Comment: Let’s make a deal

courtesy wikipedia

Few debates in energy have been more contentious than Keystone XL (KXL) pipeline. Environmental groups opposed the pipeline and turned out a grass roots movement that astonished even battle weary Enviros. It also caused serious problems for the industry as their assets became stranded and they were forced to ship crude by rail and barge. It is estimated that this amounted to approximately $17B over the past few years in lost revenue due to public accountability campaigns. But it looks as though the Obama Administration and Big Oil merely traded KXL for Arctic drilling rights.

An announcement was made, rather quietly, this month. It came from the Department of Energy’s Oil Council which is made up largely of energy company executives, some government officials, analysis firms and nonprofit organizations. The Council released a study which was produced by the National Petroleum Council at the request of Energy Secretary Ernest Moniz. It claims that the U.S. should begin Arctic drilling immediately.

Then another announcement was made a day later. The Obama Administration granted access to Shell for Arctic drilling. According to FuelFix: “The Obama administration reaffirmed a 2008 government auction of Arctic drilling rights, delivering a major victory to Shell Oil Co. as it aims to resume exploratory drilling in the Chukchi Sea this summer.”

So was this merely a choice between the lesser of two evils: oil sands vs. Arctic?

Arctic drilling, Big Oil would presumably argue, benefits the US. KXL would primarily benefit Canada. Oil sands are also one of the most vulnerable of all oil projects due to its GHG profile, one of the highest among hydrocarbons. So it stands to reason that oil sands may potentially have less of a future than crude coming from conventional drilling projects. And the Arctic happens to be a conventional drilling project

But the Arctic could be. At least according to this oil industry study. The authors wrote:“To remain globally competitive and to be positioned to provide global leadership and influence in the Arctic, the U.S. should facilitate exploration in the offshore Alaskan Arctic now.”

One day later, the door was opened for them to do just that.

So each side won something. The Enviros got their cancellation of KXL.  And Big Oil got drilling rights in the Arctic which they probably need more than we suspect.

(Full comment by Deborah Lawrence (Executive Director of U.S. Energy Policy Forum) found at Energy Policy Forum)