No Response Needed?: Response to Reader’s Pipeline Inquiry

When touching on energy related issues, responses can be quite mixed given the strong reactions that each factor in a debate elicits. Whether it’s the controversy over the merits of hydraulic fracturing of shale gas, the moratorium on offshore drilling in California, the protected status of Alaska or the route selection of the KeystoneXL and Northern Gateway Pipelines, oil and gas can draw out the best and worst in us. But going forward, it’s worth continuing the debate, as we struggle to define our energy dependency as a continent going forward.

One email from a reader comes in response to our coverage over the latest pipeline controversies. The reader, whose name we’ll leave out, writes:

“We the USA will have a (sic) "export LNG terminal" when hell freezes over. Just look at the time, work and money spent on the Keystone deal and we expect any big big company to risk screwing with Washington. Yes there have been some preliminary approvals given but that doesn't include environmental etc.

By the way tell me why Kitimat, BC will welcome US nat gas to cross the border and then off through Kitimat after the screwing they took from Keystone?

Thank you”

A subject line of “no response needed” accompanied the letter, but a response is coming anyhow.

First off, we’d like to thank the reader for their letter and can understand the skepticism over each pipeline project moving forward. That said, there was a question in that letter, and we’d like to take the time to respond to that.

Because there are more than one major pipeline projects in the hopper right now, it’s easy to confuse them and where their support comes from. Keystone has nothing to do with Kitimat, as they are two different projects. Keystone flows south into the United States, whereas Kitimat is to the west, with a destination point after shipping that’s most likely directed at Asian markets.

Keystone was blocked, not due to merit, but due to timing. That is, if we’re to believe what the White House is saying on the issue. Both sides of the aisle are placing blame over who killed the pipeline, but it’s the folly of both that caused this major snag. But, just because the government said it wouldn’t happen now, doesn’t mean it won’t happen ever.

Already there are rumblings that the next round of Keystone approval is going to come as a tie-in to a jobs bill, according to House Speaker John Boehner. Obama would love to have this issue pushed into his second term, but it doesn’t look like the Republicans are going to let him.

I don’t believe it’s a question of whether a “big big company” will be afraid of “screwing with Washington,” as Washington isn’t their biggest enemy. It’s not like Washington has been a great defender against profit-driven giants. Even in the declining statement over the pipeline, the reasons given seemed apologetic. Though it’ll be interesting to see what happens next with the Keystone, it’s doubtful that this is the last of any company trying to push through a project of this magnitude.

As for exporting LNGs to the world, one probably won’t have to wait for hell to freeze over. Like mentioned to the article in question, Cheniere Energy (AMEX:LNG) is pushing forward to place a liquification project at San Patricio County, Texas at a site already previously permitted for a regasifaction terminal. The new LNG export project, dubbed the “Corpus Christi Project” is being designed for up to three trains capable of producing in aggregate up to 13.5 million tonnes per annum, and will be primarily supplied by reserves from the Eagle Ford Shale. This announcement came in December of last year, and there have been no subsequent press releases indicating that the Keystone decision has affected these plans in the least.

But back to the letter, and its assumptions on Kitimat, though the hang-up at the border for Keystone is an issue, it doesn’t overall kill possibilities of future pipeline plans. There are already pipelines connecting Canada and the United States, and there will be more, you can count on it. But with Kitimat, an LNG facility there doesn’t hinge on any border crossings other than the border of Alberta and British Columbia.

That said, there is potential for a future source of American gas to be driven towards Kitimat, but not necessarily from the South. A more likely scenario would have a future pipeline tying in Alaska’s North Slope. These days it’s becoming increasingly important to begin a blow down of the gas cap within the pools in the North Slope.  If they don't relieve this pressure, then the recoverable oil reserves may be reduced. Should they wait too long, a pipeline would most likely be fast-tracked even harder than the current pipelines causing a stir.

Washington’s blocking of the Keystone for the time being was indeed irksome. But to think that it would cause political posturing to the tune of blocking future projects isn’t something we would expect from either side of the aisle or the border.

G. Joel Chury
Editor in Chief
VantageWire.com

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