Well, that didn't take long. The administration issued its decision denying the Keystone XL Pipeline application today, rather than using the remaining 34 days in the Congressionally mandated timeline to attempt to find a better solution. This is a prime example of what frustrates so many Americans of all political affiliations about how the nation is being governed. If you read the carefully drafted press release from the State Department, which had been given responsibility for determining whether the pipeline was in the national interest, it explicitly states that today's decision was neither final nor on the merits of the project. Implicit in this document is that today's move is exactly that, the latest move in the game that the President and Congress have been playing with a project large enough to affect the energy security of this country for decades to come. It is unseemly, and it didn't have to be played this way, despite the White House's protests that the 60-day timeline was unrealistic--after three years of study.
Here's a different statement the President could have issued, which might not have satisfied either side of the argument but would have left his administration looking like one with a bias for action and answers, instead of delays and obstacles:
"Today I have instructed the State Department to issue a pro forma finding against the application for the Keystone XL Pipeline project, with the clear understanding that this decision is a temporary expedient to provide the time necessary to resolve the remaining outstanding issues, as quickly as humanly possible. I hereby commit that my administration will do everything in its power to work with the government of Canadian Prime Minister Harper and with Governor Heineman of Nebraska to reach a mutually satisfactory solution that will allow this critical project strengthening the energy bonds between our two nations to proceed, while finding meaningful ways to address the concerns that many Americans have about the project's potential local and global environmental impacts. With renewed tensions in the Persian Gulf and with millions of Americans still out of work, we can do nothing less, even as we remain committed to protecting the environment that benefits us all. I have directed Secretary Clinton to work closely with Energy Secretary Chu and EPA Administrator Jackson and with their counterparts in Canada to develop a solution that addresses these needs, and to report back to me within 90 days with its outline ."
I don't diminish the political challenges of issuing such a statement when key parts of the President's support base have been so vocal in opposing this project. All you have to do is look at the latest set of talking points against the project from the Natural Resources Defense Council (NRDC). As disappointingly illogical a mishmash as they may be, based on misinterpreted data and a bizarre defense of cheap oil for the Midwest, they still reflect heartfelt, even visceral, reactions to the Keystone project--or more accurately to the oil sands development that it was expected to enable. Fair enough. I respect their right to an opportunity to provide input and guidance toward an eventual compromise, but not to a veto over US energy policy.
Nor should the opponents of the Keystone XL project fool themselves. Today's decision was guided by expediency, just as the future, possibly quite different decision for which the door was left open would be, perhaps at a point in time when the political calculus has shifted in favor of the project due to some external event. A decision based on principle would have looked quite different. "The Department’s denial of the permit application does not preclude any subsequent permit application or applications for similar projects." Whose move is it now?
Playing Games with US Energy Security
Authored by:
Geoffrey Styles
Geoffrey Styles is Managing Director of GSW Strategy Group, LLC, an energy and environmental strategy consulting firm. Since 2002 he has served as a consultant and advisor, helping organizations and executives address systems-level challenges. His industry experience includes 22 years at Texaco Inc., culminating in a senior position on Texaco's leadership team for strategy development, ...
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Jim Baird says:
The greater security threat Alberta and its energy sector is not interested in addressing.
Last April CNN declared Nuclear Waste is America's 'biggest security threat.
The United States is far and away Alberta’s most important export market as evidenced by the fact that in 2010 it consumed $67.4 billion worth of Alberta's goods, or 87% of the total.
The most astute business decision any party can make is to fulfill the needs of their customer and with regards the United States security pretty much trumps all.
It especially makes sense to meet your customer’s needs when you would profit from the exercise yourself and overcome environmental and cost issues that threaten the viability of your economy, which in Alberta’s case is increasingly oil sands focused.
Laricina Energy Ltd points out in a presentation, Strategies for Cheaper Bitumen, the rate of oil recovery is a function of the (time averaged) reservoir temperature and that the optimal recovery temperature is in the range of 150oC. As they note the trade off between this lower temperature and the 200oC to 250oC typically used in the Steam Assisted Gravity Drainage (SAGD) process to produce bitumen is the speed of recovery not the amount of oil produced.
Even at 150oC the cost of steam in $/bbl is roughly $12 as opposed to $15-18 typically.
The Nuclear Assisted Hydorcabon Production Method would use spent nuclear fuel to zero out this cost and produce bitumen without producing an ounce of CO2 in the absence of all but in situ water.
The surface temperature of spent nuclear fuel ranges between 250oC and 350oC and is sufficient to gradually raise the temperature of bitumen in situ into the 150oC range necessary for recovery. Production would be further enhanced by introducing a low boiling point fluid adjacent the heat source that would disperse heat into the formation. Preferably this low boiling point fluid would also have solvent or dilutant properties.
