The Canadian surge has come as other sources of heavy crude face structural issues.

     

    “Mexican heavy supply is expected to decline, and there is uncertainty around future supply from Venezuela,” IHS said. “If oil sands could displace most of the Mexican and Venezuelan imports, the opportunity for bitumen blends would be about 1.5 million barrels per day.”

     

    U.S. tight oil will grow, but it is still going to leave a lot of room for other suppliers, said Jackie Forrest, senior director at IHS CERA.

     

    “Canada is specifically well placed. The heavy crude refiners are still going to make more money running heavy crude than the light sweet crude, so they are going to prefer Canadian supply,” said Ms. Forrest.

     

    While that does not mean Canadian producers should stop exploring other markets to diversify their revenue streams, Canadian crude will not disappear in the U.S. anytime soon, even without Keystone XL pipeline being built.

     

    Over time, though, there are concerns that U.S. refiners may move toward lighter crude to meet the needs of rising U.S. shale plays, which produce lighter crude.

     

    But is it easy for refiners to flip the switch from heavy crude to light crude?

     

    “Probably not,” says Bill Simpkins, Atlantic Canada representative of the Canadian Fuels Association, which represents many refiners in Canada. “Mainly because once you have a refinery and it’s purpose-built for particular crude and slate of products, they are probably always sourcing that type of crude.”

     

    And the market for heavier crude is likely to only get bigger.

     

    “Because of the dwindling supply of conventional sweeter crudes, and their higher costs, you are more likely to see older refineries to … move into producing heavier crudes,” said Mr. Simpkins.

     

    Gulf Coast refiners such as Marathon Petroleum Corp. and Valero Energy Corp. are strong advocates of Keystone XL and are keen to get Canadian crude to the Gulf market.

     

    Market dynamics suggest Canadian dominance of U.S. imports can only be challenged by one formidable challenger: Saudi Arabia.

     

    “Saudi Arabia has managed to defend its market share in the U.S. crude oil market despite the flood of heavy pipeline imports from Canada,” said Ms. Schels, primarily because Saudi medium and heavy blend is another Gulf Coast favourite.

     

    Analysts expect discounted Canadian crude and internationally priced Saudi oil to be the last blends standing as U.S. crude imports dwindle.

     

    Saudi Aramco, the world’s largest oil producer, and Royal Dutch Shell PLC are partners in Motiva Enterprises LLC, which has three refineries on the Gulf Coast. Motiva has a 325,000-barrel-a-day crude unit at its Port Arthur plant, a key component of the $10-billion expansion that doubled the plant’s daily capacity to 600,000 barrels, and can process heavier crudes from South America, Latin America and Saudi Arabia, apart from ligher blends.

     

    The Saudi supply is also well suited for some of the Gulf Coast refiners, as long as its priced competitively, they will choose that, so they can make more money,” said Ms. Forrest. “That’s really what drives the economics of a particular refinery.”

     

    Despite all the grandstanding by U.S. politicians, it is refiners’ blend preferences that are driving U.S. imports, not any great desire to displace OPEC oil.

     

    Luckily for Canada, the heavy crude suits the large Gulf refiners.
    3 Mar 2013, 09:32 PM Reply Like
  • rlp2451, it's Canada that has tar sands. Pipe it to ND is I think Ted's point.
    4 Mar 2013, 05:33 PM Reply Like
  • Well I won't fly to DC because that'd be terrible for the environment, but it is undeniable the oil sands are a energy-negative endeavor... Burning a ton of coal to process a ton of tar to produce a few barrels of oil just doesn't add up. Doing that for many years can only exacerbate real problems to solve short term monetary desires. I'm trying to make a living on the market like many here, but part of my choice to work from home is an environmental one. Hate me for being considerate to the future. As far as things actually work though the oil is gonna come out of the ground and people are going to use it, may as well be us and our economy benefiting.
    2 Mar 2013, 02:49 AM Reply Like
  • ZBNW, Your consideration for the future is appreciated. And looking at this realistically is correct. The oil is going to get pulled out. And used. Obama is under immense pressure from both sides on this KPL XL. But if he waits too long to approve, the Canadians will build a pipeline West and it will all go to China.
    2 Mar 2013, 10:17 AM Reply Like
  • You, sir, are what many call "the lunatic fringe". What brought on such guilt?
    2 Mar 2013, 06:45 PM Reply Like
  • Approximately 20% of U.S. crude oil and products come from Canada, and a substantial portion of this amount comes from tar sands.

     

    About two tons of tar sands are required to produce one barrel of oil. Roughly 75% of the bitumen can be recovered from sand. After oil extraction, the spent sand and other materials are then returned to the mine, which is eventually reclaimed.

     

    The State Department thinks blocking the Keystone pipeline would have only a small impact on tar-sands production and climate change. If Canada can’t find an outlet for its oil, there will be less production. So what happens if Keystone XL gets blocked? A lot depends on whether other pipelines get built, such as a proposed project through British Columbia — as well as how much oil can be shipped profitably by rail instead.

