Keystone III Begins Operations

from TransCanada

On Wednesday, January 22, 2014 TransCanada began operation of the Gulf Coast Project. The pipeline also known as Keystone III has begun delivering crude oil from Cushing, Okla., to the oil refineries in Texas. This pipeline cost $2.3-billion and provides a direct connection between the Cushing, Oklahoma oil hub and the refineries on the Gulf Coast. This project also added of 2.25 million barrels of crude oil storage capacity at Cushing and will ultimately carry 1.3 million barrels of oil a day between Oklahoma and Texas. In 2012, TransCanada announced their intension to build the Cushing Oklahoma to the Nederland, Texas portion of the Keystone XL pipeline, and to extend that pipeline 435 miles to Port Arthur and Houston. The Keystone Phase III Project (Oklahoma to Texas) began construction during the summer of 2012 and began opeations at 700,000 barrels a day yesterday.

One year ago, January 22nd 2013, Governor Dave Heineman of Nebraska signed the recommendation to the U.S. Department of State for a Presidential Permit for the Keystone XL pipeline to cross the international border. The recommendation is in support of the TransCanada’s second application for a Presidential Permit to build the northern most section of the Keystone XL pipeline (Phase IV) from the Canadian Border from where Saskatchewan meets Nebraska along this new route through Nebraska that would join up with the Keystone Phase II which runs from Steel City, Nebraska to Cushing, Oklahoma. The route avoids many of the fragile soils in northern Nebraska and the shallowest areas of the Ogallala Aquifer, but still overlies portions of the aquifer, which covers most of the state. The State Department has taken no action on the Keystone request in the past year.

There is currently an existing Keystone pipeline that runs east from Hardesty Saskatchewan to Manitoba and then south through the Dakotas to Steel City, Nebraska. It is a less direct route and is a lower volume pipeline. The existing Keystone Pipeline is known as Phase I and run from Hardesty, Canada to Steel City, Nebraska near the Kansas and Nebraska border. Keystone Phase II runs from Steel City to Cushing, Oklahoma where the Canadian crude oil and U.S. domestic production of light sweet crude from North Dakota can now be transported to the refineries on the Gulf Coast.  Keystone is not the only pipeline from Cushing, OK to Texas. Enbridge Inc. and Enterprise Products Partners owners of the Seaway pipeline that runs from the gulf coast area to Cushing, Oklahoma, reversed the flow in their gas pipeline to move crude from Cushing to the gulf coast refineries in mid-2012 with the addition of pump stations and other.  The capacity of the reversed Seaway Pipeline is up to 150,000 barrels of oil per day, a fraction of the new Keystone III Pipeline.

The Keystone XL Pipeline has been very controversial. Most of the environmental controversy has focused on the porous soils of the Sandhills and fears of a possible oil leak into one of the nation's most important agricultural aquifers. Moving the pipeline away from the aquifer should mitigate that concern. However, many who oppose the Keystone XL pipeline want to prevent the development of the oil sands resources in Canada to prevent the acceleration of global warming. The Canadian oil sands have been known for decades, but until oil prices rose and technology improved these oil deposits were too expensive to exploit beyond the limited scope of surface mining. Advances in technology in both oil sand extraction and refining techniques and rising oil prices altered the economics and have made the extraction of oil sand possible. While the advances in extraction techniques have quadrupled recoverable oil reserves and moved Canada into second place in proved world oil reserves, it requires more energy to produce the oil and increases the carbon footprint of the crude as compared to oil from the Middle East or Brazil.

The current method of mining the Canadian oil sands increases the CO2 released in every gallon of gas adding to man’s carbon footprint. In addition, older methods of mining the oil sands left open pits that still need to be reclaimed, thought today groups of wells are typically drilled off a central pad and like fracking wells and can extend for miles in all directions. This reduces surface disturbances of the land and the footprint of the area to be reclaimed.