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Bypassing Keystone: Canadian Firm Uses Loophole To Ship Oil Sands To U.S.

By Nick Cunningham | Mon, 25 August 2014 22:25 | 0

Instead of waiting to obtain a “presidential permit” to ship oil sands from Canada to the United States, one Canadian firm has found a workaround, and environmental groups aren’t happy about it.

Pipeline operations giant Enbridge has figured out how to avoid having to go through the regulatory process with the U.S. State Department for approval of an oil sands pipeline.

According to EnergyWire, the company plans to build several interconnections on either side of the border between Manitoba and Minnesota. The interconnections will allow the company to transfer heavy oil from its Alberta Clipper pipeline to another pipeline known as “Line 3.” It will then be transferred back to the Alberta Clipper line once it is safely across the border in Minnesota.

The Line 3 pipeline would do the same. It is much older and normally does not run at full capacity. A 17.5 mile stretch of the pipeline was retrofitted in order to handle the heavier oil sands from the Alberta Clipper. The lighter oil from Line 3 would be switched over to the Alberta Clipper pipeline until it crosses the border, and then switched back.

The result will be the ability to increase the flow of oil sands to the United States by an additional 75,000 barrels per day without having to obtain White House approval. Both pipelines would meet regulatory requirements under existing permits.

The State Department is going along with the scheme. In an email sent to Enbridge in July and only recently made public, State Department official Patrick Dunn said, “Enbridge’s intended changes to the operation of the pipeline outside of the border segment do not require authorization from the U.S. Department of State.”

Environmental groups blasted the move, accusing the Obama administration of making backroom deals.

“When it comes to the climate crisis, President Obama’s central purpose ought to be, ‘Do no harm,’ ” Marc Fink, an attorney with the Center for Biological Diversity, said in a press release. “The administration’s approval of this Alberta Clipper scheme certainly violates that doctrine. President Obama said he wouldn’t approve Keystone XL if it significantly exacerbates the problem of carbon pollution. He must hold the same standard when it comes to the Alberta Clipper.”

The move to switch pipeline flows and the willingness of the State Department to look the other way would appear to be an effort on behalf of the Obama administration to avoid another protracted fight over a pipeline. The Keystone XL permitting process has dragged on for years, and TransCanada, the company proposing the pipeline, has only scars to show for its six-year battle with environmental groups and the U.S. government.

Enbridge submitted an application back in November 2012 to increase Alberta Clipper line’s capacity from 450,000 barrels to 880,000 barrels per day. But it did not want to wait to see its Alberta Clipper line suffer a similar fate as Keystone XL. So it has come up with the plan to swap oil flows between two existing lines.

Enbridge downplayed the significance of the move, calling it a temporary measure until the State Department considers its application for an expansion of Alberta Clipper. “Ultimately this is about meeting shipper requirements for capacity,” Enbridge spokeswoman Lorraine Little said on Aug. 20. “We are utilizing this optimization in order to meet that. We do see it as a short-term solution until the full Department of State review is completed.”

The recently released documents depicting the State Department’s consent for the plan risks igniting a broader fight from environmental groups over a project that has thus far stayed out of the limelight. They see the Alberta Clipper project as the same as Keystone XL, and will take the administration to task for appearing to abdicate regulatory responsibility over the project.

But it may be too late. Since the State Department says that Enbridge has complied with the law, there is likely little recourse. Enbridge is expected to complete the interconnections in September.  Despite the efforts to block Keystone XL, the U.S. is about to see increased flows of oil coming from Canada’s oil sands.

By Nick Cunningham of Oilprice.com

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Nick Cunningham
Company: Oilprice.com

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