Proof the Keystone Debate Was Pointless

Think back to the Keystone XL pipeline debate (sorry to make you do this). If you recall, the big complaint environmentalists had with the bit of rather mundane energy infrastructure was that it would enable crude production in Canada’s oil sands—a particularly energy-intensive and environmentally degrading enterprise. What we said then—and what the State Department said in its own review of the project—was that that Albertan crude was coming out of the ground regardless of whether or not this one pipeline was constructed. The oil sands are just too big, and the world is (sorry greens) so reliant on oil that the notion that a minor speed bump like a failed permit for an admittedly important project that would help transport that heavy crude to American refineries was downright foolish.

We’re getting confirmation of that today, as energy analysts are predicting a sharp increase in oil sands crude output over the next decade, despite the fact that Keystone is no longer in play. Reuters reports:

Canada’s oil sands production will grow by 42 percent to 3.4 million barrels per day by 2025, most of which will come from the expansion of existing facilities rather than new projects, analysts at IHS Energy said on Monday. […]

“We expect oil sands producers to focus future investments in the coming years onto their most economic projects – which we expect to be expansions of existing facilities,” said Kevin Birn, director for IHS Energy. “Expansions of existing facilities are better understood, quicker to first oil and lower cost to construct,” he added.

IHS estimates that since 2014, the cost of building and operating a new oil sands plant has fallen by $10 a barrel, and the least expensive project – expanding an existing thermal oil sands operation – could break even at a U.S. crude price of around $50 a barrel.

The only people that will be surprised by this news will be the eco-activists that bizarrely chose this pipeline as a line-in-the-sand moment. Congratulations, greens! You scuppered a project between the United States and its most important trading partner for no reason.

Trudeau has his work cut out for him as he approaches the task of expanding Canada’s pipeline network to account for these new supplies, a network which is already running near capacity. But it will be worth the effort, because at stake is a place in what’s looking likely to be one of the world’s new energy producing powerhouses. Between Canada’s oil sands, America’s shale, and Mexico’s newly privatized oil sector, North America’s energy star is on the rise in the 21st century.

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