Keystone Victory Brings New Focus on What’s Right, What’s Wrong, and What’s Next?

November 8, 2015

2011 09 02 Tarsands arrest photo b

Glaciologist and Dark Snow Project Chief Scientist Jason Box is arrested at a Keystone Pipeline/Tarsands protest, September 2011.

An important factor in bringing early public attention to the Keystone pipeline project (just cancelled by President Obama, if you’ve been offworld in recent days) – was the willingness of scientists to break with the ingrained tradition of not becoming personally or emotionally involved in the implications of their research, and put their bodies, and in some cases, their careers, on the line to make powerful statements about policy.

Jim Hansen is the most famous of those scientists who chose civil disobedience to make a statement, but there were others as well, some of whom I am proud to know.
We are now at a global inflection point where a critical mass of humanity sees climate change as a moral issue, a framing that is much easier to communicate than complex scientific or nuanced economical arguments – as this recent video points out.

In the intervening years, circumstances have changed, and one reason why the Keystone cancellation was more politically achievable at this moment has been the paradigm shifting rise of oil-shale fracking in the US, and subsequent drop in global oil prices that has made Keystone, at least for now, less economically compelling, and more of a low-hanging fruit for sending a message on climate change.  The same question mark hangs over Canadian Tar Sands mining, and every other form of “exotic” oil exploitation, in the Arctic and elsewhere.

With climate science awareness on the ascendance in every poll, un-ignorable climate related extreme events breaking out in all parts of the world,  and increasing attention to possible criminal activity of the fossil fuel industry with recent subpoenas aimed at “what Exxon knew and when they knew it” – We appear to be in a moment of paradigm shift.

Slate:

Oil companies are smart, and over the seven years the pipeline has been pending, they’ve put in place an effective mix of workarounds including oil trains, other pipelines, and a vastly different U.S. energy mix, including a substantial rise in domestic production of oil, gas, and renewables. Meanwhile, the Obama administration has made a concerted, albeit piecemeal, effort to reduce fossil fuel demand across the economy. Those trends have contributed to a sharp drop in oil prices over the last year or two.

And now, Keystone is officially dead. Basically, environmentalists should thank the ghost of John Muir and his magnificent beard that we don’t have to talk about it anymore. That’s today’s biggest victory.

Thankfully, attention is already shifting to the next big climate fight: shutting down fossil fuel production on public lands. Earlier this year, an entire new genre of activism—kayaktivism—was born in the Pacific Northwest as hundreds of brightly colored boats attempted to block Arctic-bound oil exploration vessels. Though activist attention on this issue has focused on the Arctic so far, they’re already widening their reach to the entire nation.

Here’s why that fight is so important: U.S. public lands—that’s land that you and I own, remember—are responsible for hundreds of times more carbon dioxide emissions each year than would have traveled through Keystone. Recent estimates showed the Keystone XL would have been potentially responsible for tens of millions of tons of CO2 each year—but fossil fuel extraction on public lands already produces more than 1 billion tons annually and holds the potential for an unfathomable hundreds of billions more. The difference in importance is barely even comparable—halting future public lands production would truly be a game changer.

In his Friday announcement, Obama essentially endorsed this fight, saying: “Ultimately, if we’re going to prevent large parts of this Earth from becoming not only inhospitable but uninhabitable in our lifetimes, we’re going to have to keep some fossil fuels in the ground rather than burn them.” The science on this issue backs him up.

This is a pretty substantial change in tack from the president. He repeatedly campaigned on an “all-of-the-above” energy strategy that helped encourage the ongoing American oil and gas boom, while at the same time advocating for tough action on climate change. In May, the Obama administration quietly approved vast new coal leases in Wyoming’s Powder River Basin that would dwarf the combined impact of all his other actions on climate change. As recently as his high-profile climate-focused trip to Alaska two months ago, the president was fending off criticism of his support for drilling for oil in the Alaskan Arctic. This is a little bit like having your cake and eating it too, and activists have repeatedly called him out on it.

In recent weeks, though, it seems like the president is finally starting to get it. Shortly after Shell abandoned its Arctic endeavor in September after failing to find oil in meaningful amounts, the Obama administration canceled future drilling lease sales there—an important signal.

Still, it seems Obama is mostly playing catch-up to the leading Democratic presidential candidates: Hillary Clinton’s public statements on the Arctic probably helped focus activist ire on the president, and just this week, Bernie Sanders co-sponsored a bill in the U.S. Senate that would ban all new fossil fuel leases on public lands.

ClimateProgress:

Realistically, it’s less Keystone XL as an individual project, and more the universally low price of oil, that will continue to damage the tar sands industry. Tar sands crude is an extremely labor and time intensive material to extract, making it some of the most expensive oil on the planet. Meanwhile, U.S. domestic oil production, which has increased rapidly in recent years, has made tar sands extraction seem less and less economically appealing for investors.

