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In the End, This is Why the Keystone XL Will Be Built

by | published January 30th, 2015

The map (and all of the power that goes with it) is being recast right before our eyes.

Not long ago, powerful armies decided who held the upper hand in global politics. Today, the shape of the world is dominated by energy.

In fact, over the last 24 hours, two events, thousands of miles apart, have once again demonstrated how central energy has become in the world of geopolitics.

Both have the potential to change the energy landscape, while fundamentally altering the leverage associated with it… and each involves a contentious cross-border pipeline.

One would combine a country in shambles with another under duress.

The other is closer to home and would strengthen a superpower making a big comeback in oil…

The Keystone XL: A Matter of American Energy Security

The superpower, of course, is the United States, and the pipeline is the ever-controversial Keystone XL.

Yesterday, the Senate passed a bill to force the approval of the Keystone XL, the last of a five-stage pipeline system built to move crude from Canada to the U.S. and on to Cushing, OK, the primary pipeline interconnector to the Gulf Coast refineries.

But since the project crosses an international border, the Senate doesn’t have the final say. The Keystone XL requires an appraisal by the U.S. Department of State (DOS) and approval by both Congress and the President.

So far, the biggest hurdle has been the environmental concerns.

Most of them have been dealt with in a preliminary DOS finding (the full report has yet to be released) and with the recent verdict by Nebraska that the pipeline poses no environmental threat.

Nonetheless, the Keystone XL has become the quintessential political hot potato.

As it stands, the House of Representatives has already approved the pipeline, although its version differs a bit from the Senate’s. That will require a conference committee to iron out a common version that will then be voted up or down, with no amendments allowed in either chamber. That much seems assured.

However, President Obama has indicated he will veto the measure. And neither the initial House nor Senate approval vote amounted to the two-thirds needed to override a presidential veto. Unless more Democrats decide to defect, the threatened veto will be sustained.

Yet, even with all of this political wrangling, it’s now certain the pipeline will be built. After all, the serious objections have never materialized into substantive roadblocks, and the weightiest complaint was removed when the intended route was altered to keep it from crossing a major aquifer in Nebraska.

So, it’s no longer a matter of if it will be built, but when.

Here’s why. The Keystone XL has become a basic element in America’s new energy security.

Of course, when we started talking about energy independence a few years ago, it seemed like a pipe dream (no pun intended). But now it’s rapidly becoming a reality.

In just 10 years or perhaps even sooner, America won’t need to import any large quantities of oil, and no natural gas whatsoever. Thanks to immense domestic reserves of unconventional (shale and tight) oil, the U.S. will only need to import about 30% of its daily requirements. And virtually all of that will be coming from Canada.

To put this in perspective, U.S. imports approached 70% only a few years ago. Needless to say, this massive shift carries with it certain geopolitical considerations.

In this case, the Keystone XL will be approved because it is in the U.S.’s national energy security interests to do so.

A Turn of the Tables in Greece

The second proposed pipeline with major geopolitical repercussions is found in Greece, where recent elections have suddenly propelled a leftist party into power.

Well, almost.

New Greek Prime Minister Alexis Tsipras and his Syriza Party clearly won the election on an anti-austerity platform. It was a frontal attack on the policies required by the European Union (EU) to keep Greece on financial life support.

However, those policies also created severe hardships in Greece, which many believe led to an unemployment rate of nearly 26%.

Yet despite the resounding victory, the Syriza Party didn’t win enough seats in the Parliament to form a government, so it has entered into a coalition with the Independent Greeks. This is a far right party, proving politics really does make for strange bedfellows.

The only issue they agree on is opposition to the EU austerity dictates, which will make for a volatile alliance at best. It is the Greek version of the Tea Party and Nancy Pelosi joining forces to govern San Francisco.

As unlikely as it may seem, the big beneficiary of this move is likely Moscow, since Russia has long been pushing for a natural gas terminal hub on the Greek border and has encouraged southeastern European markets to build the necessary pipeline spurs to it.

Of course, Russia had been planning a massive “South Stream” pipeline to move its gas into Europe, paralleling the “Nord Stream” pipeline already doing the same thing across the Baltic seabed to Germany.

The combination of the two would have effectively ended Russia’s need to move any volume of gas across Ukraine.

Unfortunately for the Kremlin, Bulgaria decided – after heavy EU and American pressure – to reject the $32 billion project. Since Kiev was not about to grant offshore permission in its sector of the Black Sea, that left Turkey, where all of the pieces come into place.

You see, there’s already the dual-piped “Blue Stream” pipeline moving gas from southern Russia to Samsun on the northern Turkish coast, and the countries have entered into an agreement to build a pipeline system into Europe. But to do that they need a hub somewhere on the mainland.

