Canada-Texas pipeline, one step closer

[Wanabee FTer]

First hurdle down to build the Canadian-Texas oil pipeline.
Keystone XL oil pipeline moves forward - latimes.com
If this goes through it means more US jobs and less dependence on Saudi Arabia and Venezuelan oil.
Hope it can make it through the rest of our bureaucratic road block system.

[Seajay]

I just looked at the picture of the people protesting this ''Pipeline'' in front of the White house in DC. I was really amazed. Back in the ''back'' of the photo was their means of transportation to the protest..... There was ... 9 horses, 6 mules, 7 solar powered cars, five electric cars (with really long power cords) five ''wind wagons'', three ''totally down hill cars only'', several bicycles, 2 skate boards. 2 pogo sticks and I noticed four people wearing roller skates.

I'll tell you, it does my old heart good to see people supporting their protest so they are not using fossel fuel.......
(go look at the picture if you dont believe me)

God bless our troops ....

[RickO]

Interesting. Is a lack of the ability to transport Canadian crude keeping us from buying it? I thought they were our biggest supplier already? Why does the pipeline need to go all the way to Texas?

To be clear... I'm in no way challenging anything here... just trying to understand.

Thanks

Rick

[RustyJC]

Because a significant portion of America's crude oil refining capacity is found along the Texas Gulf Coast, and many of these refineries are already set up to refine heavy crude oil.

From a report by the U.S. House of Representatives Committee on Homeland Security:

Houston brings in more imports than any other US harbor (88.2 million tons valued at $60.1 billion in 2010).

•

Houston has the second highest level of exports (73.2 million tons valued at $70.8 billion in 2010), and the second highest level of total maritime tonnage (220 million tons in 2010) in the United States.

•
More than 7,800 vessels arrive and 150,000 barge movements are registered annually.
•
Most importantly roughly 25% of the oil imports for America flow through the Port of Houston. Each day 25-30 oil and chemical tankers move along the Houston ship channel. And 31% of America’s crude oil refining capacity is in this harbor. If catastrophe struck the Port, there is little spare capacity to import and refine crude oil elsewhere in the country.

A second reason - despite the fact that Cushing, OK is a major transit hub for crude oil (you'll find Cushing prices for crude on commodity trading exchanges), there's no pipeline link currently between Cushing and the Texas Gulf Coast.

In summary, if we're going to use more Canadian tar sands synthetic crude (versus imported oil) as feedstock, then we must have the transportation capability to move the syncrude to our refineries.

Rusty

[mick]

As soon as the politicans figure out how to get their cuts, it will be done. Not before.

[Wanabee FTer]

If catastrophe struck the Port, there is little spare capacity to import and refine crude oil elsewhere in the country.

The last sentence from Rusty's quote is terrifying
Maybe building a refinery in Cushing instead of a pipeline to Texas would be more prudent.

[gonzo136]

It would seem to me to be a lot more cost effective to build a refinery close by. The only reason I see too build a pipeline to a port city is so that you can export it.

Tony G.

[Five2o]

20% of this pipeline capacity will be used by USA products from N Dakota. The Canadian heavy oil will replace Venezuelan heavy oil that Chavez is redirecting to China.

Looks like a smart move to me but I'm sure the Greentards will want to delay this.

[Superslif]

RickO said

Why does the pipeline need to go all the way to Texas?

Your right. They say the US has not built a refinery since the 1970's. Why don't they just build a super-modern refinery somewhere in the northern states along the new pipeline route.

Answer::: Because they (The oil companies & refineries) wouldn't be able use the excuse of "Refinery shut down for routine maintenance" or a "Hurricane has forced the refineries to be shut down" as often. Go figure....Let the Gouging continue.

[RustyJC]

Originally Posted by Superslif

Why don't they just build a super-modern refinery somewhere in the northern states along the new pipeline route.

Answer::: Because they (The oil companies & refineries) wouldn't be able use the excuse of "Refinery shut down for routine maintenance" or a "Hurricane has forced the refineries to be shut down" as often. Go figure....Let the Gouging continue.

As difficult as it is, I'm going to ignore your price gouging comment for this 5 minutes and attempt to respond to those who might want objective answers to your question. Refinery location has more to do with the following factors:

Use of capital: If I'm not capacity limited in my Gulf Coast refinery, and the intent is just to replace imported oil coming in on tanker ships with Canadian tar sands oil coming in by pipeline, why would I want to invest the capital to build a new refinery when I have existing refineries that are perfectly capable of processing the new source of feedstock?

