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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The Bakken oil boom is making North Dakota rich! Too bad its universities are falling apart:

Students returning this week will attend classes in buildings without adequate ventilation or fire detection systems and in historic landmarks with buckling foundations. A space crunch is making it difficult for researchers to obtain grants and putting the accreditation of several programs at risk, administrators say.

“It’s embarrassing,” said North Dakota state Representative Kathy Hawken, a Republican from Fargo who sits on the higher education funding and budget committees. “We have a divided legislature on higher ed: Some think we put too much money into it and some think we don’t put enough. Buildings aren’t people, so we don’t put dollars there” [Jennifer Oldham, "North Dakota Universities Crumble as Oil Cash Pours In," Bloomberg, 2014.08.26].

Moving that money from petro-tax revenues to classrooms is complicated: Oldham reports that 30% of the money is locked up in a state trust fund until 2017, while another big chunk goes to municipalities. The $300 million the North Dakota Legislature gets faces competition from road needs. While the universities need $808 million in repairs, the state also needs $925 million to fix roads statewide over the next two years, including $485 million for repairs to industry-battered oil-patch roads.

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...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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While Mike Rounds fantasizes that the Albertan tar sands oil that Keystone XL would ship to the Gulf of Mexico for export to China somehow secures American energy independence, and while pols and hustlers insist that maybe South Dakota can stick a straw in West River and suck some Bakken oil our way, the Union of Concerned Scientists notes that South Dakota has the resources to cash in on a real, renewable domestic source of energy growing and plopping right in our backyards... or the back forty.

UCS-Top 10 States for Crop Residue Manure Bioenergy 2030

According to a new UCS analysis, by 2030, South Dakota can sustainably produce the ninth-most biomass—crop residues and manure—for renewable energy production. (Add Mike Rounds's speeches on coal and oil, and we boost our rank to seventh.) We're not talking about turning more food into fuel; we can squeeze energy from all that stuff we and the cows leave in the fields without burning one more bean or kernel of corn.

UCS crop residue manure by county 2030

(click to enlarge!)

Why would we want to convert cornstalks and cowpies into energy?

Clean, renewable energy resources for transportation and electricity are an im- portant part of the solution to the climate, economic, environmental, and security challenges posed by our fossil fuel use. Bioenergy—the use of biomass, including plant materials and manure, to produce renewable fuels for transportation and to generate electricity—can provide a sustainable, low-carbon alternative to fossil fuels while enabling communities to benefit from local resources. Bioenergy is one of several elements of a comprehensive climate strategy that can cut projected U.S. oil use in half by 2030, and help put the nation on track to phase out the use of coal in producing electricity [Union of Concerned Scientists, "Turning Agricultural Residues and Manure into Bioenergy," July 2014].

Oh, those darned scientists, trying to get us to use less of a polluting fuel source that will run out. Don't they know that all this talk of conservation and renewability messes up the business model for Mike Rounds's favorite industries?

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Todd Epp reported Friday that Mobridge, Aberdeen, Harrisburg*, and Canton* are all in "oil train blast zones," near rail lines carrying explosive crude oil shipments. According to the ForestEthics map, so are Lemmon, Milbank, much of Sioux Falls, and North Sioux City. (McCook Lake, we will destroy you one way or another!)

Meanwhile, Energy Transfer Partners of Dallas, Texas, would like to run a 30-inch pipeline carrying an initial volume of 320,000 barrels a day of Bakken crude from the oil fields down to around Mobridge, then hypotenusally to the Hartford–Sioux Falls–Harrisburg metroplex and then from corner to corner across Iowa to Patoka, Illinois, the same refining terminus served by TransCanada's original Keystone pipeline. Doing business via subsidiary Dakota Access, LLC, ETP is sending letters to landowners along the proposed route seeking permission to survey the land and announcing ETP's plans to seek a temporary 150-foot construction easement and a permanent 50-foot access easement. And if landowners don't want to play ball, they could face eminent domain, exercised by a private company for its private profit.

As a purely domestic pipeline, ETP's Bakken–Patoka project is not subject to the State Department review and Presidential approval that (let us give thanks!) has delayed the Keystone XL pipeline. But ETP will need approval from South Dakota's Public Utilities Commission. PU Commissioner Gary Hanson, who is seeking re-election this year, promises the PUC will listen to public input. Dusty Johnson, who traded his seat on the PUC for the seat at Governor Daugaard's right hand, says the Governor hasn't taken a position on ETP's pipeline, but golly gee, we gotta move that oil somehow:

“I know as a country we’re trying to diversify how we use and create energy. But for the foreseeable future, oil’s going to be a big part of that,” said Dusty Johnson, chief of staff to Gov. Dennis Daugaard and a former member of the Public Utilities Commission. “If we’re going to use oil, the question is, where do we want that oil to come from? I would prefer North American oil, whether that comes from North Dakota or Canada or elsewhere.”

Johnson said Daugaard, sympathetic to pipelines in general, hasn’t decided about the Energy Transfer Partners pipeline. The governor’s primary issue is whether the pipeline is safe, Johnson said.

