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Labor Day News Dump: FERC Hands Enbridge Permit for Tar Sands by Rail Facility

4:07 pm in Uncategorized by Steve Horn

Syncrude’s base mine

On the Friday before Labor Day — in the form of an age-old “Friday News Dump“ — the Federal Energy Regulatory Commission (FERC) handed a permit to Enbridge, the tar sands-carrying corporate pipeline giant, to open a tar sands-by-rail facility in Flanagan, Ill. by early-2016.

With the capacity to accept 140,000 barrels of tar sands product per day, the company’s rail facility serves as another step in the direction towards Enbridge’s quiet creation of a “Keystone XL Clone.” That is, like TransCanada’s Keystone Pipeline System sets out to do, sending Alberta’s tar sands all the way down to the Gulf of Mexico’s refinery row — and perhaps to the global export market.

Flanagan sits as the starting point of Enbridge’s Flanagan South pipeline, which will take tar sands diluted bitumen (“dilbit”) from Flanagan to Cushing, Okla. beginning in October, according to a recent company earnings call. From there, Enbridge’s Seaway Twin pipeline will bring dilbit to Port Arthur, Texas near the Gulf.

Enbridge made the prospect of a tar sands-by-rail terminal public for the first time during its quarter two investor call.

“In terms of the rail facility, one of the things we’re looking at is – and the rail facility is really in relation to the situation in western Canada where there is growing crude oil volumes and not enough pipeline capacity to get it out of Alberta for a two or three year period,” Guy Jarvis, president of liquids pipelines for Enbridge, said on the call.

“So, one of the things we’re looking at doing is constructing a rail unloading facility that would allow western Canadian crudes to go by rail to Flanagan, be offloaded, and then flow down the Flanagan South pipeline further into Seaway and to the Gulf.”

FERC has given Enbridge the permit it needs to make that happen.

Enbridge “Scheme” Receives MN Permit

The announcement comes just days after the U.S. Department of State handed Enbridge a controversial permit to move an additional 350,000 barrels of tar sands per day across the U.S.-Canada border without the legally conventional Presidential Permit, public hearings or an environmental review conducted by the State Department.

Enbridge also received a permit from the Minnesota Public Utilities Commission (MPUC) the day before FERC’s “Friday News Dump,” locking in the State Department’s legal ruling at the state-level. MPUC voted 4-1 to permit the pipeline after a meeting lasting nearly eight hours.

The Commission did so even though the staffer analyzing comments and legal submissions acknowledged he reviewed far more climate and environmental concerns than vice versa, according to MPUC staff briefing papers reviewed by DeSmogBlog.

“Clearly there exists much public opposition to the increased consumption of fossil fuels and diluted bitumen sources in particular,” wrote Michael Kaluzniak, planning director for energy facilities permitting for MPUC.

“Additionally, the Commission received numerous comments expressing genuine concern regarding the potential impact of the project on water quality and overall dissatisfaction with Enbridge’s public safety and spill response actions.”

TransCanada and Tar Sands by Rail

With the combination of its Alberta Clipper expansion “illegal scheme” (referred to as such by the National Wildlife Federation), Flanagan South and Seaway Twin pipelines, as well as the FERC-approved rail facility, Enbridge now has the capacity to bring roughly 960,000 barrels per day of tar sands product to the Gulf.

For sake of comparison, Keystone XL has the capacity to bring 830,000 barrels per day of tar sands to the Gulf. But TransCanada has also brokered its own deals and made its own chess moves.

As reported on DeSmogBlog, TransCanada may build its own tar sands-by-rail facility while it waits for Keystone XL’s northern leg to receive — or not receive — a State Department permit and accompanying Presidential Permit.

“It is something…that we can move on relatively quickly,” TransCanada CEO Russ Girling stated on his company’s quarter one earnings call. “We’ve done a pretty substantial amount of work at the terminal end and mostly at the receipt and delivery points and that’s really what our key role in here would be.”

Since that call, TransCanada has not discussed its tar sands by rail business plans.

“Keystone? Who needs it?”

In July, Global Partners and Kansas City Southern announced plans to develop a tar sands by rail facility in Port Arthur, Texas with 340,000 barrels of storage capacity.

If TransCanada opens up its own tar sands by rail facility, the combination of that and Enbridge’s latest tar sands by rail move could feed the Global Partners-Kansas City Southern beast.

With tar sands now “Texas Bound and Flyin” in a major way, and both Enbridge and TransCanada finding a way to get tar sands to the Gulf, the seemingly hyperbolic headline published on July 10 by the Houston Business Journal seems to ring true more now than ever: “Keystone? Who needs it?Read the rest of this entry →

Court: Key Environmental Law Doesn’t Apply to Part of Enbridge Keystone XL “Clone”

6:06 pm in Uncategorized by Steve Horn

A judge's gavel

A judge just ruled federal law doesn’t apply to this pipeline firm.

U.S. District Court for the District of Columbia has ruled that Enbridge’s 600-mile-long Flanagan South Pipeline, a Keystone XL “clone,” is legally cleared to proceed opening for business in October.