Feedstock supply flexibility: Refineries on the Gulf Coast can obtain their feedstock from any number of domestic and international sources via pipelines and barge/tanker berths. I'm not going to be very likely to build a refinery in the middle of nowhere that only has one source of feedstock that is non-traditional and extremely price-sensitive (when crude oil prices drop, Canadian tar sands production is economically non-competitive because of the higher costs per barrel to extract the syncrude) and thus subject to supply disruption.

Product distribution: There are channels of distribution to market from existing refinery locations. These include product pipelines to the northeast and midwest markets, barge distribution through the Intracoastal Waterway, up the Mississippi and Ohio rivers to the midwest, rail service via tank cars, etc. If you built a new refinery in the middle of nowhere, how are you going to get your products to market? You would have to build a whole new infrastructure system to distribute them.

NIMBY: The same individuals who say they want more refineries unfortunately are all too often the first to say "...but Not In My Back Yard!!! "

There are other factors we can discuss, but the ones above are some of the major ones.

Rusty

[Dixieray53]

Originally Posted by Rustic

As difficult as it is, I'm going to ignore your price gouging comment for this 5 minutes and attempt to respond to those who might want objective answers to your question. Refinery location has more to do with the following factors:

NIMBY: The same individuals who say they want more refineries unfortunately are all too often the first to say "...but Not In My Back Yard!!! "

Rusty

Thank you...nail on the head...There have always been sufficient oil inventories....Just not enough refinery capability, but the refined gas is also traded on commodity exchanges. Also just because we have more domestic oil does not mean lower price. They will sell the oil to the highest bidder...Sepeculators will always find a reason to bid up the price and not give the American consumer a break. IMO. Peace D

[blackf3504dr]

Originally Posted by RustyJC

As difficult as it is, I'm going to ignore your price gouging comment for this 5 minutes and attempt to respond to those who might want objective answers to your question. Refinery location has more to do with the following factors:

Use of capital: If I'm not capacity limited in my Gulf Coast refinery, and the intent is just to replace imported oil coming in on tanker ships with Canadian tar sands oil coming in by pipeline, why would I want to invest the capital to build a new refinery when I have existing refineries that are perfectly capable of processing the new source of feedstock?

Feedstock supply flexibility: Refineries on the Gulf Coast can obtain their feedstock from any number of domestic and international sources via pipelines and barge/tanker berths. I'm not going to be very likely to build a refinery in the middle of nowhere that only has one source of feedstock that is non-traditional and extremely price-sensitive (when crude oil prices drop, Canadian tar sands production is economically non-competitive because of the higher costs per barrel to extract the syncrude) and thus subject to supply disruption.

Product distribution: There are channels of distribution to market from existing refinery locations. These include product pipelines to the northeast and midwest markets, barge distribution through the Intracoastal Waterway, up the Mississippi and Ohio rivers to the midwest, rail service via tank cars, etc. If you built a new refinery in the middle of nowhere, how are you going to get your products to market? You would have to build a whole new infrastructure system to distribute them.

NIMBY: The same individuals who say they want more refineries unfortunately are all too often the first to say "...but Not In My Back Yard!!! "

There are other factors we can discuss, but the ones above are some of the major ones.

Rusty

Very well stated.

[jeepersrus]

I've always been with the understanding that the current refineries are all ready running at max capacity. Its more refineries that we need. But the problem comes in to where. Just as soon as a location would be decided on you'll get people protesting saying "NOT IN MY BACK YARD"!! There was a former Senator from Massachusetts that blocked a wind farm from be constructed off the Mass coast because it would have been visible from his coastal mansion.

[Ann n Gene]

Ironic, there used to be a fairly large refinery in Cushing but the owners could not get all the permits required to keep it modern and update it(gas was cheap at the time and we were exporting gas)so...........they shut it down and sold it off for scrap. Now, it is extremely difficult and expensive to get a new refinery permitted (may not even be possible as long as it has been since a large new one came on line). Add to the the high cost of labor to run it (much cheaper in Mexico and Venezula, then import finished product) and it seems unlikely that new refineries will be built here anytime soon. all just my opinion.