President Obama vetoed Congress’ effort to expedite approval of the Keystone XL pipeline Tuesday, but the decision to allow the Canadian pipeline to cross the U.S. border is still on the president’s desk. As part of the process, the president will be considering comments from the Environmental Protection Agency (EPA), which is using lower oil prices as a last ditch effort to give him a new excuse to deny the pipeline—an argument he should reject.
Denying the Keystone permit application and over-regulating hydraulic fracturing drilling techniques in the U.S. would make our nation more reliant on imports of oil from sources less reliable than Canada. In the process, there would be no discernable benefit to the environment.
EPA contends that since moving oil is cheaper by pipeline than by rail, Keystone will make it possible for Canadian oil sands producers to produce more oil than they otherwise would when oil prices are very low. According to EPA, that’s a bad thing, because oil sands can have a slightly higher greenhouse gas emissions profile.
Denying the Keystone permit application and over-regulating hydraulic fracturing drilling techniques in the U.S. would make our nation more reliant on imports of oil from sources less reliable than Canada. In the process, there would be no discernable benefit to the environment.
For the sake of argument, let’s say the green groups and EPA are right, and Keystone will make oil sands production more economical. Is that really such a bad thing?
No. The key point they overlook—whether consciously or not—is that crude oil from Canada is replacing crude oils from other suppliers that have greenhouse gas emissions profiles as high as Canadian oil sands, or even higher.
U.S. refiners along the Gulf Coast and in the Midwest are geared to process heavy, sour crudes, so if they’re not using heavy crude from Canada, they’re using heavy crude from somewhere else, such as the traditional suppliers Mexico and Venezuela.
Data from the U.S. Energy Information Administration (EIA) backs this up. Since Canada started producing from its oil sands in 2003, imports from these two formerly large suppliers have declined sharply. EIA reports that the combined volume of crude imported from these countries to the Gulf Coast and Midwest refining regions in 2013 was 1.0 million barrels per day lower than in 2003, while crude imported from Canada was 900,000 barrels per day higher, almost a one-for-one replacement. That’s no coincidence.
If oil from Canadian oil sands stopped flowing to the United States, what would happen? While U.S. production is up, we still must import millions of barrels of oil each day. Among the likely suppliers that would increase their markets if Canadian oil decreased would be Venezuela.
What would that mean for GHG emissions? According to an analysis by the National Energy Technology Laboratory (NETL), crudes from Venezuela have a life-cycle greenhouse gas emissions quite similar to Canadian oil sands crude. But unlike Canada, Venezuela has hardly been a reliable ally and a major trading partner.
One of the ironies in all of this is that the more than $50 plunge in the price of crude oil EPA is now relying on to oppose Keystone was precipitated in large part by the use of technologies—hydraulic fracturing and horizontal drilling—that many environmental groups oppose.
The vast amounts of unconventional light, sweet crude oil now being unlocked domestically through fracking is reducing the need for imports. For instance, Nigeria has seen its oil exports to the United States decrease by nearly 750,000 barrels a day since 2010.
Why should environmentalists care? Because NETL estimates that Nigerian crude oil has one of the highest GHG profiles of any crude it examined. So, the oil being produced here at home is better for the environment than the oil it is replacing. That means that increased unconventional oil and gas development should be a considered a win for the environment, not something to protest and obstruct.
The bottom line: denying the Keystone permit application and over-regulating hydraulic fracturing drilling techniques in the U.S. would make our nation more reliant on imports of oil from sources less reliable than Canada. In the process, there would be no discernable benefit to the environment.
So instead of trying to kill Keystone and impose new and restricting regulations on hydraulic fracturing, the Obama administration should be praising both as part of a more secure future for energy and the environment.
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