Approved by the U.S. Army Corps of Engineers via a controversial regulatory mechanism called Nationwide Permit 12 (NWP 12), Judge Kentanji Brown Jackson, an Obama-appointed judge, ruled NWP 12 was not a federal government “action.” Thus, Brown posited that Enbridge did not need to use the National Environmental Policy Act (NEPA) regulatory process and NWP12 was up to snuff.

The case pitted the Sierra Club and the National Wildlife Federation (NWF) against the Army Corps of Engineers and Enbridge and has lasted for just over a year, with the initial complaint filed on August 13, 2013 (Case #: 1:13-cv-01239-KBJ).

Sierra Club and NWF submitted the recent precedent-setting Delaware Riverkeeper v. Federal Energy Regulatory Commission (FERC) case as supplemental authority for Sierra Club v. U.S. Army Corps of Engineers on the day that decision was handed down.

But Jackson brushed it aside, saying it doesn’t apply to Flanagan South, despite the fact that the Delaware Riverkeeper v. FERC decision said that a continuous pipeline project cannot be segmented into multiple parts to avoid a comprehensive NEPA review.

Although Enbridge will operate this project as a single pipeline, Flanagan South was broken up into thousands of “single and complete” projects by the Army Corps of Engineers. This helped Enbridge skirt the requirement of a more comprehensive and public-facing NEPA review, which involves public hearings and a public comment period.

“Here, not only was there no NEPA analysis of this massive project, there was never any public notice or opportunity for involvement before it was constructed across four states,” Sierra Club attorney for the case, Doug Hayes, told DeSmogBlog. “The entire thing was permitted behind closed doors.”

For all intents and purposes, then, Flanagan South is a fait accompli and tar sands diluted bitumen (“dilbit”) will begin pumping through it as summer turns to fall.

Private Company, Hands-Off Approach

At 48-pages, Jackson’s ruling centers around a key central argument: Enbridge is a private company and Congress has never given executive agencies the green light to regulate domestic oil pipelines.

“Congress has not authorized the federal government to oversee the construction of private domestic oil pipelines; consequently, Enbridge has undertaken to build the planned [Flanagan South] Pipeline largely on its own, primarily by securing easements from the landowners who own the property over which the pipeline will operate,” wrote Jackson.

Judge Jackson said that a laissez-faire governmental approach to authorizing pipelines is appropriate, according to her reading of the law on the books.

“[T]he gist of the Court’s conclusion is that Plaintiffs are wrong to insist that any federal agency had an obligation under NEPA or any other statute to conduct an environmental review of the impact of the entire [Flanagan South] Pipeline before Enbridge broke ground on the project,” she opined.

“Connected Action” Doctrine

Another key legal precedent discussed in Jackson’s ruling was Delaware Riverkeeper v. FERC, covered by DeSmogBlog in June.

She weighed the merits of the “connected action” doctrine as applied to a lack ofNEPA review for Flanagan South, writing it does not apply to the pipeline because the Army Corps of Engineers has no obligation to do a NEPA review in this case.

“In [Delaware Riverkeeper v. FERC] the connected actions rule applied because the courts were required to assess whether the agencies had improperly limited the scope of the review of actions within their own jurisdiction—a determination that is fundamentally different from the question Plaintiffs present here, i.e., whether [NEPA] must be expanded to include an environmental review of actions completely outside the agencies’ purview,” Jackson wrote.

Army Corps Abusing NWP 12?

Hayes told DeSmogBlog back in November that the Army Corps of Engineers’ intricate involvement in permitting massive tar sands pipeline projects is at the root of the problem.

“The Corps is abusing the nationwide permit program. Nationwide permits were intended to permit categories of projects with truly minimal impacts, not tar sands oil pipelines crossing several states,” said Hayes. “What the Corps is doing is artificially dividing up these massive pipelines, treating them as thousands of individual projects to avoid NEPA compliance.”

Congress Passed NEPA in 1969

The greatest irony of Jackson’s decision is that Congress passed NEPA — known by legal scholars as the “environmental Magna Carta“ — in 1969, and it was signed into law by President Richard Nixon in 1970.

Read the rest of this entry →

Investor Call: Enbridge’s Keystone XL Clone Opens in October, Rail Facility to Follow

6:06 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

In a recent quarter two call for investorsEnbridge Inc executives said the company’s “Keystone XL” clone — the combination of the Flanagan South and Seaway Twin pipelines — will open for business by October.

As previously reported by DeSmogBlog, Enbridge has committed a “silent coup” of sorts, ushering in its own Alberta to Port Arthur, Texas pipeline system “clone” of TransCanada‘s Keystone XL tar sands pipeline. Unlike Keystone XL‘s northern leg, however, Enbridge has done so with little debate.

With the combination of the Alberta Clipper (now called Line 67, currently up for expansion), Flanagan South and Seaway Twin pipelines, Enbridge will soon do what TransCanada has done via its Keystone Pipeline System.

That is, bring Alberta’s tar sands to Gulf of Mexico refineries and send it off to the global export market.

