Canada has excess pipeline capacity and in our Department of Energy report reviewing the Keystone XL pipelines impact on U.S. energy supply over the next
twenty years, the agency found that it will take decades for Canada to
produce enough oil to fill existing pipelines. DOE's conclusion is the United States will import the same amount
of crude from Canada through 2030 whether the Keystone XL pipeline is built or not.
Canada has a business risk issue to correct; they have a single marketplace for their oil production, the United States. A big the problem with existing pipelines is
they all end in the U.S. Midwest and 97 percent of their energy is delivered to the United States. They need to diversify. Though even the Canadians remain balancing the environmental factors involved with the production of Tar Sands oil Production as the Canadian government has halted two pipeline proposals to export tar sands through its provinces
due to the need to take more time to listen to its own public's
concerns about water and safety.
The hidden benefit behind the Keystone XL pipeline is a 1st step for Canada to diversify it's energy
marketplace. The pipeline would divert large volumes of Canadian oil from its present destination in the Midwest United States to our Gulf Coast, where it would be available for the first
time to buyers on the world market. This goal is coveted since many of the
refineries on the Gulf Coast happen to be located in foreign trade
zones, where they can export Canadian oil to the world market without
paying United States taxes.
Nothing is ever as it seems
Historically the Cushing, Oklahoma is the area in the United States
where crude oil from the Gulf Coast came to Cushing for refining in
order to and to reach out to America's northern consumers. Generally, Light Sweet Crude oil is
stored in bulk here.
In 2006, with production increases from Canadian oil sands, one pipeline
reversed direction, bringing crude into the Cushing Hub, rather than
delivering crude from Cushing to oil refineries. Today the existing market for HEAVY Canadian Crude are oversupplied.
Light Crude oil is liquid petroleum that has low density and that
flows freely at room temperature. It has low viscosity, low specific
gravity and high API gravity due to the presence of a high proportion of
light hydrocarbon fractions. It generally has a low wax content as
well.
On the other hand, heavy crude oil or extra heavy crude oil is any
type of crude oil which does not flow easily. It is referred to as
“heavy” because its density or specific gravity is higher than that of
light crude oil. Heavy crude oil has been defined as any liquid
petroleum with an API gravity less than 20°. Extra heavy oil is defined
with API gravity below 10.0 °API (API gravity, is a measure of how heavy
or light a petroleum liquid is compared to water. If its API gravity is
greater than 10, it is lighter and floats on water; if less than 10, it
is heavier and sinks. )
Light crude oil receives a higher price than heavy crude oil on
commodity markets because it produces a higher percentage of gasoline
and diesel fuel when converted into products by an oil refinery.
Heavy
crude oil has more negative impact on the environment than its light
counterpart since its refinement requires the use of more advanced
techniques an the use of contaminants.
The sweet light crude oil Western Texas Intermediate (WTI) is a benchmark in oil pricing in America.
The core refining process is simple distillation. Crude oil is made up of a
mixture of hydrocarbons, this first and basic refining process is aimed at separating the
crude oil into its "fractions," the broad categories of its component
hydrocarbons.
Crude oil is heated and put into a still -- a distillation column --
and different products boil off and can be recovered at different temperatures.
The
lighter products -- liquid petroleum gases (LPG), naphtha, and so-called
"straight run" gasoline -- are recovered at the lowest temperatures.
Middle distillates -- jet fuel, kerosene, distillates (such as home heating oil and diesel
fuel) -- come next.
Finally, the heaviest products (residuum or residual fuel oil)
are recovered, sometimes at temperatures over 1000 degrees F.
Keystone XL is a pipeline delivering Canadian Heavy Crude; an export pipeline. According to Keystone Investor Presentations,
Gulf Coast refiners plan to refine the cheap Canadian crude supplied by
the pipeline into diesel and other products for export to Europe and
Latin America. Proceeds from these exports are earned tax-free. Much of
the fuel refined from the pipeline’s heavy crude oil will never reach
U.S. drivers’ tanks.
By distilling heavy Canadian crude oil in Gulf Coast Refinery's the United States Refinery Capacity for Light Sweet Crude will be reduced lowering supply of the very products on which American consumers rely.
By draining Midwestern refineries of cheap Canadian crude into
export-oriented refineries in the Gulf Coast, Keystone XL will increase
the cost of gas for Americans.
And the risk of environmental damage from the transportation and refinement process is a dramatic increase from that of our Light Sweet Crude with no appreciable benefits for the country.
There might actually be an increase cost for the consumer for light crude products such as gasoline. Since we have limited Oil Refineries in America, if our existing refineries begin to process this dirty heavy Canadian crude oil there will be less capacity to process our own light sweet crude supplies.