And, you guessed it, Greece would work just fine. Now there is a receptive left-wing administration in Athens to make it all happen. That most Greeks are angry with Brussels hardly hurts either.

Right on cue, the Russian government said yesterday they would be receptive should Athens request foreign aid in order to circumvent additional austerity measures from Brussels.

And while Greece has agreed to extend the current EU sanctions against Moscow, they may well block any additional punishments. For that matter, the new government would have popular support to pull out of the EU entirely.

Greece would also welcome the connection to Russian gas, which would allow them to receive some nice revenues from the resale to Europe. In turn, Russian President Vladimir Putin would be able to offset some of the financial penalties from the current sanctions, while socking it to the EU with gas sales into Europe against their wishes.

The next conflict between Moscow and Brussels may well take shape over a pipeline thorough Greece.

Energy… it’s what makes the world go round.

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  1. Woody
    January 30th, 2015 at 16:54 | #1

    Dear Kent,

    Could you please address the practicality of a floating tariff on imported oil, other than North American production (primarily Canada and to some degree Mexico)? This would allow our shale and unconventional sources to be more financially secure and operational.

    I have heard many critics decry pumping our oil now when we could burn other countries oil now. I think that the fly in that ointment is that infrastructure takes years to develop and put in place and only months to destroy with low prices.

    If you want to talk about energy & national security in the same sentence then most likely we will need a financially healthy infrastructure to accomplish this task. This includes Keystone and all of the Junior Producers out working the small patches.

  2. fred beyers
    January 30th, 2015 at 17:10 | #2

    Keystone won’t be built in your or my lifetimes because the price of oil won’t justify it. Thank goodness there was enough political sense to delay the nonsense a few years ago when it might have been built!

  3. Robert in Vancouver
    January 30th, 2015 at 17:43 | #3

    @fred beyers
    So Fred and the Democartic Party prefers to buy oil from countries that hate America such as Venezuela and most of the middle east instead of buying it from your Canadian friends, supporters, allies, and relatives.

    Plus, you buy Canadian oil at a discount compared to oil from those other countries.

    Why not buy from Canada?

  4. Ed Doan
    January 30th, 2015 at 18:39 | #4

    No offense, but the energy experts don’t seem to be doing too well of late based on their forecasts of just a few mere months ago in pricing. I have yet to see a world demand forecast that goes down from current levels. The lower demand talked about is really just a slower growing demand. We need to know so much more. What is the world wide refining capacity and when do we saturate the ones in the US? Worldwide? What is the refined demand by US location? Would an inland refinery near Canada cost more than the pipeline to Houston, of all places? We move oil by rail from ND because the producers find it more flexible than a pipeline. The only advantage to Houston that I can see is that they can refine our oil and ship it back out to foreign locations at a profit. Is it worth a long pipeline from Canada just to support their exports? We have good rail service from Canada so who is pushing for the pipeline and why is still a mystery to me, or maybe not. It is to someones profit interest and not a necessary part of our energy independance.

  5. unknown
    January 30th, 2015 at 21:02 | #5

    What makes you think they haven’t already started building it? Part of the plans were to use some of the pipelines that already exist and connect any extra they need to complete it. After the Free Trade Agreement was made between all three countries of North America and the project first came to be known they started building. Now they’re proposing that most of it be underground. Which usually means with the U.S Gov. it’s already been done.

  6. Andy
    January 31st, 2015 at 01:10 | #6

    @fred beyers
    Did you even read Dr. Moors’ Article about the XL Pipeline being built? I suspect enough Democrat Congress Folks will join in a Veto Override. If they want to be re-elected, that is. The Pipeline is essential to US Energy Security. Most Americans understand this. Oil won’t stay cheap for long, in any case.

  7. January 31st, 2015 at 10:19 | #7

    From your article on the Keystone pipeline it seems that you are saying that we (the USA) will get oil from this pipeline. Maybe some from leakage, but the oil is to be deported. I miss your point.

  8. Kevin mackay
    February 1st, 2015 at 15:00 | #8

    The funny thing is they don’t need Obama’s approval to build the pipeline they just needed to cross the border. So when they build it they just got to stop one mile before the border and then just truck at 1 mile. Then they just have to apply for one-mile a pipe. And think about how much carbon you’d save having just that one extra mile a pipe versus running 500 trucks.and if they were going to export The oil through the pipeline to foreign countries
    The United States would benefit greatly as that means they’re producing oil cheaper than anybody else and That would keep oil prices down worldwide. Helping the US consumers

  9. Kevin mackay
    February 1st, 2015 at 15:07 | #9

    In my last statement it should read they just need Obamas approval to cross the border not to build a pipeline to the border. if Canada build a pipeline to the east and the pipeline to the West the United States could lose energy security. And North American prices would still rise in the US would still have to send the military to the Middle East.