According to Guy Jarvis, president of liquids pipelines for Enbridge, even though the Cushing, Oklahoma to Port Arthur, Texas Seaway Twin is technically operational, it will not become functional until Flanagan South opens in October.

“The base plan had been, and still is, to do the line fill of the Seaway Twin from Flanagan South. So we don’t expect to see too much off the Seaway Twin until Flanagan South does go into service,” Jarvis said on the investor call.

“It does have the capability to be line filled at Cushing if the barrels are available and the market signals would suggest that you would want to do that. But at this point in time, we think it will be the base plan that it is filled on from Flanagan South.”

Beyond piping diluted bitumen (“dilbit”) to market, Enbridge also has plans to market dilbit via rail in a big way.

All Aboard Enbridge’s Tar Sands-By-Rail

Jarvis unpacked his company’s plans to help move tar sands by rail during the call, as well.

“In terms of the rail facility, one of the things we’re looking at is – and the rail facility is really in relation to the situation in western Canada where there is growing crude oil volumes and not enough pipeline capacity to get it out of Alberta for a two or three year period,” he said.

“So, one of the things we’re looking at doing is constructing a rail unloading facility that would allow western Canadian crudes to go by rail to Flanagan, be offloaded, and then flow down the Flanagan South pipeline further into Seaway and to the Gulf.”

The Wall Street Journal explained that Enbridge’s rail loading facility can handle 140,000 barrels of heavy oil per day and will be open for business in early 2016.

“Competitive Advantage”

According to lobbying disclosure forms reviewed by DeSmogBlog, Enbridge spent $230,000 on lobbying the federal government in the first half of 2014. For a company that earned over $410 million (US dollars) in 2013, the amount equals a mere drop in the bucket.

But, the company acknowledged in its earnings call that its quiet and cheap — yet effective — efforts have paid huge dividends.

“So, we think that, while we’re already very competitive into the markets that we serve directly with pipelines, that competitive advantage into those markets is likely only to get stronger,” said Jarvis.

Enbridge’s “competitive advantage,” however, comes with a cost for everyone else: lighting the “fuse” to a “carbon bomb” for one of the filthiest, climate destroying fossil fuels on the planet in Alberta.

Documents: Cheniere Fuels ALEC’s New Push for Fracked Gas Exports

7:18 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

Two LNG storage tanks, one labelled with Cheniere logo

Cheniere is pushing ALEC to encourage exporting of fracked gas.

Today, legislative and lobbyist members of the American Legislative Exchange Council (ALEC) voted on model legislation promoting both exports of gas obtained via hydraulic fracturing (“fracking”) and vehicles powered by compressed natural gas (CNG).

Dubbed a “corporate bill mill” by its critics, ALEC is heavily engaged in a state-level effort to attack renewable energy and grease the skids for exports of U.S. oil and gas. Today’s bills up for a vote — as conveyed in an ALEC mailer sent out on June 25 by ALEC’s Energy, Environment and Agriculture Task Force — are titled “Resolution In Support of Expanded Liquefied Natural Gas Exports“ and “Weights and Measures and Standards for Dispensing CNG and LNG Motor Fuels.”

An exclusive investigation conducted by DeSmogBlog reveals that Cheniere — the first U.S. company to receive a final liquefied natural gas (LNG) export permit by the U.S. Federal Energy Regulatory Commission (FERC) — has acted as the lead corporate backer of the LNG exports model resolution.

Further, Clean Energy Fuels Corporation, owned by energy baron T. Boone Pickens, of Pickens Plan fame, and trade associations it is a member of, served as the main pusher of the CNG model resolution.

ALEC has served as a key vehicle through which the fracking industry has curried favor and pushed for policies favorable to their bottom lines in statehouses nationwide. Now ALEC and its corporate backers have upped the ante, pushing policies that will lock in downstream demand for fracked gas for years to come.

With Cheniere becoming an ALEC dues-paying member in May 2013 and with America’s Natural Gas Alliance (ANGA) — the fracking industry’s tour de force — crowned an ALEC member in August 2013, it looks like many more fracking-friendly model bills could arise out of ALEC in the months and years ahead.

According to a document obtained by the Center for Media and Democracy, top ALEC 2014 Annual Meeting sponsors in Dallas include ANGA, ExxonMobil, Chevron, Devon Energy, and TransCanada, among others.

LNG exports will serve as the focus for part one of this series, while CNG vehicles will serve as the focus for part two.

“LNG Day”

The genesis of the Cheniere-backed model bill is tied to a March 26 “LNG Day” reception put together in Baton Rouge, La. on March 26 by the influential lobbying firm, The Picard Group.

“LNG Day gives Legislators the opportunity to learn more about the benefits of natural gas,” exclaimed a press release featuring a photo of the event taken by Dawn Cole of The Picard Group. “Attendance was great and the day was successful.”

That release was disseminated by the Louisiana Mid-Continent Oil and Gas Association, of which Cheniere is a member. Among The Picard Group’s clients: Cheniere, which it is registered to lobby for in Louisiana.

