TransCanada has put in motion the official process to renew its expired construction permit for the Keystone XL pipeline. On Monday, the Canadian pipeliner asked the South Dakota Public Utilities Commission to recertify its project.

While TransCanada and its dupes peddle their inflated jobs numbers, let's look at the original arguments the coaxed the PUC to approve the project in 2010. The PUC's Amended Final Decision greenlighting Keystone XL included the following findings of fact on the purpose of and demand for the project:

14. The purpose of the Project is to transport incremental crude oil production from the Western Canadian Sedimentary Basin ("WCSB") to meet growing demand by refineries and markets in the United States ("U.S."). This supply will serve to replace U.S. reliance on less stable and less reliable sources of offshore crude oil.

24. The transport of additional crude oil production from the WCSB is necessary to meet growing demand by refineries and markets in the U.S. The need for the project is dictated by a number of factors, including increasing WCSB crude oil supply combined with insufficient export pipeline capacity; increasing crude oil demand in the U.S. and decreasing domestic crude supply; the opportunity to reduce U.S. dependence on foreign off-shore oil through increased access to stable, secure Canadian crude oil supplies; and binding shipper commitments to utilize the Keystone Pipeline Project.

25. According to the U.S. Energy Information Administration ("EIA"), U.S. demand for petroleum products has increased by over 11 percent or 2,000,000 bpd over the past 10 years and is expected to increase further. The EIA estimates that total U.S. petroleum consumption will increases by approximately 10 million [sic] bpd over the next 10 years, representing average demand growth of about 100,000 [sic] bpd per year (EIA Annual Energy Outlook 2008).

26. At the same time, domestic U.S. crude oil supplies continue to decline. For example, over the past 10 years, domestic crude production in the United States has declined at an average rate of about 135,000 bpd per year, or 2% per year.... Crude and refined petroleum product imports into the U.S. have increased by over 3.3 million bpd over the past 10 years. In 2007, the U.S. imported over 13.4 million bpd of crude oil and petroleum products or over 60 percent of total U.S. petroleum product consumption. Canada is currently the largest supplier of imported crude oil and refined products to the U.S., supplying over 2.4 million bpd in 2007, representing over 11 percent of total U.S. petroleum product consumption (EIA 2007) [South Dakota Public Utilities Commission, Amended Final Decision and Order, TransCanada Keystone XL Pipeline application, 2010.06.29].

First let us note that Finding of Fact #14 is not fact. TransCanada is not seeking to ship more oil to the U.S. Keystone XL will ship more oil through the U.S. to the international market, raising our gasoline prices in the process.

Besides, TransCanada can't count on the U.S. market, because we are using less oil. Let's look at new EIA data and projections showing the significant changes in the oil market in the four years since the PUC issued its findings:

U.S. demand for petroleum is no longer increasing. U.S. demand for petroleum peaked in 2007, which appears to be the final year the PUC considered in formulating its economic analysis. Petroleum demand plunged during the recession. The EIA projects U.S. petroleum use will remain flat over the next 25 years.

EIA AEO 2014-primary energy use by fuel 1980-2040

EIA Annual Energy Outlook 2014, p. MT-6

EIA projects U.S. crude oil consumption will decrease 0.1% a year through 2040 (see EIA AEO 2014, p. A-1).

U.S. domestic crude production is no longer declining. U.S. production troughed at about the same time U.S. consumption peaked. Booming oil production on the Bakken and elsewhere has erased the preceding twenty-year decline and will likely remain above the previous 1990 peak through 2040.

EIA AEO 2014 - U.S. Crude Oil Production 1990-2040

EIA Annual Energy Outlook 2014, p. MT-27

The EIA projects domestic crude oil and lease condensate energy production will increase 0.5% a year through 2040 (see EIA AEO 2014, p. A-1).

U.S. petroleum imports are no longer increasing. Same arc: increase to the mid-2000s, followed by a dramatic decrease thanks to recession- and conservation-driven reductions in consumption and Bakken-frackin' production increases. In the best-case scenario, the U.S. is a net exporter by the mid-2030s. Worst-case, our imports return to a bit above current levels, still less than 50%.

EIA AEO 2014 - Net import share of US petro-liquids 1990-2040

EIA Annual Energy Outlook 2014, p. MT-29

The EIA projects that U.S. crude oil imports will decrease 0.2% a year through 2040 (see EIA AEO 2014, p. A-1).

TransCanada does not have to make an economic case to the Public Utilities Commission. The pipeliners' burden of proof consists mostly of showing that they'll follow the rules and not kill anybody.

But if Commissioners Hanson, Nelson, and Fiegen are going to include economic and energy security justifications in their discussion of the merits of Keystone XL, they'll want to revisit the oil market and consider the significant changes that have taken place in U.S. oil consumption, production, and imports since the PUC issued TransCanada its initial permit.

