Proponents of the Keystone XL tar sands pipeline often cite energy security and the desirability of Canadian over Saudi or Venezuelan crude in promoting the project. But how does the pipeline enhance American energy security if much of the product it carries is refined and then exported?
Research has shown that the pipeline’s major purpose is not to provide oil for the U.S., but to serve as an export pipeline fueling international markets. New data reveals that 60 percent of gasoline produced in 2012 at Texas Gulf Coast refineries was exported. These are the refineries that would process the majority of the tar sands bitumen flowing through the Keystone XL pipeline, if it were built.
The changing dynamics of the U.S. oil market strongly suggest that exports would only rise over the lifetime of the pipeline. U.S. production is rising but consumption is declining and the industry will continue to maximize its profits through exports.
Table: Production and Export Data for Texas Gulf Coast Refineries
Using government data for exports from Texas Gulf Coast ports and for Texas Gulf Coast refinery production, the data shows that these refineries are now exporting 60 percent of their annual production of "Finished Motor Gasoline." In addition, 42 percent of the diesel produced by these refineries is currently exported, which is an 11 percent increase over 2011 diesel exports from these refineries.
Finally, more than 95 percent of their production of petcoke—a dirty coal substitute that is a byproduct of refining heavy oil—is exported.
The new data clarifies a statement made by the State Department in the latest Keystone XL Draft Supplementary Environmental Impact Statement (DSEIS). In the Market Analysis section, State notes the level of exports coming from the Gulf Coast refining region (known as PADD 3): “… almost half of PADD 3 refined products go to the domestic market.”
In other words, the State Department’s own analysis acknowledges that the majority of refined products produced on the Gulf Coast are already being exported. Those who believe that Keystone XL is necessary for U.S. energy supply might be surprised by this fact.
Chart: U.S. Petroleum Product Exports—Mostly from the Gulf Coast
The Gulf Coast Export Boom
Gulf Coast refineries have been at the center of the petroleum products export boom for years. The wider PADD 3 refining region, which includes Louisiana, Mississippi, Arkansas, Alabama and New Mexico as well as Texas, exported more than 2.3 million barrels per day (bpd) in 2012 out of a U.S. total of nearly 3.2 million bpd (see chart). Since 2009 PADD 3, which has just over 50 percent of U.S. refining capacity, has been the source of more than 70 percent of U.S. exports, reaching 74 percent in 2012.
Refineries in Port Arthur, Houston, as well as in Lake Charles just over the border in Louisiana, will all have excellent access to both the Keystone XL pipeline and export facilities, and are already at the core of the PADD 3 export boom.
Map: Refineries that will have direct access to Keystone XL have excellent access to export facilities.
KXL Refiner’s Export Growth Plans
Valero has a large refinery in the area and ambitious export plans. It claims in recent investor presentations to be responsible for exporting up to 25 percent of U.S. exports “over the past few years”. That means it exported about 800,000 bpd in 2012, or nearly 40 percent of its U.S. production.
The Motiva Port Arthur Refinery—a 50/50 joint venture between Royal Dutch Shell and Saudi Aramco—has just completed the biggest refinery expansion in U.S. history. The $10 billion, 5-year project added 325,000 bpd of refining capacity to create the country’s largest refinery at 600,000 bpd. Much of this capacity is configured to process heavy oil.
At the plant’s official opening in May 2012, Shell’s CEO Peter Voser told journalists that “clearly exports are part of (the) thinking.”
An analyst at Bank of America-Merrill Lynch recently told the Investor Daily that, “The bulk of the Motiva plant’s production is—like a growing share of refinery capacity along the Gulf Coast—geared for export (…) (w)e can export gasoline and diesel to northwest Europe cheaper than they can produce it locally."
The Investor Daily report concluded that because of exports, the massive production expansion at Motiva Port Arthur would not result in lower gasoline prices for American consumers.