Hydrogen released by the process of radiolysis and ionizing radiation would also aid in fracturing and upgrading long chain bitumen molecules into more valuable fractions under ground.
Placing spent fuel in a deep oil sands formation to foster production would provide a massive economic benefit to Alberta, the best way to address the NIMBY factor, and is one of the few ways Alberta can produce its resource in compliance with Section 526 of the U.S. Energy Independence and Security Act.
It also fulfills the energy and security needs that are the rationale for the act.
Bitumen has unprecedented capacity to sequester radionuclides as was noted by a recent study by Canadian, French, Australian and American scientists.
The cost of a Canadian spent nuclear fuel repository has been estimated at $24 billion – Yucca Mountain 4 times as much - and as the Canadian Broadcasting Company reported in 2009 these costs are likely to rise therefore it makes economic sense for Canada and other nuclear nations to put this material to work producing oil sands where the energy return on investment for SAGD is estimated at 5.2/1.
Lord Oxburgh, one of the world’s leading geologists and former British chairman of Shell, has said of the Nuclear Assisted Hydrocarbon Production Method, “I have often myself wondered whether it would be feasible to harness the heat generated by sequestered nuclear materials. I suspect that the major problems might well be political rather than technological.”
More and more it is becoming clear cost and emissions are a problem for Alberta’s oil sands and accordingly a political problem for Alberta and Canada in general as the Harper government in very unconservative fashion has thrown all of our economic eggs in the oil sands basket.
If Alberta's government and industry are too timid to implement or even consider a controversial solution that would resolve its problems as well as one of its cutomers biggest threats, then this Alberta expat has little sympathy for their conundrum.
Geoffrey Styles says:
Jim,
It's an interesting idea, and you may be aware that Total considered other ways to leverage nuclear energy for oil sands extraction, before reconsidering. However, Lord Oxburgh's concern about obstacles seems spot on. If the main objections to the Keystone Pipeline and the oil sands crude it would transport are political, rather than technical--since if technical they would likely be focused on finding a better route and obtaining agreement to limit or offset the extra emissions, rather than seeking total rejection--what convinces you that adding nuclear waste to the equation would make oil sands crude exploitation more palatable to critics in the US?
A guest says:
Geoff,
"The only taxpayer money being spent is on the government's endless review process."
Endless government review is also responsible for much of the private capital expenditure to date. This is certainly not the first oil pipeline which has ever been constructed in the US.
I would argue that "endless review" is the first strategic phase, which (if ever completed) would then lead to the second strategic phase - "endless litigation". I believe there is extensive historical experience to support my argument.
Paul O says:
My fellow Americans, I stand here this day boldly affirm that were I elected president of the United States, on the day after I am sworn in to office, I will sign an Executive Order directing the departments of State, Interior, and Energy to immediately take all neccessary steps to make the keystone pipeline a reality with all due and dilligence and haste. (PS. I am not a presidential candidate, of course).
One wonders where the field of presidential candidates stand on this matter, and wheteher such a declaration would have moved the issue forward faster.
A guest says:
Geoff,
Just think about how much more attractive solar, wind and cellulosic ethanol would appear once all of the fossil alternatives had been removed, or at least massively restricted.
Also, imagine how much more rapidly Asian CO2 emissions would increase from ~50% to ~75% of global annual emissions.
Geoffrey Styles says:
Ed,
Depends how far you take it. Pitting Keystone against renewables is a non sequitur: It doesn't compete with them either for federal largess (it requires none) or in the energy markets. Cellulosic ethanol isn't being held back by competition from oil, but by its own technology challenges, despite being supported by both the RFS mandate and a $1.01/gal. producer credit that wasn't connected to the corn ethanol tax credit that expired 12/31/11. And wind and solar compete in a market in which oil hasn't been a serious factor since the 1980s, at least in the US. As for emissions, the incremental GHGs attributable to Keystone are only about 1% of the US total, and so would be fairly easy to offset--an option I have yet to hear anyone in the administration consider to help move this issue toward a broadly acceptable solution.
A guest says:
Geoff,
Keystone is just one element of a very much larger and more comprehensive effort to restrict fossil energy usage. EPA's coal plant regs, new CAFE standards, proposed EPA regs for fracking, etc. are all part of that effort. As of right now, Obama's promise to make electricity rates "skyrocket" is well behind schedule.
Bob Meinetz says:
Will,
How does the promise to find "meaningful ways to address the concerns that many Americans have about the project's... global environmental impacts" represent a bias toward action and answers? in the context of largely informed opinions like that of James Hansen, who believes Keystone would mean "game over" for controlling climate change, these are empty platitudes.