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While Corinna Robinson talked sense about the Keystone XL pipeline (risk to water supplies, oil shipped to China, jobs nowhere near as numerous or impactful as TransCanada pretends), I hear Rep. Kristi Noem is trying to spread the flow by arguing that TransCanada's tar sands pipeline will free up more rail capacity for farm products.

Alas, farmers are buying this baloney:

Farmers and ranchers have a stake in the Keystone XL project, said Randy Miiller, who farms near Mount Vernon.

Miiller said trucks carrying oil from North Dakota are damaging roads in South Dakota. Meanwhile, the oil companies have been driving up the cost of rail for farmers. There is less rail capacity for farm products, and it's more expensive.

"Without the XL pipeline, to me it's a slow cancer to all the farmers," Miiller said. "It's going to kill us" [Jonathan Ellis, "Noem, Robinson Disagree on Keystone XL Pipeline," that Sioux Falls paper, 2014.08.19].

Pssst, Randy! Did you notice that the first Keystone pipeline through East River didn't do diddly to free up rail cars for your corn? That pipeline isn't moving any Bakken crude. 92% of the oil in Keystone XL will be Canadian oil. Even if Bakken producers can get any oil into Keystone XL, they might still prefer to use your rail cars, since they get access to more refineries.

Here's a thought, farmers and Republican Congress critters: if you really think the rail shortage is critical, why not entertain some other, less risky solutions? Instead of eminent domaining West River landowners to transfer their property rights to a private foreign corporation, why not impose on the railroad corporations' rights? Why not require that, at the peak of the harvest, the railroads give priority to American agricultural products?

If we're going to use eminent domain, shouldn't we use it for American interests? And what meets American interests more: shipping mostly Canadian oil, or shipping American corn?

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Dakota Rural Action's stance on the Keystone XL pipeline has evolved from an initial careful accommodation, seeking the safest pipeline and fairest deals possible for landowners, to the current call to stop to the tar sands pipeline.

Paul Seamans, hay grower, landowner threatened by Keystone XL

Paul Seamans, hay grower, landowner threatened by Keystone XL

DRA Board Chairman Paul Seamans has undergone a similar evolution in his thinking. He grows hay in Jones County, south of Draper. When TransCanada first contacted him in 2008, he didn't think the proposed pipeline would be a big deal, but he expected better treatment. In their first substantive contact, TransCanada made it what called its best, non-negotiable offer, one that would only go down if Seamans didn't accept and forced TransCanada to invoke eminent domain.

Seamans didn't care to gamble on a lawyer and a judge. Eventually, unenthusiastically, Seamans signed the easement that would allow TransCanada to lay its 36-inch, 830,000-barrel-per-day tar sands pipeline across his property.

But then in November 2011, President Barack Obama issued his first delay of the project. That delay and the subsequent delay last April have bought folks like Seamans time to learn more about the pipeline and the oil it will carry and to realize fighting TransCanada may not be futile. Those delays have caused the expiration of the permit TransCanada received from the South Dakota Public Utilities Commission, opening the door to what PU Commissioner Gary Hanson indicated last spring would likely be "protracted hearings"—read, hearings where Seamans, other landowners, and allies from national organizations like 350.org can raise all sorts of heck.

Among his most important allies, says Seamans, are the tribes. Seamans says an important moment in the evolution of his thinking came in a meeting with indigenous folks from Canada who came to explain the harm done in Alberta by tar sands extraction. Seamans says he and fellow landowners hadn't interacted much with tribes of any sort, local or foreign, before they found this common issue. Seamans says he was struck in his very first meeting with tribal allies by the ironic realization that now he and his white neighbors are the ones being forced to surrender their land to foreign invaders. Now you know how we feel echoes in the words of every tribal ally to whom Seamans speaks about Keystone XL.

Seamans is optimistic that he, the tribes, and other grassroots allies can beat a fifty-billion-dollar corporation. I'm optimistic that these new alliances will build some white-Indian trust that will translate into recognition of common ground and cooperation on more South Dakota issues.

2 comments

...and your gasoline prices will still go up.

A new study from researchers at the Stockholm Environment Institute (based in the U.S., not Sweden) says the U.S. State Department could be off by a factor of four in its estimate of greenhouse gas emissions that the Keystone XL pipeline would facilitate. The State Department says Keystone XL could lead to 1 to 27 million more tons of carbon dioxide belched into the atmosphere each year. Researchers Peter Erickson and Michael Lazarus say the additional carbon pollution could be almost nil, but they could also be as great as 110 million tons per year.

But check out the reason: Peterson and Lazarus say the State Department failed to include in its model the economic impact of Keystone XL, which will increase supply, lower global oil prices, and thus increase oil consumption. A working version of the Peterson-Lazarus paper from December 2013 suggests the new oil Keystone XL will bring to the market (510,000 barrels per day, 62% of the pipeline's capacity) would lower the global price of oil by $1.50 per barrel, from $101.10 to $98.60.

