Pipeline opponents question amount of Bakken oil in Keystone XL

PIPE: President Obama speaks at a TransCanada pipe yard in Cushing, Okla., in March 2012 about the glut of oil there and expanding domestic oil production. The southern leg of Keystone XL was approved, but the northern leg has been held up for nearly six years.

By Deena Winter | Nebraska Watchdog

LINCOLN, Neb. — The Canadian pipeline company trying to get a permit to build the Keystone XL oil pipeline has said one-quarter of the pipeline would be reserved for oil from the Bakken oil fields of North Dakota and Montana, but in other documents has indicated only 8 percent of the pipeline would be Bakken oil.

On its website and in comments to the U.S. State Department, TransCanada says it has firm, long-term contracts to transport 65,000 barrels of crude oil per day of the maximum 100,000 bpd set aside to pick up Bakken crude oil from what they call the Bakken Marketlink — where Keystone XL would pick up oil in Baker, Mont.

That equates to less than 8 percent of the pipeline’s total initial capacity of 830,000 barrels per day. However, the pipeline project has been sold, in part, on the claim that 25 percent of the oil it carries would be U.S. oil, encouraging domestic oil production and enhancing America’s energy security.

In fact, TransCanada says on its website, “We have dedicated one-quarter of Keystone XL’s capacity to transport light crude oil produced in the U.S. Bakken region of Montana and North Dakota.”

A “fact check” group funded by the oil industry has also advocated for extraction of Canada’s tar sands oil by claiming 25 percent of the oil running through Keystone XL will be “from U.S. sources.”

Canada’s Minister of International Trade Ed Fast has said 25 percent of the oil transported by the pipeline would be Bakken crude produced in the United States. Another Canadian official, Joe Oliver, minister of natural resources, told USA Today 20 to 25 percent of the oil would be from the Bakken formation, improving our nation’s energy security.

But if only 8 percent of the oil will be picked up from the Bakken, where does TransCanada come up with that 25 percent figure that’s been tossed around?

Asked about the discrepancy, TransCanada spokesman Shawn Howard said TransCanada has previously said the Bakken Marketlink will transport up to 100,000 bpd and the Cushing Marketlink — a 485-mile pipeline from a storage hub in Cushing, Okla., to the Gulf Coast — can transport up to 150,000 bpd of crude.

The Cushing oil comes from Texas, Oklahoma and Canada, not the Bakken, according to Howard.

TransCanada began shipping oil through that pipeline in January. It is the southern leg of the original Keystone XL pipeline, which was allowed to be built because it doesn’t cross an international border. The northern leg, which would be built from Alberta through Montana, South Dakota and Nebraska, has been held up by protests, legal maneuvering and a lawsuit. Much of the resistance centers in Nebraska.

“We have been consistent in saying that Keystone will be able to move up to 250,000 barrels of U.S. crude oil per day, and of course, that depends on what our customers nominate to ship through the line,” Howard said.

However, in 2012 Howard told InsideClimate News that Bakken oil was slated to fill 25 percent of the capacity on the original Keystone XL pipeline route.

Jane Kleeb, executive director of anti-pipeline group Bold Nebraska, is skeptical of TransCanada’s claim that 25 percent of the oil will be from the Bakken oil fields or the United States in general.

“TransCanada changes their story often in order to keep up the appearance that their foreign tar sands pipeline is somehow helping with America’s energy independence,” she said. “The reality is Keystone XL was planned for one reason — to get Canadian tar sands to the export market.”

She calls it “more spin from a desperate company without a viable pipeline.”

Lorne Stockman, research director for Oil Change International, said evidence is thin that 25 percent of the pipeline will be reserved for Bakken oil, as Bakken oil producers are finding that sending their crude to market by rail is working better because they can reach refineries all around the continent, rather than being committed to ship to one destination.

He said he’s seen no evidence TransCanada has contracts with Bakken oil producers.

“They seem to be using it as a talking point to try and convince Americans that the pipeline will move American oil rather than Canadian tar sands oil,” Stockman said.

Late last year, Reuters reported that a major Bakken oil producer that had committed to ship oil on Keystone XL no longer felt the pipeline was needed.

TransCanada first applied for a federal permit for Keystone XL nearly six years ago. As the permitting process has dragged on, producers have found other ways to get their oil to refineries.

Harold Hamm, CEO of Continental Resources, which had signed a contract to ship 35,000 barrels of oil through Keystone XL, told Reuters he was no longer counting on the pipeline and liked the flexibility of shipping oil by rail.

“It may be several years yet, you know, before you find out if it (Keystone XL) is going to be built,” Hamm told Reuters. “It’s no way to run your business.”

TransCanada has declined to comment on Continental.

Contact Deena Winter at deena@nebraskawatchdog.org. Follow Deena on Twitter at @DeenaNEWatchdog

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Rob Port is the editor of SayAnythingBlog.com, a columnist for the Forum News Service, and host of the Plain Talk Podcast which you can subscribe to by clicking here.

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