The only meaningful way to address the concerns that many Americans have about the project's global environmental impacts is to scrap it.
Geoffrey Styles says:
Bob,
Unfortunately, Mr. Hansen's opinion on this matter doesn't look as informed as it might on further scrutiny. I invite you to do the math for yourself on producing the extra 800,000 barrels per day of oil sands crude that Keystone XL might facilitate, at a factor 15% higher than the 0.43 tons CO2/bbl for average crude. It works out to around 150 million tons CO2/year on a well-to-wheels basis, including end-user combustion where most of the emissions occur, even for oil sands crude. That's less than 0.5% of global emissions of 36.7 billion tons of CO2e. In that context, it's "Game over" that's the platitude, since it's surely not an analysis.
And since all emissions are equivalent, regardless of source, it ought to be possible to find satisfactory mechanisms to offset the extra CO2 involved, which if you focused on the incremental CO2 from oil sands compared to other oil production would be an even smaller, more manageable number.
Unfortunately, none of this reduces easily to a 2-word slogan, which is why I'd like to scrap government by soundbite.
And who the heck is Will?
Bob Meinetz says:
Geoffrey,
Point well taken on James Hansen's opinion. But ultimately it's a self-defeating proposition - Keystone will only put out about 2.5% of our domestic needs anyway, so in regards to energy dependence what's the point? We should be desperately looking for ways to offset any CO2 period, not increasing it here/slashing it there in another carbon-trading shell game - a trade in which the environment always seems to lose.
Keystone XL will only extend reliance on the dirtiest of dirty energy (other statistics suggest it's 1.5x as dirty as what's calculated using yours). Invest $10B/year in a crash program on Gen IV nuclear and battery tech, and in 20 years we could not only kick the gasoline but the coal and natural gas habits as well.
Now we're getting somewhere.
(Will is the product of trying to communicate with too many people online at the same time - my apologies).
Geoffrey Styles says:
Bob,
I'm afraid that's not the most relevant way to assess the prospect of 800,000 bbl/day of additional oil from a reliable neighbor. Instead, consider that it's the equivalent of 9% of our net crude oil imports and nearly 18% of what we currently import from OPEC. That's what all the nebulous talk about energy security really boils down to: secure oil imports. It's a lot easier to offset the extra GHG emissions from this oil than to continue to rely on less-dependable sources for our oil imports.
And yes, by all means lets invest that $10B/year in Gen IV nuclear, batteries, and whatever else, because that won't compete in any way with Keystone. Furthermore, as hard as it is to fathom in this era of federal loan guarantees and renewable energy grants, Keystone would be built entirely with private funds. The only taxpayer money being spent is on the government's endless review process.
Jim Baird says:
Geoff it may not be long before developers of projects like Keystone and the Northern Gateway pipeline are going to find it harder and harder to find those "private funds".
"The carbon-burning economy is tomorrow's Rust Belt," the U.N.’s Roland Rich told a recent conference of investors with a collective $26 trillion under management. "Your job, it seems to me, is to invest in the Microsofts and Googles of the green economy."
Kevin Parker, global head of Deutsche Asset Management seems to concur stating.."It's not going to be long before an investor looking to roll out a new energy plant has to take solar and wind and other forms of renewables very seriously,"
Geoffrey Styles says:
Jim,
Sustainability, particularly in the form of Environmental, Social and Governance (ESG) focused investing, is gaining traction, with trillions under management globally. I agree that these issues can't be ignored by either investors or developers. However, it's equally clear that the time horizon of the transition still allows projects like Keystone ample time to earn a decent return. Whether that will still be the case a decade from now remains to be seen.
Jim Baird says:
Geoff,
Enron perfected the accounting trick of booking liabilities as revenue. Today the energy sector keeps long term environmental damage off the books entirely or even more cynically books it as an asset, as in the case of the Ethical Oil campaign in Canada.
I submit, the financial sector are beginning to understand the public is catching on and does not want to meet the fate of Enron's facilitator Arthur Andersen.
Scott Edward Anderson is a consultant, blogger, and media commentator who blogs at The Green Skeptic. More »
Christine Hertzog is a consultant, author, and a professional explainer focused on Smart Grid. More »
Gary Hunt Gary is an Executive-in-Residence at Deloitte Investments with extensive experience in the energy & utility industries. More »
Jesse Jenkins is a graduate student and researcher at MIT with expertise in energy technology, policy, and innovation. More »
Jim Pierobon helps trade associations/NGOs, government agencies and companies communicate about cleaner energy solutions. More »
Geoffrey Styles is Managing Director of GSW Strategy Group, LLC and an award-winning blogger. More »
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