You don’t have to spend much time around the oil and natural gas industry to understand that it is political. No matter where you work as a petroleum geoscientist – in academia, government, or industry – the odds are high that you’ll encounter situations in your career where politics affect your ability to do your job.
There are some good reasons for this:
♦ First, energy resources are a fundamental building block of modern society, and oil and natural gas represent more than 60 percent of the global energy portfolio.
♦ Second, finding and producing these energy resources is a massive industrial undertaking, requiring large investments and creating significant numbers of jobs.
Consequently, government officials take great interest in what we’re doing. Problems arise, however, when the politics around an energy project overshadow the real issues at hand.
And that is the case with the Keystone XL pipeline.
I’ve written about the Keystone XL project twice before in these pages. The issue under review is whether the State Department should issue a presidential permit for the cross-border section of the pipeline to transport Canadian oil sands crude to refineries along the U.S. Gulf Coast.
It’s been a long and frustrating process, now in its fifth year, where the debate has shifted from the merits of the proposed pipeline project to its impact on climate change. And President Obama added fuel to the debate in his June 25 speech at Georgetown University on climate change:
“Now, I know there’s been, for example, a lot of controversy surrounding the proposal to build a pipeline, the Keystone pipeline, that would carry oil from Canadian tar sands down to refineries in the Gulf. And the State Department is going through the final stages of evaluating the proposal. That’s how it’s always been done.
“But I do want to be clear: Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution.
The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It’s relevant.”
Go back and reread the president’s words again. There’s something there for everyone.
Opponents of Keystone XL were delighted to hear the president link climate change considerations to the national interest, crowing that he had essentially killed the project.
Supporters of Keystone XL heard those words, preceded by the statement, “Now one thing I want to make sure everybody understands – this [building a low-carbon energy economy] does not mean that we’re going to suddenly stop producing fossil fuels. Our economy wouldn’t run very well if it did,” as evidence that the president is firmly committed to having the State Department issue the presidential permit.
What’s a trading partner – the United States’ largest trading partner – to do?
It should come as no surprise that the Canadian government is now looking for other outlets for crude oil produced from its oil sands.
The June issue of Petroleum Economist includes an extensive review of Canadian oil sands. The Keystone XL clearly remains a top priority, with Canadian Prime Minister Stephen Harper actively engaging policy makers in Washington, D.C., to marshal support for the project. But the industry is developing additional plans to bring these resources to market.
The reason for this is significant production growth expected from the oil sands, with a doubling forecast between 2012 and 2023. It would take the equivalent of three Keystone XL pipelines to move this volume of crude. So, the industry also is evaluating pipeline options to Canada’s West Coast as well as to the East Coast.
Canada “has ambitions to become a world oil and gas force,” writes the Petroleum Economist. “But it is tough to be a global energy superpower when you have only one customer.”
But that customer is still buying.
In fact, according to the Energy Information Administration, even with total U.S. crude imports falling, the volume of imported Canadian crude continues to rise – and much of that is from the oil sands.
So, the United States is evaluating a project that strengthens the bilateral relationship with our largest trading partner, through the building of a pipeline that encourages investment and job creation, and brings to U.S. and global markets the vast energy resources in Canada’s oil sands, thereby enhancing global energy security and providing consumers with affordable and reliable energy supplies.
I’m not sure how best to define “in the nation’s interest,” but the preceding sentence seems like a pretty good start.
It’s time to set politics aside and issue the presidential permit for the Keystone XL pipeline.