“There can be good pipelines and there can be bad pipelines,” he said [David Montgomery, "Oil Pipeline Plan for Eastern S.D. May Trigger a Battle," that Sioux Falls paper, 2014.07.12].

Oh, the easy surrender to inevitability! Dusty sounds a bit like the mean dad saying, "You can pick: belt or stick. But you will get your beating." We do have the option to not use the oil, or not use as much as fast. We do have the policy option to make the use of petro-products more expensive to protect the general welfare and counter any economic impacts with the stimulus of investing in renewable energy.

We don't have to move more crude through South Dakota by rail or pipeline. We don't have to double or triple the chances of blowing Harrisburg off the map. We don't have to burn that oil.

*Correction 2014.07.14 23:51 CDT: An eager reader and "railfan geek" says the Forest Ethics folks may have read the map wrong and unnecessarily alarmed the good folks hearing train whistles in Sioux Falls, Harrisburg, and Canton. Rick tells us that the line running southwest from Willmar enters South Dakota at Sherman, continues to Garretson, then bounces east across the border again. Big oil trains would take that line. A secondary BNSF line does branch off at Garretson and head down Harrisburg- and Canton-way, but you won't find oil trains on that secondary line.

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South Dakota is "under-explored" for oil, says Sturgis consultant and former cop Adam Martin, the new exec of the South Dakota Oil and Gas Association.

"Under-explored" appears frequently in press dealing with South Dakota and oil exploration. State officials are doing a lot of petro-wishing, but geology and economics are still working against them. Heck, we can't even find the right sand to use in the fracking process—except for maybe one isolated patch of the Black Hills near Hill City where South Dakota Proppants thinks it can mine a million tons of frac-sand a year... and turn the central Black Hills into a dusty freeway for trucks thundering out to Wyoming and the Bakken. Yay.

Plenty of folks have made money punching holes in the Black Hills. If we punch more holes across the state and find oil, more folks will make money. But not all of them. Texas is far from under-explored, but the growing petro-wealth still doesn't flow smoothly to the greater good:

...[D]espite the boom, Texas has some of the highest rates of poverty in the nation and ranks first in the percentage of residents without health insurance. Republican leaders have supported tapping the Rainy Day Fund for one-time investments in water and transportation infrastructure, but they have blocked attempts to use the fund for education and other services, arguing that it was designed to cover emergencies and not recurring expenses.

“Despite the bounty of the Eagle Ford, which is considerable and on the whole clearly positive, it is not a rising tide that lifts all boats,” said Ray Perryman, a leading Texas economist and author based in Waco. He noted that Texas had long had a philosophy of limited government and an aversion to spending on social services, an attitude intensified by the current political environment.

“Texas is not a good place to be poor, and there is little political appetite for change,” he said [Manny Fernandez and Clifford Krauss, "Boom Meets Bust in Texas; Atop Sea of Oil, Poverty Digs In," New York Times, 2014.06.29].

It may not hurt to go looking for the spare change dinosaurs may have left in the couch cushions in West River. Then again, it might. But don't let the South Dakota Oil and Gas Association or South Dakota's state government fool you: fracking what little oil we may have won't bring easy, widespread wealth to South Dakota.

p.s.: Hey! Anyone strike oil down in the Precambrian rock by Wasta yet?

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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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CNN reports what we South Dakotans know from experience: Chinese investors love the EB-5 visa investment program. According to yesterday's report, Chinese immigrants took almost 6,900 EB-5 visas in 2013, 81% of the total issued. Compare that with the 16 EB-5 visas issued to Chinese immigrants in 2004, the year South Dakota started leaning on the program to support large dairy projects in East River.

Immigration lawyers tell CNN Canada's decision to end a similar immigration program based on poor payoff has already driven more immigrants to apply for EB-5 visas. Rich Chinese looking to buy their green cards get a great bargain from the U.S.:

"The cost is very reasonable in relation to other countries," [immigration lawyer David] Hirson said. Australia, for example, requires a $4.5 million investment -- nine times the minimum required in the U.S. [Sophia Yan, "Rich Chinese Overwhelm U.S. Visa Program," CNNMoney, 2014.03.25]

Readers know I'm not nearly as fond of the EB-5 visa investment program as the handful of South Dakota players who've profited from it without proper state oversight. But let me reach for a silver lining to the Chinese takeover of the EB-5 visa quota:

For rich Chinese, opportunities in America are attractive. A green card offers a way to send their children to college, escape heavy pollution and enjoy an improved quality of life, said Kate Kalmykov, an attorney with Greenberg Taurig. Plus, the EB-5 program is relatively cheap [Yan, 2014.03.25].

These Chinese investors want to escape pollution. So when they come here and see the spate of oil spills and pipeline ruptures driven in part by their home country's increasing thirst for North American oil, those EB-5 immigrants may join our fight to protect their new home from the predations of TransCanada's China-bound Keystone XL pipeline, keep the price of driving their new American Cadillacs down, and leave a billion barrels of dirty tar sands oil in the ground. Save West River, and save the planet: bring on more EB-5 investors!

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