Emails obtained by DeSmogBlog under Louisiana Public Records Act reveal that Laura MacDiarmid, who works as a government and environmental affairs analyst for Cheniere, was copied on email outreach by The Picard Group to Louisiana state representatives inviting them to participate in LNG Day.

Further, “Our Energy Moment“ — the gas industry-funded propaganda campaign promoting LNG exports — put out a release of its own promoting “LNG Day.”

That release featured a quote from Jason French, listed only as a “spokesperson for the Our Energy Moment coalition” in the release. In reality, French serves as director of government and public affairs for Cheniere.

French wrote an article published in the July/August 2013 edition of “Inside ALEC” titled, “LNG Exports – A Story of American Innovation and Economic Opportunity” and also gave a presentation on LNG exports at ALEC’s 2013 Annual Meeting held in Chicago, Ill.

Via email, French confirmed with DeSmogBlog that he will also be giving a presentation at this year’s ALEC meeting in Dallas on LNG exports immediately before the model resolution promoting them receives a vote by ALEC member legislators and corporate lobbyists.

LNG Day, though, was more than a gas industry-manufactured media event. Out of it arose House Concurrent Resolution 29, co-sponsored by Speaker of The House, Rep. Chuck Kleckley and Sen. John A. Alario, Jr. (an ALEC member).

Alario, Jr. has taken significant campaign money from LNG exporters, such as ExxonMobil, Energy Transfer Partners and Sempra.

After HCR 29 passed the House under suspended rules, it also passed unanimously in a 36-0 vote in the Senate on March 25. The next evening after the lights went off on the day-time LNG Day festivities, lobbyists and legislators convened for a corporate-sponsored reception at the Jimmie Davis House.

Among the sponsors — a copy of the invitation obtained via Louisiana Public Records Act shows — were those set to benefit most from a policy of plentiful LNG exports: the frackers and the LNG exporters, such as Chesapeake Energy, ANGA, Our Energy Moment, Cheniere, Trunkline LNG, Magnolia LNG and Sempra LNG and others.

Guessing at Numbers and Figures

The language found within HCR 29 mirrors that found within the ALEC model resolution.

Read the rest of this entry →

Recent Federal Court Decision Could Muddy Waters for Keystone XL South, Flanagan South

2:20 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

The case depicts a collision between long-standing principles of environmental law and President Barack Obama’s March 2012 Executive Order expediting pipeline reviews — an order issued six days after delivering a speech in front of the pipe segments that would two years later be pieced together as Keystone XL South, now open for business.

On June 6, the U.S. Court of Appeals for the District of Columbia Circuit handed down a ruling that will serve as important precedent for the ongoing federal legal battles over the Keystone XL and Flanagan South tar sands pipelines.

In the Delaware Riverkeeper v. Federal Energy Regulatory Commission (FERC) case, judges ruled that a continuous pipeline project cannot be segmented into multiple parts to avoid a comprehensive National Environmental Policy Act (NEPA) review. This is what Kinder Morgan proposed and did for its Northeast Upgrade Project.

As reported on DeSmogBlog, the U.S. Army Corps of Engineers did the same thing to streamline permitting for both the southern leg of TransCanada’s Keystone XL and Enbridge’s Flanagan South. Sierra Club and co-plaintiffs were denied injunctions for both pipelines in October and November 2013, respectively.

Delaware Riverkeeper v. FERC dealt with breaking up a new 40-mile long pipeline upgrade into four segments. For the other two cases, the Army Corps of Engineers shape-shifted the two projects — both hundreds of miles long each — into thousands of “single and complete” projects for permitting purposes.

On the day of the Delaware Riverkeeper v. FERC decision, Sierra Club attorney Doug Hayes submitted the case as supplemental authority for the ongoing Flanagan South case.

On May 5, Hayes also submitted paperwork to appeal the Keystone XL Southdecision in front of the U.S. Court of Appeals for the Tenth Circuit, which was docketed by the clerk of Ccurt the next day.

Hayes told DeSmogBlog his side will file an opening brief for the appeal on July 30. It seems likely Delaware Riverkeeper v. FERC will be a key part of that appeal.

In a sign of the importance of the outcome for the oil and gas industry, theAmerican Petroleum Institute (API) entered the Sierra Club v. Army Corps of Engineers case on Keystone XL as an intervenor on May 16, represented by corporate law firm Hunton & Williams.

At the federal level, Hunton & Williams lobbies on behalf of Koch Industries, a company with a major stake in tar sands leases and refining.

“No Uncertain Terms”

Hayes told DeSmogBlog that Delaware Riverkeeper v. FERC could prove a game-changer for the Keystone XL southern leg (now dubbed the Gulf Coast Pipeline Project) appeal, the Flanagan South decision and far beyond.

“Delaware Riverkeeper is important in many respects,” Hayes said. “In general, the D.C. Circuit is considered the second most powerful court in the country and here it held, in no uncertain terms, that agencies must analyze all parts of these interrelated projects under NEPA to get the full picture of the environmental impacts.”

