Keystone developer: We won't quit
Asked if White House disapproval would be the end of the road, CEO Russ Girling replied: “How can it be?”
“Oil is still going to move every day, and there has got to be a way to get it there,” he said in an interview Wednesday.
His comments suggest the yearslong political and lobbying battle over Keystone, a project environmentalists are pressing the White House to scuttle, could outlast the Obama presidency.
The company has for years been seeking a federal permit to bring crude from Canadian oil sands across the border en route to Gulf Coast refineries.
It hopes for a favorable decision within the first few months of 2014. “We would like to advance it as quickly as we possibly can while recognizing there is a process that we need to adhere to,” said Girling, who met with a senior State Department official Tuesday.
But Girling told The Hill that he believes demand for the project would not go away if Obama says no. Companies turning to rail to move oil from Canada and the Bakken region in North Dakota would have incentive to use Keystone if it’s built, Girling said.
That business case won’t disappear any time soon, he argued when asked if the project could die on the vine if the review process drags on too long.
“The marketplace will react as they have over the last five years, finding alternative means to get their product to market. Rail is more expensive, it is more dangerous, it is less efficient, but they will replace it with those,” he said of the growing use of rail, but added: “That is not a replacement for the right long-term solution.”
Girling told The Hill that companies seeking to ship oil through Keystone aren’t bailing out even though the federal review has lasted for years. The company first applied for a permit in 2008.
“We have just been through a process again, not the first time obviously in five years, where we have had to go back to our shippers and say ‘OK, is everybody still in? Has anything changed in your minds?’ Every one of those shippers, including the Bakken shippers, have not given up their space on the pipeline, even though they are all railing, they have ordered 19,000 rail cars,” Girling said.
“Those are pretty inexpensive interim alternatives for shipping by pipeline. But if you have got 20, 30, 40, 50 years of reserves, and you have got a refinery that you have made multibillion dollar investments in to run the heavy oil, and you can save $4 or $5 five a barrel by putting it into a pipeline, irrespective of whether that happens tomorrow or three years from now, that is a pretty easy decision to make,” he added.
Obama said in June that he will not approve Keystone unless he’s convinced that it would not “substantially” increase greenhouse gas emissions on a “net” basis.
Environmentalists say the project would worsen climate change by enabling expansion of carbon-intensive oil sands production.
But a draft, controversial State Department report in March said building Keystone or rejecting it would have little effect on the rate of oil sands production growth.
Pipeline proponents agree with State and are urging the department, which is heading the federal review, to uphold the finding in a final report.
“I think it’s clear that, [for] producers in both Canada and the United States, that the production decision is driven off … global oil prices, not off pipeline infrastructure. As long as global prices support the development of the resource, it is going to get developed, and then it is going to get to market one way or another,” Girling said.
In addition to arguing that oil sands will be produced with out without the pipeline, they also argue that Keystone would displace oil produced carbon-intensively elsewhere, notably Venezuelan heavy crudes currently used by Gulf Coast refiners.
More broadly, Girling framed the emissions question in terms of global oil consumption.
“I don’t think there is … any evidence anywhere globally that the building of infrastructure, building of a pipeline leads to increases in oil consumption,” Girling said.
“It is impossible to get to a conclusion that the pipeline causes any significant increase in [greenhouse gas] emissions. It’s a consumption question, not a supply question,” he said.
Girling declined to directly gauge his level of confidence that the White House would approve Keystone. “I would answer in the context of what I know, which is the market. The market transcends politics,” Girling said.
He said that as the U.S. continues to need oil imports, bringing more by pipeline from adjoining Canada, already the top source of U.S. imports, makes sense. “I am 100 percent confident that the oil market transcends politics,” he said.