Attentive readers are saying to themselves, "Wait a minute! Heidelberger told us Keystone XL would raise our gasoline prices. These eggheads are saying Keystone XL will lower global oil prices. Heidelberger's an idiot! Build the pipeline!"

But here, you have to think locally, not globally. Not all segments of the market are created equally (as anyone traveling across the country last week and getting a motel room in Minnesota one night and the Black Hills the next can attest). As I've reported for years, the whole business case for Keystone XL hinges on clearing the relative glut of oil in middle America and connecting Canada's oil to the global export market. Keystone XL would erase the discount we Midwesterners get and divide it up among the Chinese and other global players.

Now if you want to give China your credit card reward points or the money you save on your capital gains tax rate, then hey, Keystone XL is for you. But if you're putting American interests first and/or if you would like to take one more action to mitigate carbon-induced climate change, you tell TransCanada to keep its pipeline out of South Dakota and leave more of that tar sands oil in the ground.

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In a symbolic committee vote Wednesday, Senator Tim Johnson had the good sense to reject rank Big Oil propaganda and vote against the Keystone XL pipeline... sort of. The Senate Energy Committee approved Senator Mary Landrieu's (D-LA) pro-Keystone XL bill on a 12–10 vote, but Senator Johnson stuck with the nays.

Senator Johnson has been squishy at best on Keystone XL. In May, he said he prefers to let the regular State Department process, along with the current state-level litigation in Nebraska, proceed without Congressional interference. But he did not say Keystone XL is a bad idea. In March 2013 Johnson supported a resolution encouraging construction of the tar sands pipeline.

So with whom shall we replace Johnson's Keystone XL squishiness?

  • Democrat Rick Weiland isn't afraid to tell the truth about Keystone XL. He says TransCanada's pipeline is a "big money con" much more risk than  benefit for South Dakota, with only 35 jobs to compensate for the ongoing risk to our land and water.
  • Republican Mike Rounds, whose dear old dad made enough money lobbying for Big Oil that he's not worried about the ACA cutting his Medicare, keeps pretending that oil from Canada is domestic oil and that oil sold to China will help us buy less oil from evil dictators.
  • Independent Larry Pressler says South Dakota got little from the first Keystone pipeline in East River and that the U.S. will get little from Keystone XL. He'd rather we build a pipeline for Bakken oil.
  • Independent Gordon Howie says we should let big industry, even foreign industry, do whatever they want.

President Obama has left this issue on the table for another election cycle, so the Senate candidates will have a chance to educate voters about the Keystone XL pipeline through November. Or, more accurately, Weiland and Pressler will have the duty to educate voters and refute the Big Oil lies that Rounds and Howie are too happy to spread... and that Senator Johnson hasn't done enough to oppose.

 

comment!

The Senate Energy and Natural Resources Committee holds another show vote tomorrow to boost the Keystone XL pipeline. Big Oil and friends are thus cranking out a little extra Keystone XL baloney.

Prairie Business offers up the American Petroleum Institute's laughable claim that building TransCanada's pipeline across the Great Plains will create 42,100 jobs. This claim is old news, based on fuzzy math that assumes those construction workers spending a month or two in each county along the construction route will create a booming demand for ballet dancers and speech therapists at the man camps.

Alas, Big Labor is on board with Big Oil's Keystone XL snake oil:

[President of AFL-CIO’s building and construction trades department Steve] McGarvey said the project also would bring $3.1 billion in construction contracts, support and materials to his industry.

“I think there comes a time when as a country you circle wagons and get behind what’s gonna be in our best long-term interest,” he said [Katherine Lymn, "American Petroleum Institute: Approve Keystone XL for the Jobs," Prairie Business, 2014.06.17].

Long-term interest? Let's see, when Keystone XL clears the glut at Cushing, closes the price gap between North American and offshore oil, and raises our gasoline prices 20 to 40 cents per gallon, it will shackle our economy with an ongoing drag. Just a 20-cent rise knocks $22 billion out of the economy, swamping the $3.1-billion temporary pipeline infusion McGarvey cites. More expensive gasoline reduces the amount consumers can spend on other goods and services.

A $20 increase in the price of a barrel of oil increases unemployment by 0.1% in one year. One tenth of one percentage point of the current U.S. workforce is about 150,000 jobs. If Keystone XL raised the price of oil on this continent just $6, we'd lose about 50,000 jobs, more than enough to wipe out even the indirect, induced, magic-math jobs the API and other pipeline dreamers want you to think Keystone XL will bring. So even if API were telling the truth, we'd see 42,100 jobs come and go for the few months it takes to build the pipeline, then sandbag ourselves thousands more jobs long-term.