Phillips66, the newly formed independent refining company that split from ConocoPhillips, is aiming to almost quadruple its exports from 60,000 bpd in 2010 to 220,000 bpd in 2015 (see presentation slide below). It has a 240,000 bpd refinery in Lake Charles, LA, with access to Keystone XL and boasts on its website of this refinery’s ability to export through its marine terminal.
A Changing World
In 2007, when the Keystone XL pipeline was first proposed, it was not yet as clear as it is today that U.S. oil demand is in decline. Once in office however, President Obama moved aggressively on much needed vehicle efficiency standards that have clearly put the U.S. on course to reduce oil consumption. U.S. oil demand is now seen as having peaked in 2005, and if additional climate-friendly policies are put in place it is expected to decline further.
Additionally, few realized then that new technology (hydraulic fracturing or fracking) would precipitate a rise in U.S. tight oil (and gas) production. In other words, the U.S. oil market that Keystone XL was conceived in is a very different market to that which exists today.
Many refineries in Texas invested in the original Keystone XL concept; a concept that saw U.S. oil demand continuing to grow while U.S. oil production continued to decline. They invested billions in equipment to refine Canada’s heavy sour tar sands oil because they thought the tar sands would provide a reliable source of oil for years to come via the Keystone XL pipeline. These investments were supported by generous tax breaks.
In the intervening years the world changed. These refineries found themselves in the middle of big investment cycles in a declining market. Pretty soon they realized that their future was not in selling gasoline to the U.S. market but in selling diesel, gasoline, petcoke and other products to Europe, Latin America and Asia.
They also underestimated the rise in public opposition to the tar sands and the increasing urgency with which the American public would demand action on climate change.
It is now clear that the Keystone XL pipeline is a pipeline through America not to America. Tar sands producers are desperate to get their product to refineries that serve international markets so that they can expand their market beyond U.S. borders, increase the price they get for their product, and maximize profits. The refiners that will help them do that are increasingly dependent on serving export markets to maximize their profits amidst a domestic market that is both striving to become more efficient while at the same time is already flooded with oil.
That this has nothing to do with the U.S. national interest, the main criterion for State Department approval, is now even more abundantly clear.
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By D. André Green II
One of nature's epic events is underway: Monarch butterflies' fall migration. Departing from all across the United States and Canada, the butterflies travel up to 2,500 miles to cluster at the same locations in Mexico or along the Pacific Coast where their great-grandparents spent the previous winter.
Millions of People Care About Monarchs<p>I will never forget the sights and sounds the first time I visited monarchs' overwintering sites in Mexico. Our guide pointed in the distance to what looked like hanging branches covered with dead leaves. But then I saw the leaves flash orange every so often, revealing what were actually thousands of tightly packed butterflies. The monarchs made their most striking sounds in the Sun, when they burst from the trees in massive fluttering plumes or landed on the ground in the tussle of mating.</p><p>Decades of educational outreach by teachers, researchers and hobbyists has cultivated a generation of monarch admirers who want to help preserve this phenomenon. This global network has helped restore not only monarchs' summer breeding habitat by planting milkweed, but also general pollinator habitat by planting nectaring flowers across North America.</p><p>Scientists have calculated that restoring the monarch population to a stable level of about 120 million butterflies will require <a href="https://doi.org/10.1111/icad.12198" target="_blank">planting 1.6 billion new milkweed stems</a>. And they need them fast. This is too large a target to achieve through grassroots efforts alone. A <a href="https://www.fws.gov/savethemonarch/CCAA.html" target="_blank" rel="noopener noreferrer">new plan</a>, announced in the spring of 2020, is designed to help fill the gap.</p>
