Keystone XL or Not, Canadian Crude Already Shipping Out From U.S.

Photo by Terrence Henry/StateImpact Texas

The Keystone XL pipeline under construction in East Texas in the Spring of 2013.

Congress’ attempts to force approval of the Keystone XL pipeline have re-ignited debate over the project, which would allow more crude oil to flow from the tar sands of Canada to refineries on the Gulf Coast.  It’s also re-ignited debate over what could happen to that oil once it gets to Texas.

President Obama and opponents of the pipeline say it will be used as a funnel to export Canadian crude to international markets. TransCanada, the company building the pipeline, has been unequivocal when asked about that.

“It makes no sense to see anything getting shipped offshore,” CEO Russ Girling said about a year ago when the southern leg of the pipeline opened in Texas. “And those that continue to make those kind of comments, there’s no factual underpinning, no evidence, no basis for those kind of claims.”

Except there is.

Under U.S. law, it’s relatively easy to “re-export” Canadian crude. It’s one of many exceptions to a loose ban on exports, according to Sarah Emerson, president of the consulting group Energy Security Analysis.

“You can export Canadian crude. You can export Alaskan crude. You can export crude to Canada. You can export California crude,” she says. “I mean there’s so many variables that we’re exporting.”

And if the pipeline company wanted to stop exports of the crude it carries, it couldn’t, says Jacob Dweck, a lawyer specializing in oil exports.

“They are a common carrier, they are subject to [Federal Energy Regulation Commission] regulations and they have no way of policing what is exported,” Dweck says.

The real question is whether there’s an international market for tar sands crude. Dweck says there isn’t one right now, but there could be down the road. Some companies are already trying it out. The U.S. Energy Information Administration says starting this April, small amounts of Canadian crude started shipping from the Gulf Coast.