The case depicts a collision between long-standing principles of environmental law and President Barack Obama’s March 2012 Executive Order expediting pipeline reviews — an order issued six days after delivering a speech in front of the pipe segments that would two years later be pieced together as Keystone XL South, now open for business.

Executive Order 13604

Executive Order 13604, signed on March 28, 2012, said “agencies shall…coordinate and expedite their reviews…as necessary to expedite decisions related to domestic pipeline infrastructure projects that would contribute to a more efficient domestic pipeline system for the transportation of crude oil.”

Read the rest of this entry →

Former Obama Energy Aide Named to Board of Fracked Gas Exports Giant Cheniere

11:14 am in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

 

Face photo of Heather Zichal

Revolving door: An Obama energy aide may join a fracking giant.

Heather Zichal, former Obama White House Deputy Assistant to the President for Energy and Climate Change, may soon walk out of the government-industry revolving door to become a member of the board of directors for fracked gas exports giant Cheniere, who nominated her to serve on the board.

The announcement, made through Cheniere’s U.S. Securities and Exchange Commission Form 8-K and its Schedule 14A, comes just as a major class-action lawsuit was filed against the board of the company by stockholders.

In reaction to the lawsuit, Cheniere has delayed its annual meeting. At that meeting, the company’s stockholders will vote on the Zichal nomination.

The class-action lawsuit was filed by plaintiff and stockholder James B. Jones, who alleges the board gave stock awards to CEO Charif Souki in defiance of both a stockholders’ vote and the company’s by-laws.

Souki — a central character in Gregory Zuckerman‘s book The Frackers — became the highest paid CEO in the U.S. as a result of the maneuver, raking in $142 million in 2013, $133 million of which came from stock awards.

Zichal was nominated to join Cheniere’s audit committee of the board, and will be paid $180,000 per year for the gig if elected.

Among the audit dommittee duties: “Prepare and review the audit committee report for inclusion in the proxy statement for the company’s annual meeting of stockholders,” which is now set for September 11 after the push-back following the filing of the stockholder class-action lawsuit.

“The audit committee’s responsibility is oversight, and it recognizes that the company’s management is responsible for preparing the company’s financial statements and complying with applicable laws and regulations,” Cheniere’s audit committee charter further explains.

Cheniere (stock symbol LNG, shorthand for “liquefied natural gas”) is currently awaiting a final decision on Corpus Christi LNG, its proposed LNG exports facility. That terminal would send gas obtained predominantly via hydraulic fracturing (“fracking”) to the global market.

The company already received the first ever final approval to export fracked gas from the U.S. Federal Energy Regulatory Commission (FERC) in April 2012 for itsSabine Pass LNG export terminal, which is scheduled to be operational by late-2015.

The nature of what role Zichal will play on the board and audit committee of the first company to make a major bet on LNG exports remains unclear. But one thing remains clear: she joins a politically well-connected cadre of Cheniere board members.

Other prominent Cheniere board members include John Deutch, former head of the U.S. Central Intelligence Agency (CIA) and Vicky Bailey, a FERC commissioner, both of whom worked for the Clinton administration.

And given Zichal’s former role as liaison between the oil and gas industry at the White House and her track record serving in that role, it raises the question: was she working for the industry all along?

Zichal Oil and Gas Services

Zichal was best known to many as the main mediator between the oil and gas industry and the White House during her time working for the Obama administration. In fact, Cheniere cites that experience as the rationale for nominating her to serve on the board.

“Zichal has extensive knowledge of the domestic and global energy markets as well as the U.S. regulatory environment,” reads the “skills and qualifications” portion of her nomination announcement on Cheniere’s Schedule 14A. “She brings a diversified perspective about the energy industry to our board having served in significant government positions during her career.” 

As Obama’s “climate czar,” Zichal headed up the effort — mandated via an April 13, 2012 Obama Executive Order — to streamline regulatory oversight of the gas industry in the U.S.

Titled, “Supporting Safe and Responsible Development of Unconventional Domestic Natural Gas Resources,” the Executive Order signed in the form of a “Friday news dump” created “a high-level, interagency working group that will facilitate…domestic natural gas development” overseen by Zichal.

Obama signed the Executive Order after meeting with Jack Gerard, head of the American Petroleum Institute (API), and other industry leaders. According to EnergyWire, API requested the creation of that working group.

“We have called on the White House to rein in these uncoordinated activities to avoid unnecessary and overlapping federal regulatory efforts and are pleased to see forward progress,” Gerard told the Associated Press in response to a question about the order.

A month later on May 15, Zichal spoke to API about her efforts and those of the Obama administration on fracking.

“It’s hard to overstate how natural gas — and our ability to access more of it than ever — has become a game-changer and that’s why it’s been a fixture of the President’s ‘All of the Above’ energy strategy,” she told API.

Just think about it: a few years ago, the conventional wisdom was that the United States would need to build more terminals to import natural gas overseas. And today, America is the world’s leading producer of natural gas and we’re actually exploring opportunities for exports.

As a May 2012 Bloomberg article explained, among Zichal’s tasks was wooing API head Jack Gerard, which she appears to have succeeded at.

