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Tim Mullaney reports at CNBC that as Congress rushes to approve the long-delayed Keystone XL pipeline, it is questionable whether or not the controversial pipeline will make as much of a difference as proponents expect. The so-called "heavy oil" extracted from sand in Alberta, which the proposed pipeline would carry to Nebraska, en route to refineries on the Gulf Coast, will cost between $85 and $110 to produce[PDF] , depending on which drilling technology is used, according to a report in July by the Canadian Energy Research Institute, a nonprofit whose work is often cited by Keystone proponents. But crude oil futures now hover near four-year lows as sustained concerns over a glut in world markets continued to weigh heavily on prices and oil ministers from Saudi Arabia and Kuwait resisted calls to lower production to prevent further price declines. CERI' s analysis squares with the views of other experts, who have pointed to low prices as a sign that economic facts, at least for now, don't match political rhetoric coming from Washington, where Keystone has been a goal for both Republicans and for Senate Democrats from oil-producing states. "Anything not under construction [is] at risk of being delayed or canceled altogether," says Dinara Millington.
The situation is broadly similar to that faced by an earlier proposal to build a natural-gas pipeline from Alaska to the Midwest says energy economist Chris Lafakis. After being approved by then-Alaska Gov. Sarah Palin in 2007, the pipeline was never built, because newly discovered supplies of gas in the Lower 48 states pushed gas prices down by about two-thirds. "If oil were to stay as cheap as it is right now," says Lafakis, "you might very well get that Palin pipeline scenario."
(Score: 2) by emg on Sunday November 16 2014, @06:32AM
If the global economy ever recovers, the price of oil will skyrocket again, and everyone will be asking why the pipeline was never built.
And that's assuming that Obama starting another war in the Middle East doesn't do the job.
(Score: 2) by VLM on Sunday November 16 2014, @12:27PM
Another clause to the "if" is as depletion continues, eventually either civilization will collapse or all oil/gas will be pumped. It may not be pumped now but it will be eventually or we'll have a collapse and not care. If we're pumping it eventually then zoning and research and blueprints for a pipeline to be built in a decade make sense, especially the zoning (may not want to build a public school or a hydroelectric dam right on top of the pipeline route, etc, so make a greenspace corridor or something. If civilization collapses we won't care. Either way it makes sense to do everything with the project from geology to blueprints to zoning and then perhaps not break ground for a decade...
There are economic effects where prices only go up, income inequality only goes up, etc, such that civilization might not collapse, but we might not need the pipeline or might not be able to afford to build it in the future. What I'm getting at is wiping out the middle class gets rid of a lot of oil demand, and we're doing a great job of it. Or you can only build a pipeline like that by burning a million barrels of $80/barrel oil (mostly in the form of diesel trucks, I guess) but you can't economically pull it off the construction if you start when oil is $120/barrel. The latter might be a good argument for building it today, pressurizing it with nitrogen, and sealing it off for a decade or so.