Texas company builds pipeline for oil sands to West Coast

Fuel Fix:

As President Obama weighs the fate of the Keystone pipeline, a similar project connecting Canada’s oil sands to the West Coast is quietly moving forward, little noticed in the United States.

A 60-year-old pipeline already pumps oil from northern Alberta to Vancouver’s busy harbor for shipment to Asia or California. Now the owner, Kinder Morgan Canada, wants to nearly triple the Trans Mountain Pipeline’s capacity, making it even bigger than Keystone.

And unlike Keystone, Trans Mountain’s proposed $5.4 billion expansion doesn’t need the approval of the U.S. government. Canadian authorities will have the final say.

The project would give Canada’s oil industry something it desperately wants — a wide-open conduit between the tar sands and the global market. The existing pipelines that run from northern Alberta are at full capacity, and oil sands operators can’t increase production as a result. Plus, most of the lines run south to the United States, which is in the midst of its own oil boom. Direct access to overseas customers could fetch tar sands oil a higher price.

“The constraints are extremely real,” said Geoff Hill, head of consulting firm Deloitte Canada’s oil and gas practice. “We can’t get our product to market. We need several pipelines leaving Canada, not one.”

Very little tar sands oil finds its way into California today. But the Trans Mountain expansion could change that, placing the state in the center of the oil sands debate.

Canada now supplies just 2.4 percent of the crude processed in California refineries, according to the state’s energy commission. And one of California’s global warming regulations would make it difficult for those refineries to use tar sands oil in the future. The rule, called the Low Carbon Fuel Standard, requires oil companies to cut the “carbon intensity” of the fuels they sell in the state.

But the standard is under attack in court and has already been ruled unconstitutional by one judge. Should higher courts strike it down, Trans Mountain oil could find eager buyers in California. Oil shipments from Alaska — long one of California’s main suppliers — are falling, making the state more dependent on foreign imports.

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The California greenies will not be pleased, but they will be excited about this move.  We do need more pipelines to handle the oil boom and this one will be an interesting addition if they can get it approved by the anti energy left that is in control of much of the regulations emanating from Washington.