March 2013, Vol. 240, No. 3

From the Burner Tip

Protesters Give Many Reasons to Stop Canadian Keystone XL Coming South

One issue still a hot topic for the Obama administration is whether to approve the second and final phase of the Keystone XL Pipeline. This will include another pipeline coming from Canada into the U.S. bringing another million barrels per day of tar sand crude oil also known as “diluted bitumen” to Gulf Coast refineries.

The first phase, already in operation, brings bitumen to Mid-America, Cushing, OK storage facilities. Construction is under way on the southern leg from Cushing to the Gulf Coast to refine and market the oil from the existing supply and the potential supply. The final phase needs federal approval since it crosses international borders. That decision was due in 2012 but was postponed because of requested additional studies and really, the coming election and rejection of the whole project by environmentally concerned groups.

There are almost no questions as to the major benefits of the project – supply, economics, security, business, etc. – of getting this large quantity of relatively clean crude oil from a friendly country into the U.S. supply pool.

That is the nice, easy and clean side of the project! Opposition – from wrestling the crude from the ground to refining and marketing the products – is just out of this world. Starting at the very beginning where the resource is mined – crude from tar sands is mined rather than using conventional drilling, pumping, etc. methods for oil extraction – to the refineries themselves – the opposition is fighting to stop the whole project – period. Opposition is in Canada, U.S. and even around the world.

Some object to the extraction because of what it might do to the region of Canada where the resource production is located. There are those opposed to the pipeline and shipping of the diluted bitumen – as it is called once it is ready for shipping – because there might be a spill or leakage from the pipeline and the objectors describe the contents as poison since they are believed so toxic and so dangerous.

These reasons have been the main emphasis of the group protesting the building of the southern leg from Oklahoma to the Gulf Coast. Many local groups as well as national environmentally concerned organizations are protesting this construction and have actively participated in trying to block the pipeline.

There are those opposed because of the belief that refining such a bad raw material, as they picture bitumen, for commercial products, causes major pollution and environmental problems. On top of all this, there are those opposed to developing such a large source of hydrocarbon fossil fuels because of it is their belief – not a fact, even though many make it sound like a fact – carbon dioxide released when burning the fuel would seriously affect the earth’s climate and future. A doomsday forecast.

To make their point – to persuade regulatory authorities and the public of the alleged disadvantages of the project – the opponents’ claims include everything imaginable. Everything from total earth destruction to moving a deadly poison is the hue and cry. Much of the opposition is from civic groups like the Sierra Club and others. Like everything else in the world that is controversial – there are some truths but an awful lot of exaggerations.

Since this is a journal about pipelines, this article will only speak to the pipeline questions. Is the movement of the diluted bitumen in a 1,700-mile pipeline from Alberta to the Gulf Coast so formidable and dangerous that it not be considered? The final pipeline, in addition to moving Canadian oil to Gulf Coast refineries, will bring large quantities of crude from Kansas, Montana, Nebraska, Oklahoma, South Dakota, and Texas for refining and marketing.

A major claim, in addition to the normal potential pipeline breakage and leakage, is the alleged toxicity and “badness” of the tar sand crude. Some just refer to it as – “dirty crude”. And here lays the exaggerations designed to persuade the public and regulators of the dangers.

Some insist diluted bitumen is more corrosive than regular crude oils because of the composition and viscosity of its tar sands source. Some claim it’s more toxic because in addition to the composition as produced, the diluents added for pumping are very toxic and harmful.

Missing in these claims and exaggerations is a careful look and comparison of the diluted bitumen and the composition and properties of the many millions of barrels of heavy crude already being transported safely into and around the U.S.

A review of the physical properties of heavy crude refined in the U.S. from Mexico, Venezuela, California, Nigeria, Russia, and other locations similar to the tar sands oil should lessen fears.

The oil sand “diluted bitumen” also known as “dilbit” as a raw material for refining would fall into the category of crude oils known as heavy or very heavy crude oils. The difference between these and regular crude oils are the lower amounts of light-end hydrocarbons in the oil, making them very viscous, sticky and difficult to pump.

After processing the original tar sands ore to free it from sand, grit, water, and other impurities, producers will reduce the viscosity for shipping by diluting the bitumen with low-end hydrocarbons such as natural gas liquids, condensate or synthetic oil. Opponents mistakenly claim benzene, a known cancer-causing agent, is used as a diluent.

Once diluted, the bitumen is similar to regular grades of certain crude oils. In a study by Battelle Memorial Institute, one of the world’s largest independent research and development organizations based in Columbus, OH, it was found that the oil sands product and regular heavy sour crude oils had the same characteristics and its corrosion characteristics would be similar.

Again, these types of oils have been handled by pipelines and refineries equipped for this kind of service for many years and have shown an excellent safety and environmental record. It should be remembered that the pipeline is estimated to be a $7 billion project. Surely industry management would use the proper equipment to ensure safe, economic, and efficient service.

To bring the additional Canadian product into the U.S., a Final Environmental Impact Statement (FEIS) was issued by the U.S. State Department. It led to similar conclusions as Battelle, concluding, “Synthetic crude oil and dilbit (from the Western Canadian oil sands) are similar in composition and quality to the crude oil currently transported in pipelines in the U.S. and being refined in Gulf Coast refineries.”

Surprisingly, with all the talk about Canadian oil coming into the U.S., no one seems interested in the supply of heavy crude imported from Venezuela. Well over 1 million bpd were imported in prior years and is only down because of that country’s decline in production. This oil is very similar to dilbit in composition and characteristics and has presented no problems in handling, environment, etc. The false information on how bad the material is should be disregarded when making the decision on importing this valuable resource.

When well over 1 million bpd were being refined in the U.S. at Gulf Coast refineries, there was little concern about that quantity of heavy oil coming across the Gulf of Mexico and being unloaded for refining at Gulf Coast docks. There is no question pipelines are among the safest forms of transportation. The protest is only another effort to try and kill the whole Canadian resource potential.

Decision time is scheduled by the end of the second quarter. The governor of Nebraska has given that state’s consent which was the main reason for the delay in 2012. Now it is only a question of the federal government granting a permit for the border crossing. In addition to the technical, economic, security, and environmental issues, politics will play a role. The increasing opposition by various civic groups and a new secretary of state affect the final decision.