Similar to the interagency working group created by the April 13, 2012, Executive Order, Zichal also oversaw the Bakken Federal Executives Group, which was created through the signing of Executive Order 13604 on March 22, 2012. That order was part of the same package that called for expedited building of the southern leg of the Keystone XL tar sands pipeline.

Executive Order 13604 created an interagency steering committee with a goal “to significantly reduce the aggregate time required to make federal permitting and review decisions on infrastructure projects while improving outcomes for communities and the environment.”

Zichal was also instrumental in legalizing the American Legislative Exchange Council‘s (ALEC) approach for fracking chemical fluid disclosure on U.S. public lands, overseen by the U.S. Department of Interior’s Bureau of Land Management.

“Zichal met more than 20 times in 2012 with industry groups and company executives lobbying on the proposed rule,” reported EnergyWire. “Among them were the American Petroleum Institute (API) and the Independent Petroleum Association of America (IPAA), along with BP America Inc., Devon Energy Corp. and Exxon Mobil Corp.”

Beyond overseeing streamlined permitting for fracking sites on both public and private lands, Zichal also oversaw the White House file for the Pavillion, Wyo., fracking groundwater contamination study.

Conducted by the U.S. Environmental Protection Agency (EPA), many believe the White House — counseled by Zichal — made a political calculus to cancel the ongoing investigation, the first of three major major studies on the subject shutdown by the EPA.

“Deeply Embedded”

The Zichal nomination is taking place alongside the deployment of the Obama Administration regulating coal-fired power plants through the U.S. Environmental Protection Agency. The rule is a de facto endorsement of fracking and gas-fired power plants as part of the “all of the above” energy policy.

As the Zichal case makes clear with regards to climate change-causing fracked gas, LNG exports flow through the revolving door in Washington, DC, and beyond.

“The fact that one of Obama’s top climate advisors is now helping expand fossil fuel use raises questions about how deeply embedded oil and gas industry interests are in the administration,” Jesse Coleman, a researcher for Greenpeace USA told DeSmogBlog.

Silent Coup: How Enbridge is Quietly Cloning the Keystone XL Tar Sands Pipeline

10:48 am in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog 

A Canadian flag dripping with oil

Despite activist opposition, “pipeline giant Enbridge has quietly cloned its own Keystone XL in the U.S and Canada.”

While the debate over the TransCanada Keystone XL tar sands pipeline has raged on for over half a decade, pipeline giant Enbridge has quietly cloned its own Keystone XL in the U.S and Canada.

It comes in the form of the combination of Enbridge’s Alberta Clipper (Line 67), Flanagan South and Seaway Twin pipelines.

The pipeline system does what Keystone XL and the Keystone Pipeline System at large is designed to do: ship hundreds of thousands of barrels per day of Alberta’s tar sands diluted bitumen (“dilbit”) to both Gulf Coast refineries in Port Arthur, Texas, and the global export market.

Alberta Clipper and Line 67 expansion

Alberta Clipper was approved by President Barack Obama and the U.S. State Department (legally required because it is a border-crossing pipeline like KeystoneXL) in August 2009 during congressional recess. Clipper runs from Alberta to Superior, Wis.

Initially slated to carry 450,000 barrels per day of dilbit to market, Enbridge now seeks an expansion permit from the State Department to carry up to 570,000 barrels per day, with a designed capacity of 800,000 barrels per day. It has dubbed the expansion Line 67.

As reported on previously by DeSmogBlog, Line 67 is the key connecter pipeline to Line 6A, which feeds into the BP Whiting refinery located near Chicago, Ill., in Whiting, Ind. BP Whiting — the largest in-land refinery in the U.S. — was recently retooled to refine larger amounts of tar sands under the Whiting Refinery Modernization Project. 

Line 67 also connects to Line 61 via a fork in the road of sorts in Wisconsin. From there, it heads to Flanagan, Ill., the namesake of the start of Enbridge’s Flanagan South pipeline.

Like Keystone XL, Enbridge’s Line 67 expansion project has faced unexpected delays in its State Department and Obama Administration review process.

Flanagan South also shares a key legal commonality with TransCanada’s Keystone pipeline system.

That is, like Phase II and Phase III of that system — best known to the general public as Keystone XL’s southern leg and to TransCanada as the Gulf Coast Pipeline Project — it was permitted by the U.S. Army Corps of Engineers using the controversial Nationwide Permit 12 (NWP 12) process.

As documented here on DeSmogBlog, the southern leg of Keystone XL and Flanagan South both played a central role in separate but related precedent-setting federal-level court cases.

In reviewing the legality of approval via NWP 12 through the lens of “harms,” the courts ruled in both cases that the harms of losing corporate profits for both Enbridge and TransCanada trump the potential harms of ecological damage the pipelines could cause in the future. Climate change went undiscussed in both rulings.

According to a May 2014 company newsletter, Enbridge is “on schedule to put [Flanagan South] in operation later this year.”