Pros and Cons of Regulation<p>The top-down strategy for saving monarchs gained energy in 2014, when the U.S. Fish and Wildlife Service <a href="https://www.fws.gov/southeast/pdf/petition/monarch.pdf" target="_blank">proposed</a> listing them as threatened under the Endangered Species Act. A decision is expected in December 2020.</p><p>Listing a species as endangered or threatened <a href="https://www.fws.gov/endangered/esa-library/pdf/listing.pdf" target="_blank">triggers restrictions</a> on "taking" (hunting, collecting or killing), transporting or selling it, and on activities that negatively affect its habitat. Listing monarchs would impose restrictions on landowners in areas where monarchs are found, over vast swaths of land in the U.S.</p><p>In my opinion, this is not a reason to avoid a listing. However, a "threatened" listing might inadvertently threaten one of the best conservation tools that we have: public education.</p><p>It would severely restrict common practices, such as rearing monarchs in classrooms and back yards, as well as scientific research. Anyone who wants to take monarchs and milkweed for these purposes would have to apply for special permits. But these efforts have had a multigenerational educational impact, and they should be protected. Few public campaigns have been more successful at raising awareness of conservation issues.</p>
<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="91165203d4ec0efc30e4632a00fdf57d"><iframe lazy-loadable="true" src="https://www.youtube.com/embed/KilPRvjbMrA?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
The Rescue Attempt<p>To preempt the need for this kind of regulation, the U.S. Fish and Wildlife Service approved a <a href="https://www.fws.gov/savethemonarch/pdfs/Monarch%20CCAA-CCA%20Public%20Comment%20Documents/Monarch-Nationwide_CCAA-CCA_Draft.pdf" target="_blank">Nationwide Candidate Conservation Agreement for Monarch Butterflies</a>. Under this plan, "rights-of-way" landowners – energy and transportation companies and private owners – commit to restoring and creating millions of acres of pollinator habitat that have been decimated by land development and herbicide use in the past half-century.</p><p>The agreement was spearheaded by the <a href="http://rightofway.erc.uic.edu/" target="_blank">Rights-of-Way Habitat Working Group</a>, a collaboration between the University of Illinois Chicago's <a href="https://erc.uic.edu/" target="_blank" rel="noopener noreferrer">Energy Resources Center</a>, the Fish and Wildlife Service and over 40 organizations from the energy and transportation sectors. These sectors control "rights-of-way" corridors such as lands near power lines, oil pipelines, railroad tracks and interstates, all valuable to monarch habitat restoration.</p><p>Under the plan, partners voluntarily agree to commit a percentage of their land to host protected monarch habitat. In exchange, general operations on their land that might directly harm monarchs or destroy milkweed will not be subject to the enhanced regulation of the Endangered Species Act – protection that would last for 25 years if monarchs are listed as threatened. The agreement is expected to create up to 2.3 million acres of new protected habitat, which ideally would avoid the need for a "threatened" listing.</p>
A Model for Collaboration<p>This agreement could be one of the few specific interventions that is big enough to allow researchers to quantify its impact on the size of the monarch population. Even if the agreement produces only 20% of its 2.3 million acre goal, this would still yield nearly half a million acres of new protected habitat. This would provide a powerful test of the role of declining breeding and nectaring habitat compared to other challenges to monarchs, such as climate change or pollution.</p><p>Scientists hope that data from this agreement will be made publicly available, like projects in the <a href="https://www.fws.gov/savethemonarch/MCD.html" target="_blank">Monarch Conservation Database</a>, which has tracked smaller on-the-ground conservation efforts since 2014. With this information we can continue to develop powerful new models with better accuracy for determining how different habitat factors, such as the number of milkweed stems or nectaring flowers on a landscape scale, affect the monarch population.</p><p>North America's monarch butterfly migration is one of the most awe-inspiring feats in the natural world. If this rescue plan succeeds, it could become a model for bridging different interests to achieve a common conservation goal.</p>
The annual Ig Nobel prizes were awarded Thursday by the science humor magazine Annals of Improbable Research for scientific experiments that seem somewhat absurd, but are also thought-provoking. This was the 30th year the awards have been presented, but the first time they were not presented at Harvard University. Instead, they were delivered in a 75-minute pre-recorded ceremony.