A US congressional hearing on the proposed Keystone XL pipeline extension grew somewhat testy Friday over the issue of keeping the products refined from Canadian oil sands within the US.
The House of Representatives' Subcommittee on Energy and Power held the hearing to highlight the job creating potential of the 1,700-mile pipeline that would carry diluted bitumen from Alberta, Canada to refiners on the US Gulf coast.
Alex Pourbaix, president of Energy and Oil Pipelines at TransCanada, the company that wants to build the pipeline, testified that another issue the pipeline would address is energy security.
"When you boil down the debate on this project, I believe it comes down to a simple question for Americans: do they want secure, stable oil from a friendly neighbor in Canada or do they want to continue importing high priced conflict oil from unfriendly regions such as the Middle East or Venezuela?" Pourbaix said.
That sparked a series of comments from Democrats on the panel and a representative from a Nebraska anti-pipeline group about the eventual destination of the diesel fuel and other products that would be refined from the heavy Canadian oil.
"If this oil is meant for the United States, then attach that to a bill," Jane Kleeb, executive director of Bold Nebraska said. "Make it clear that this oil is guaranteed for the United States. Because right now, there are no guarantees. We know that TransCanada and other tar sands companies need to get to our ports ... They want access to our ports in order to sell their commodity on the international market."
Pourbaix said that diesel oil refined on the Gulf Coast has a ready market overseas, where demand runs high. The US, which has a huge need for gasoline, imports some of the product, he said.
"The US produces about 5 million b/d and consumes about 20 million b/d of refined products," Pourbaix said. "It is natural that the vast majority of this product will stay in the region with the highest demand."
Distillates, which are more easily refined from heavy crude, also is in demand overseas. Data released this week by the Energy Information Administration showed that total US exports of crude and products rose 87,000 b/d month-on-month in September to an all-time high 3.158 million b/d, driven by record distillate exports.
Distillate exports climbed to 931,000 b/d in September from 895,000b/d in August, the data showed. Finished motor gasoline exports fell 7,000 b/d to 529,000 b/d in September, but remained near August's all-time high level. The bulk of the gasoline exports -- 322,000 b/d -- went to Mexico.
As a result of the high exports, and a reduced dependency on imports, US net imports of crude and products fell to 8.051 million b/d in September, the lowest level since September 2006, when net imports were at 8.038 million b/d.
And it was not just product exports leading the decline. The US is importing fewer barrels of crude. Imports fell 18,000 b/d month-over-month to 8.97 million b/d in September, led by declines in Iraqi and Nigerian imports.
Representative Edward Markey, Democrat-Massachusetts, pressed Pourbaix on whether TransCanada would back legislation that would require that products refined from Canadian oil sands remain in the US.
"Would TransCanada support legislation that ensures that the product can only move forward if the diesel or other refined fuels from the pipeline are only sold in the United States so that this country realizes all of the energy security benefits your company and others have promised it would bring?" Markey asked.
"TransCanada does not produce one barrel of oil," Pourbaix replied. "Our entire business is safely transporting that oil. That is a question better put to our shippers, who are largely refiners and producers and largely American companies."
"Would you agree that there would be no net difference?" Markey asked. He suggested that TransCanada require from its customers that any products exported from Canadian oil be offset by the exact same amount of imports. The result, Markey said, would be that the US would receive the full benefit from the oil transported through the pipeline.
"I can't do that because I am merely a shipper of that oil," Pourbaix said. "We've already agreed to our shipping arrangements."