“After eight months of construction, we are now in the home stretch for the nearly 600-mile pipeline project,” touts the newsletter. “At the peak of construction, between October 2013 and January 2014, there were on average 3,650 construction workers over the entire route — about 1,600 of those workers from communities located along the pipeline route.”

Seaway Pipeline

In a June 16 article titled, “Blame Canada,” Reuters pointed to two new “pipes set to hit U.S. Gulf with heavy crude,” which — as it pertains to Canada — is industry vernacular for tar sands.

Flanagan South was one of the pipelines pointed to in the Reuters piece.

The other is Enbridge’s Seaway Twin pipeline, co-owned on a 50/50 joint venture basis with Enterprise Products Partners. Seaway Twin, like Keystone XL’s southern leg, runs from Cushing, Okla., to Port Arthur, Texas.

Enbridge scheduled Line 67 to go on-line in mid-2014 and reach full-capacity by mid-2015.

But, because of backlash against the proposal from environmentalists and citizens who live along the pipeline expansion’s route, the company does not expect to receive a State Department expansion permit until mid-2015.

Flanagan South Pipeline

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Exxon Awarded Gulf of Mexico Oil Leases Days Before Obama Announced CO2 Rule

5:58 pm in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

Exxon Logo

Steve Horn uncovers “last minute” energy deals at Exxon.

On Friday May 30, just a few days before the U.S. Environmental Protection Agency announced details of its carbon rule proposal, the Obama Administration awarded offshore oil leases to ExxonMobil in an area of the Gulf of Mexico potentially containing over 172 million barrels of oil.

The U.S. Department of Interior‘s (DOI) Bureau of Ocean Energy Management (BOEM) proclaimed in a May 30 press release that the ExxonMobil offshore oil lease is part of “President Obama’s all-of-the-above energy strategy to continue to expand safe and responsible domestic energy production.”

Secretary of Interior Sally Jewell formerly worked as a petroleum engineer for Mobil, purchased as a wholly-owned subsidiary by Exxon in 1998.

Dubbed a “Private Empire” by investigative reporter Steve Coll, ExxonMobil will now have access to oil and gas in the Alaminos Canyon Area, located 170 miles east of Port Isabel, Texas. Port Isabel borders spring break and tourist hot spotSouth Padre Island.

ExxonMobil originally won the three leases at the Western Planning Area Sale 233, held on March 19. BOEM records show ExxonMobil was the only company to participate in the bid and paid over $21.3 million.

Transboundary Agreement Opens Floodgates

The U.S.-Mexico Transboundary Hydrocarbon Agreement signed into law by President Obama on December 23, 2013 — a key precursor to the ongoing debate over Mexico’s oil and gas industry reforms — served as the legal backdrop for BOEM awarding ExxonMobil with the lease.

“With the Agreement now in full force, we can make additional oil and gas along the resource-rich boundary between the United States and Mexico available and we have a clear process by which both governments can provide the necessary oversight to ensure exploration and development activities are conducted safely and responsibly,” Secretary Jewell said in a press release.

“These leases represent a significant step forward in U.S.-Mexico cooperation in energy production and pave the way for future energy and environmental collaboration.”

Over 1.5 million offshore acres opened for business as a result of the Transboundary Agreement.

Through the Agreement, U.S. companies agreed to develop the area jointly with Mexican state-owned company Petroleos Mexicanos (Pemex).

Mexico’s legislature is now debating the details of secondary legislation, coming after the country signed constitutional amendments in December 2013. The constitutional amendments-secondary legislation one-two punch will open up the rest of Mexico’s onshore and offshore oil and gas reserves to international oil and gas companies, working in partnership with Pemex.

According to a May 6 article appearing in Upstream Online, the legislature will open up an “extraordinary session” to debate the secondary legislation sometime this month.

Five Year Program

Beyond the Transboundary Hydrocarbon Agreement, in February the Obama Administration announced it would be opening up over 40 million acres of offshore land for oil and gas development, also doing so under the “all-of-the-above” banner.

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For First Time, TransCanada Says Tar Sands Flowing to Gulf in Keystone XL South

11:56 am in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog 

TransCanada admitted for the first time that tar sands oil is now flowing through Keystone XL‘s southern leg, now rebranded the Gulf Coast Pipeline Project. The company confirmed the pipeline activity in its 2014 quarter one earnings call.

Asked by Argus Media reporter Iris Kuo how much of the current 300,000-400,000 barrels per day of oil flowing from the Cushing, Oklahoma to Port Arthur, Texas pipeline is tar sands (“heavy crude,” in industry lingo), TransCanada CEO Russ Girling confirmed what many had already suspected.

“I don’t have that exact mix, but it does have the ability to take the domestic lights as well as any heavies that find a way down to the Cushing market, so it is a combination of the heavies and the lights,” said Girling. “I just don’t know what the percentage is.”

The Keystone Pipeline System — of which Keystone XL’s northern leg is phase four of four phases — is and always has been slated to carry Alberta’s tar sands to targeted markets. So the announcement is far from a shocker.

