Energy East: As America Dawdles On Keystone XL, Canada Ponders Another Route For Oil

The Keystone XL pipeline has been a source of controversy and debate since it was announced but it looks like Canada’s oil industry might be willing to ditch Keystone entirely, as they might have found a different route that doesn’t even have to go through America.

The project is called Energy East and, according to a new Bloomberg report, it does exactly that: it takes Canada’s oil sands crude east instead of south. Right now, the project is still in the planning and approval stages, but if it gets the green light, it could let Canada’s oil industry end-run around the difficulties it has faced in getting Keystone built.

It could also light a fire under America to get Keystone XL past its own regulatory hurdles.

Energy East would start off in Alberta, where a wealth of crude oil is locked in that region’s oil sands. The pipeline would run 2,858 miles across Canada to New Brunswick where it would meet the Atlantic, crossing six provinces and four time zones in the process. Oil pumped through the Energy East project would still have access to the same Louisiana and Texas oil refineries that the Keystone XL pipeline was meant to supply.

The Energy East proposal would take Canada’s oil sands east to the Atlantic instead of south through the United States.

In all, the project would cost about $11 billion, and proponents say it could be up and running by 2018.

Right now, the Energy East proposal looks a lot more vibrant than does Keystone XL. Despite the special relationship between the United States and Canada, Keystone has languished over the last few years, caught up in bureaucratic wrangling.

The proposed path for the Keystone XL pipeline would run down the United States, terminating in the Gulf of Mexico.

The Keystone project of late has been more of a political football than a potential energy solution. The Obama administration has dragged its feet on Keystone, owing in large part to concerns among the Democratic Party’s base. That faction contends that the construction of the Keystone XL pipeline will itself be environmentally destructive enough without even taking into account the environmental impact of refining oil from oil sands and increased use of fossil fuels.

Critics of the Obama administration say that the President is putting environmental concerns ahead of much needed economic growth. Keystone, they say, is a way for America to become energy independent even as the pipeline creates jobs along the path of its construction.

One reason Keystone XL has been so delayed is the fierce resistance the project has met from environmentalists.

As Bloomberg notes, the Keystone proposal has also run into pushback from farmers in Nebraska who don’t want the pipeline crossing through their fields or over their water sources.

Canada, too, has seen its own share of obstacles in attempting to exploit its oil sands. Northern Gateway, an alternate proposal to run a pipeline west to Canada’s Pacific shores, has met with resistance from aboriginal peoples in areas the pipeline would cross, as well as from Canada’s own environmentally-minded citizens. Despite those protests, Canada’s government approved the Northern Gateway project. Opponents in British Columbia, though, still threaten to block the pipeline, according to The New York Times.

One reason Keystone XL has been so delayed is the fierce resistance the project has met from environmentalists.

With 168 billion proven barrels of oil, though, Canada’s oil sands represent the third-largest oil reserves in the world, and that oil is likely to find its way to shore one way or another. With Keystone XL seemingly on indefinite hold, big players in Canada’s oil industry are expected to file applications to proceed with the Energy East proposal and approval could come as early as 2016.

“[It’s time for] a real shift in the mindset of Canadian business culture,” one oil executive told a British business audience in September. Downplaying the importance of Keystone XL, that executive noted that America “is unlikely to be a fast-growing economy for many years to come,” saying that Canada needs to look away from its century-old policy of relying heavily on the United States for exports.

Still, the push behind Energy East could be a ploy to get American bureaucrats up and moving. The Keystone project is likely the easiest option Canada has at its disposal to exploit its oil sands, and it could be that the threat of cutting America out of the deal entirely is enough to clear the clog that is keeping the oil from flowing south.

[Images via PBS, Canadian Oil and Gas, Atlantic Sentinel, Bloomberg, and Huffington Post]

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