North Dakota Senator John Hoeven and Canadian Ambassador Gary Doer now say TransCanada will get the green light to build Keystone XL by next spring. Even if that happens, we should thank Keystone XL opponents for getting the President to at least delay the pipeline's long-term economic damage for another year.

Related Reading: TransCanada's permit to build Keystone XL in South Dakota expires June 29. When they resubmit their application, we could boost the economy by bringing a thousand Keystone XL opponents to Pierre to testify, protest, and buy sandwiches.

But don't wait for the hearing—protest now! Dakota Rural Action is among the participants in a Day of Unity and Action against Keystone XL on Saturday at the Pte Ospaye Spiritual Camp in Bridger, the Wiconi Un Tipi Camp in Lower Brule, and the Oyate Wahacanka Woecun Camp in Ideal.

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U.C. Berkeley professor emeritus and welder (!) Robert Bea says a bad-weld rate of 0.1% on high-risk projects is cause for concern.

What's TransCanada's bad-weld rate on the Oklahoma-Texas leg of Keystone XL? Over 50%, according to warning letters the Pipeline and Hazardous Materials Safety Administration sent to TransCanada last year:

"From the start of welding, TransCanada experienced a high weld rejection rate," said one letter dated Sept. 26. Over 72 per cent of welds required repairs during one week. In another week, TransCanada stopped welding work after 205 of 425 welds required repair.

Inspections by the safety agency found TransCanada wasn't using approved welding procedures to connect pipes, the letter said. The company had hired welders who weren't qualified to work on the project because TransCanada used improper procedures to test them, the letter said ["U.S. Imposes New Conditions on Keystone XL Pipeline Construction," AP via Times-Colonist, 2014.05.26].

The PHMSA found TransCanada doing generally careless work:

Another letter, dated Sept. 10, said a government inspector witnessed TransCanada officials investigating dents in pipeline that had been laid without first sufficiently clearing rock from trenches or from soil used as backfill. The same letter said coating that protects pipeline from corrosion was damaged by weld splatter because a contractor hadn't followed the company's welding procedures. Eventually, pipeline was excavated in 98 places to make coating repairs [AP, 2014.05.26].

But hey, why be careful? It's not TransCanada's land. A few thousand barrels of oil spilled on some poor farmer's land or into an American aquifer isn't their problem. They've got millions more barrels to tap from their tar sands, Chinese who will happily pay them for it, and those crazy Americans who think government doesn't need to regulate business.

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Kudos to Ken Santema for making the drive out to Ipswich for Monday's District 23 GOP House candidates forum. His summary of the candidates' responses to audience questions is a useful guide for voters in the sparse but sprawling north central district.

Of all the instructive policy statements staked out by the candidates, Mr. Powers chooses to focus on the vague partisan snark issued by Democratic Party apostate Dale Hargens. District 23 voters frankly don't care about that. They want to know which of the five candidates can best represent their views on property taxes, education, and social issues.

Santema notes that all five candidates—Hargens of Miller, Michelle Harrison of Mobridge, Gene Toennies of Cresbard, Larry Nielson of Tulare, and incumbent Rep. Justin Cronin of Gettysburg—appear to view economic development as a priority for government. Hargens said his departure from the Democratic Party came because of a "surge to the left" by our party, but I remain fascinated at supposedly free-market Republicans' ongoing surge toward leftist government intervention in the economy.

On education, all five candidates appear to defer the question of education funding to local control... because legislators would hate to be responsible for advocating the tax increases necessary for schools to end South Dakota's humiliation of teachers with the lowest salaries in the nation.

Santema reports some predictable fuss and feathers about Common Core. But someone phrased the Common Core question perfectly, asking the candidates what they thought would happen if there suddenly were no standards in public education. Harrison, Toennies, and Hargens gave the right answer: teachers would go right on teaching, proving there is no need for top-down standards and political reform movements like Common Core and No Child Left Behind.

On gay marriage, Nielson appears to have offered the greatest offense, saying (in Santema's paraphrase) that gay marriage is "nothing but a topic brought forth to expand benefits...." Yeah, because all you non-heterosexuals aren't looking for equality or justice or respect; you just want your partner's pension, and that's just evil. We should get rid of all those greedy spousal benefits for everybody!

On the hopeful side, Harrison said gay marriage and abortion are morality issues and that (reports Santema) "she doesn’t believe the government has the right to choose these issues for people." Hey, Charlie Hoffman! Can you get your neighbors to recognize the true conservatism in that statement?

Alas, Santema notes that all five candidates said they support the Keystone XL pipeline (Hargens on the false assertion that TransCanada's export of tar sands oil to China will promote our energy independence) and that not one addressed the issue of property rights and eminent domain that ought to raise Republican ire over Keystone XL.

Thank you for that report, Ken!

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