  10. Fred Yde
    February 1st, 2015 at 16:47 | #10

    It seems that the ultimate purpose for the crude that will be sent through the Keystone will be refined product for US consumers when that day comes that we turn off the spigot from the middle east . If we are to have a North American interdependence then buying our own instead importing from the world supply chain will become essential. The world’s current appetite for oil is some 92 million barrels a day. We consume 1/7th of that in North America. As we ramp up our technologies to reduce consumption and increase our exporting capacity so that the rest of the world is satisfied, we will need what the pipeline brings us. We still need to expand refining capacity in the USA to achieve a balance in production and consumption.

  11. Dan McGrew
    February 2nd, 2015 at 10:27 | #11

    Dr. Moors;
    Inasmuch as the Canadian will not permit the Tar Sands Oil from Alberta to be piped less than 1,000 miles to the British Columbia Coast, or even north to Hudson Bay for tanker shipment — Why should the U.S. allow that supertoxic witches brew to be piped through every mid-continent watershed — Missouri, Yellowstone, North and South Platte, the Missouri again, the Mississippi, Arkansas, Cimarron, Nort and South Canadian, Red and most of the Texas Coastal rivers?
    SECOND MAJOR ITEM — The Cushing pipeline center cannot move domestic mid-continent crude production south to the Texas Coast line.
    The Cushing system and the pipelines radiating from it are already unable to handle the volume and much of the U.S. oil arriving there must be moved by rail car, east, south and west.
    With your vast knowledge — Why haven’t you suggested the Keystone and all Bakken Region pipelines be routed directly south along the ND/MT, SD/WY borders, just east of Greeley, Colorado (West of the Ogalla Auqifer),west of Boise City, OK, along the Texas/NM border to the south end of the Permian Basin — and then southeast to the coast.
    One right of way;
    One large-diameter tunnel bored through bedrock beneath every stream supporting separate pipelines for each region’s crude and the massive quantities of natural gas which will be liquefied at the new plants extending from Biloxi, west toward the Rio Grande;
    One power grid as needed where solar, wind generators, In-Line Electrical Generation turbines and Natural Gas generation are inadequate — although the combination — particularly the In-Line ge nerators should be fully adequate to power pumping stations and controls.
    With all the pipelines following the same direct route, Alberta and Sask. Tar Sands toxics, Bakken, Three Forks, Powder Basin, Thunder Basin, DJ Deposit, West Texas and New Mexico crude and natural gas could all be moved within the same right of way, justifying a decent road system within that right of way, from Canada to the Gulf and spreading the cost for bedrock tunnels under all streams.
    CERTAINLY — with Cushing already unable to move the pre-existing crude glut — moving another five to ten million barrels daily through that single choke point is insane.
    The next major problem — building adequate refinery capacity between the Canadian border to Texas to at least serve the Great Plains, western Great Lakes, western Corn Belt, and the southern plains markets with refined products. Stop shipping crude to Texas and bringing rail tanker cars loaded with the huge diesel, gasoline and other needs back to the Northern and Central Plains.
    Dan McGrew
    Artic Enterprises, Inc of North Dakota

  12. Michael Miles
    February 3rd, 2015 at 17:32 | #12

    the problem with Oil is the way we think and justify it’s use by what it costs to use other fuels.
    Bottom line is OIL needs to go. It has ruined our atmosphere and will only get worse as the years go by.
    Justifying oil over water fuels like Hydrogen because of what it costs to make Hydrogen is what must change. So what it cost more. If we do not do it then we won’t have a world left so the cost is something that we must not care about.
    Tesla had a way to give 100% free electricity to all in this world. No matter where they were on the planet. Because of very corrupt men like JP Morgan who could not make money off of free energy we are in this position now with the oil. That patent must be brought back. Our own Earth generates enough energy for every person on the planet. It is being used now but in a different way with Project Haarp. Trillions of watts of energy are being generated ever second in our atmosphere. Time to tap into it and use it. If we do not do something now then our future is something we will not see

  13. Jeff Olsen
    February 17th, 2015 at 17:13 | #13

    Hooray to Dan McGrew with his comments listed above. Notice how his plan has no mention of government influence or control and makes perfectly good sense while still considering environmental issues and efficiency? Pay attention, liberals. You might actually learn that free enterprise coupled with American ingenuity can thrive without government.
    Ask for an audience with some senators and congressmen and present your case, Dan. Well done.
    Regarding Fred Beyers comment about oil too cheap, since when did the Democrats start worrying about money?

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