     

    The State Department considered two scenarios. First, if the Keystone pipeline is blocked, and other proposed pipelines go forward, tar sands production in Alberta “could decrease by approximately 0.4 to 0.6 percent” by 2030. A fairly small drop.
    Alternatively, if Keystone XL was blocked and all of the proposed pipeline capacity out of Alberta were restricted, then tar sands production would drop by 2 to 4 percent by 2030.

     

    That’s a real dip, albeit a small one. In that second scenario, we would see a decrease of somewhere between 0.07 to 5.3 million metric tons of carbon dioxide per year by 2030. At the high end, that would be like taking one million cars off the road. But that’s also equivalent to just 0.07 percent of current U.S. emissions.
    2 Mar 2013, 06:59 PM Reply Like
  • Bitumen not tar sands
    2 Mar 2013, 08:15 PM Reply Like
  • I'm sure the White House will find a creative way to swamp the project and pin the blame on the Republicans.
    2 Mar 2013, 02:57 AM Reply Like
  • think about it. most all the jobs that would be created are in red states. obama doesn't have their votes anyway. he may as well continue to pander to his left base of guilty for being born misanthropes.
    2 Mar 2013, 03:24 AM Reply Like
  • The pipeline will be built; if not now then in another 4 years. It is good for Canada; good for the US and a severe threat to Venezuela since the pipeline will ship enough heavy oil to displace all Venezuelan imports into the Gulf Coast refineries.
    2 Mar 2013, 10:59 AM Reply Like
  • Obama opposes Keystone because it's pro American and Canadian. Obama much prefers the likes of Chavez in Venezuela. The Democrats were trying to get the Soviets to instigate trouble in South America in 1984 to hurt Reagan's reelection bid. The DNC is the enemy of the American people.
    2 Mar 2013, 03:58 PM Reply Like
  • If keystone gets passed, who are the winners/losers from a stock standpoint? Mlp speaking.....
    2 Mar 2013, 07:01 PM Reply Like
  • There are no MLPs in Canada.
    2 Mar 2013, 07:40 PM Reply Like
  • "Exclusive: China plans bond overhaul to fund $6 trillion urbanization - sources" - Reuters.
    The populations in the so called emerging markets - which were the dominant economies for 18 of the last 20 centuries - will catch up to developed country consumption - or at least try very hard. All this is starting from a very low per capita energy consumption compared to US. This Canadian oil sands and every other source of oil will get used up to the max. Prices will go up - until shortages appear - then people will - as usual fight for it.
    That is how it will be - if you have a a long enough investment horizon. Which is easy to say - hard to do - because it basically implies an ability to take drawdowns of 50%+ and keep smiling. Talk is easy.
    2 Mar 2013, 08:14 PM Reply Like
  • I think it will pass and mlps will be better off.
    3 Mar 2013, 01:41 AM Reply Like
  • Rlp,

     

    The majority of the keystone will run through the USA, no?
    Who are going to be the big winners/losers from a corporate standpoint, across the usa energy sector?

     

    I dont care about canadian stocks and their 30% haircut i have to give up as a tax.
    3 Mar 2013, 07:29 AM Reply Like
  • The biggest winners will be the refiners who will be able to process the oil and pay about 1/2 the price of Brent.
    3 Mar 2013, 08:11 AM Reply Like
  • For how long?
    3 Mar 2013, 09:32 PM Reply Like
  • Losers will be Midwestern refiners and consumers who have feasted on cheap bottlenecked midwestern products.

     

    Winners will be Canadian oil producers who will finally have the means to export product to Asia.
    3 Mar 2013, 11:07 AM Reply Like
  • I fear you may be right dingojoe. Gov. of Neb. has already approved a new route bypassing thier aquifer and DC is still procrastinating. Last time a pipeline sprung a leak was Alaska. Some nit-wit with a deer rifle got drunk and used it as target practice. If they build a pipeline West, Canadians don't have to worry about Jones Act ships complicating costs.
    3 Mar 2013, 11:35 AM Reply Like
  • Approve Keystone now! The pros are big, the cons are small.
    3 Mar 2013, 09:26 PM Reply Like
  • I see it like this: "Excuse me Mr. Farmer but can I build a road across your cornfield so I can haul my own harvest to market and undercut your price?"

     

    Yeah right. Like I'm such a rube that I should say yes to that?
    4 Mar 2013, 05:37 PM Reply Like
  • Eminent Domain. The farmer will take what they give him, and like it (or not).
    5 Mar 2013, 08:08 AM Reply Like
  • JohnBin TN , Yep. And bluefin646 wants to know who the losers are.
    Ask someone who has a rig on their property, who's forefathers got suckered into selling the mineral rights just to hang on to the farm.
    5 Mar 2013, 08:44 PM Reply Like
  • If Obama is against it you know that it must be good for America !
    6 Mar 2013, 10:33 AM Reply Like
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