“The price of oil is too low,” Brune said. “There’s no profit in building new tar sands extraction projects, and there’s no support for deepening our dependence on dirty fuels.”

As Brad Plumer at Vox pointed out in January, tar sands extraction projects are different from the types of oil extraction that happens domestically. In places like North Dakota or Texas, fracking wells tend to become depleted quickly, meaning that investors can easily scale back on production if oil prices drop. Tar sands extraction, by contrast, is a hugely time and labor intensive undertaking that requires a lot of commitment upfront, but can operate fairly cheaply for years after that. That means that, even with low oil prices, existing tar sands extraction projects can continue to operate, but future extraction or expansion projects are less economically appealing.

Even with Keystone off the table, there are still a number of tar sands pipelines in various points of construction. Energy East, Northern Gateway, and the Trans Mountain Expansion are all proposed pipeline projects that would run through Canada. In the Midwest of the United States, Enbridge — another Canadian energy company — also has a number of pipeline expansion projects in the works. These new projects or expansions are crucial for the tar sands industry, according to a recent report from the pro-clean energy group Oil Change International, because existing pipeline infrastructure has reached 89 percent of its crude-carrying capacity. If no new pipelines are built, or expanded, Oil Change International estimates that tar sands producers will run out of capacity by the end of 2017.

“We’ve seen tar sands companies consistently cite lack of pipeline capacity for many of the mines we’ve seen shelved or delayed,” Moffitt said.

The rejection of Keystone XL is certainly a blow to the already struggling Canadian tar sands industry. Whether or not it’s a mortal blow, however, remains to be seen.

14 Responses to “Keystone Victory Brings New Focus on What’s Right, What’s Wrong, and What’s Next?”

  1. Gingerbaker Says:

    “the paradigm shifting rise of oil-shale fracking in the US, and subsequent drop in global oil prices that has made Keystone, at least for now, less economically compelling,”

    If fracking is that successful, why are we inundated with articles telling us that the fracking boom is over?

    • omnologos Says:

      my thoughts exactly

      and if oil companies have “put in place an effective mix of workarounds”, doesn’t that make Obama’s decision absolutely irrelevant?

    • earlosatrun Says:

      While Saudi Arabia is dumping its oil onto the market at 40-50$ for a barrel the fracking boom is over.

      When SA starts to ask for 110$ per barrel, or actually runs out of oil, then the fracking boom will return.

    • andrewfez Says:

      I haven’t been following the latest news but it looks to me like rig counts are down but crude production is at unprecedented highs for the US. Most of these fracking and drilling companies have hedged out to 2017 and are scrambling to put the latest technology (i.e. cheaper ways to drill) in the ground before that time: such will be replacing the older, higher cost of operation rigs, and will be able to pull more oil/gas out of the ground and have longer recovery times.

      Re: BBEP –

      “Production at our Permian division was up approximately 13% higher than our forecast for the third quarter driven in large part to the reactivation program. Because of these additional expenditures, third quarter LOE for the total company came in at $19.83 per Boe, which was in line with our analyst guidance. However, LOE ran below forecast in every one of our other operating areas. If we had not spent the additional $5 million in the Midland Basin, our LOE for the third quarter would have essentially come in flat with the second quarter LOE which was 14% below last year fourth quarter LOE.”

      ….

      “In the Overton field, the company recently acquired about 8,000 acres of new prospects that management considers prospective in the current pricing environment. The first well that was completed on the new acreage flowed at 11 MMCF per day along with 500 barrels of condensate per day during initial testing. Wells have been costing $4.5 million and averaging 1,275 BOE per day for the first thirty days. These kinds of figures would enable the company to achieve payback fairly quickly. Six month payback is considered ideal in the industry, and these wells look like they have the numbers to do just that (and maybe better). It should be no surprise that the company is running a two rig program through the end of the year in this field.”

  2. BL Brown Says:

    The question is, why aren’t the Saudis holding back production to keep prices high? Every barrel they sell at current prices is one less barrel they will have to sell at whatever prices are available in the future– a difference of 100% if oil will soon return to near $100/bbl. If they really think the current glut is temporary and demand (and prices) will continue to grow into the future, they could do better (much better) in the long run by reducing output and driving prices back up while they wait for demand to recover, providing firm support for the higher prices. On the other hand, if they think a lot of oil will be left in the ground, what they’re doing now makes good sense. Why shouldn’t they use their inexpensive oil to displace high-cost oil in the market, if the market is for oil is on the verge of decline and a substantial part of current reserves will never be produced?


  3. Keep it up, Peter. You’re one of those rare people who manages to stay abreast of (and meticulously cover) current events while always maintaining the long view. Excellent work. Thank you.

  4. schwadevivre Says:

    I have just been informed on Alternet that James Hansen said that the seas would “boil off and leave Earth just like Venus.”

    Luckily I recalled what Hansen actually said.


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