More perplexing is why it took so long for the company to tell the public that tar sands oil now flows through the half of the pipeline approved via a March 2012 Executive Order by President Barack Obama.

“Oil is Oil”

When DeSmogBlog reported TransCanada had begun injecting oil into the pipeline’s southern leg in December, the company would not reveal what type of oil it was.

“As you’ve likely seen me quoted before, oil is oil and this pipeline is designed to handle both light and heavy blends of oil, in accordance with all U.S. regulatory standards,” TransCanada spokesman Shawn Howard told DeSmogblog at the time.

I am not able to provide you the specific blend or breakdown as we are not permitted (by our customers) from disclosing that information to the media. There are very strict confidentiality clauses in the commercial contracts we enter into with our customers, and that precludes us from providing that.

Now, though, it appears the company has let the proverbial cat out of the bag.

“Texas Bound and Flyin’”

In the first quarter of 2014, Keystone XL’s southern half has opened up the floodgates for what was once a glut of oil in Cushing to reach Gulf Coast refineries at record levels.

To borrow the title of Jerry Reed’s 1980 country song classic, it’s “Texas Bound and Flyin.’” An April 17 Energy Information Agency communiqué lays out the dirty details.

“The main driver of the recent crude oil inventory builds on the [Gulf Coast] is start-up of TransCanada’s [Gulf Coast Pipeline] which runs from the Cushing, Oklahoma storage hub to the Houston area,” explained the EIA. “In late January, TransCanada completed the first delivery of crude oil via [Gulf Coast Pipeline] to [Gulf Coast] refineries.”

In short, the glut of oil has teleported from Cushing to Texas in the aftermath ofKeystone XL’s southern leg opening for business in January, as explained in another EIA March 27 update.

“Crude oil inventories at Cushing, Oklahoma, the primary crude oil storage location in the United States, decreased 13 million barrels (32%) over the past two months,” the EIA wrote. “On March 21, Cushing inventories were less than 29 million barrels, more than 20 million barrels lower than a year ago.”

Northern Leg and Rail

Keystone XL’s northern leg, or what many know simply as Keystone XL, also came up on the earnings call.

Girling voiced frustration with how long the process has taken and with President Obama’s April 18 announcement to delay a decision on the northern leg until after the 2014 mid-term elections.

“In our view this delay is inexplicable. The first leg of our Keystone system took just over 600 days to review and approve,” said Girling. “Now after more than 2,000 days, five exhaustive environmental reviews and over 17,000 cases of scientific data, the review process continues to be delayed.”

The prospect of moving tar sands oil by rail to Cushing was also discussed on the call.

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Explosive Virginia Train Carried Fracked Bakken Oil, Headed to Potential Export Facility

10:34 am in Uncategorized by Steve Horn

Cross-Posted from DeSmogBlog

Platts confirmed CSX Corporation’s train that exploded in Lynchburg, Virginia was carrying sweet crude obtained via hydraulic fracturing (“fracking”) in North Dakota’s Bakken Shale basin. CSXCEO Michael Ward has also confirmed this to Bloomberg.

“Trade sources said the train was carrying Bakken crude from North Dakota and was headed to Plains All American’s terminal in Yorktown,”Platts explained. “The Yorktown facility can unload 130,000 b/d of crude and is located on the site of Plains oil product terminal.”

In January, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration issued a Safety Alert concluding Bakken crude is more flammable than heavier oils. Hence the term “bomb trains.”

At least 50,000 gallons of the oil headed to Yorktown is now missing, according to ABC 13 in Lynchburg. Some of it has spilled into the James River, as previously reported on DeSmogBlog.

map available on CSX’s website displaying the routes for its crude-by-rail trains offers a clear indication of where the train was headed.

Formerly a refinery owned by Standard Oil and then BP/Amoco, Plains All American has turned the Yorktown refinery into a mega holding facility.

Yorktown may become a key future site for crude oil exports if the ban on exports of oil produced domestically in the U.S. is lifted.

Yorktown: Future Oil Export Mecca?

In February, Plains CEO Greg Armstrong said on the company’s quarter four earnings call that Yorktown is ideally situated geographically to become an oil export mecca if the ban is lifted.

When asked by an analyst from Bank of America about the ongoing debate over lifting the crude oil export ban, Armstrong discussed how Plains could stand to profit from exports.

“Ultimately we’re positioned, we think well for either answer if they allow blanket exports we have assets in the right places that can help build that market niche,” said Anderson.

Harry Pefanis, President and COO for Plains, sang a similar tune to Anderson.

“I guess if I also just add to that if there was export…we’ve got couple of locations that we could load ocean-going vessels. Yorktown is a location where we can rail-in and load out an ocean-going vessel,” Pefanis explained.

The industry lobbying effort to lift the U.S.-produced oil export ban has picked up major steam in 2014, with the geopolitical crisis in Ukraine and Russia serving as the hook.

Keystone XL Connection

It’s only a matter of time until the familiar oil industry overture begins. That is, pointing to the Lynchburg disaster as the reason why the northern leg of TransCanada’s Keystone XL tar sands pipeline must be built.

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