Oil Boom Shifts The Landscape Of Rural North Dakota

Language on the proposed Keystone XL pipeline buried on page 491 of the International Energy Agency’s most recent World Energy Outlook may provide more fuel for opponents of the project, but it could offer a leg up to project proponents, as well.

The WEO 2013 forecasts that oil sands production will average 4.3 million barrels per day in 2035, up from 1.8MM bbl/d last year, “contingent on the construction of major new pipelines to enable the crude to be exported to Asia and the United States.” The pipelines in question are Keystone XL, which would link Alberta oil sands to Gulf Coast refineries, and two pipelines from Alberta to Canada’s western coast to allow for Asia-Pacific exports.

In a later section of the report, the IEA states that “if the controversies over the Keystone XL pipeline and the pipelines from Alberta to the Brish Columbia coast were to be resolved quickly, oil sands producon could easily grow 1MM bbl/d higher than we project.”

Ben Geman at the Hill noted that that statement backs up claims by Keystone XL opponents.

“That’s a crucial point for opponents of Keystone, who argue that building that project and other major pipelines would worsen climate change by enabling expansion of the carbon-intensive oil sands projects,” Geman wrote.

But there is an additional factor to consider, and that is the ammunition that the statement gives to the pipeline’s proponents. This hypothetical situation that could add 1MM bb/d to oil sands production by 2035 is part of the IEA’s low oil price case, which is “based on the premise that supply developments in a number of countries turn out more positively than we project in the New Policies Scenario”.

Environmentalists may have more backing for their claims that the pipeline would spur more oil sands development, but a solid argument that quick resolution of the impasse over the project could lead to lower oil prices is also potent political firepower.