The renewable energy advocacy group Oil Change International released a report on Wednesday claiming that oil from Canadian tar sands imported to the United States through the proposed Keystone XL pipeline “would primarily be exported rather than used domestically in the U.S,” Politico reported.
The report specifically and repeatedly cited Texas oil company Valero as emblematic of that strategy. Valero “has locked in at least 20 percent of the pipeline’s capacity,” the report claims. It insists that the company will use its new supplies of Canadian crude to bolster its exports, rather supplement American energy use.
The report counters recent efforts to present the pipeline as a means to draw business away from oil rich Middle Eastern regimes that often work against American interests abroad.
Whether the company will export the oil and whether it will reduce the industry’s dependence on OPEC, though, are two different questions. Some of Valero’s largest export markets are in South America and Europe. If those markets can replace OPEC crude with oil from Canadian tar sands, Middle Eastern oil exporters will still enjoy a smaller share of the global market.
Bill Day, Valero’s executive director for media relations, objected to the report’s conclusions regarding the company’s export strategy in an email to the Heritage Foundation on Wednesday. Day called the report “misleading” and offered this reply, which also addresses other claims made in the Oil Change International report:
While Valero has said that it is exporting an increasing amount of products, particularly from the Gulf Coast, the volume of exports remains relatively small. The vast bulk of our products are made for domestic consumption.
I also take issue with the statement that “…rather than serving U.S. interests, Keystone XL serves only the interests of tar sands producers and shippers, and a few Gulf Coast refiners aiming to export the oil.” In fact, the Keystone will generate 20,000 jobs, increase property values and generate tax revenue that will directly benefit hard-hit cities, counties, school districts, etc.
The Canadian oil from the XL pipeline would supplement supplies of less-expensive heavy sour crudes. The pipeline would provide a steady supply of oil from a nearby and friendly trading partner, in a manner that is more efficient than bringing cargoes of oil in by ship. The Oil Change International report fails to mention that Valero is rapidly increasing the amount of Texas oil it processes at our McKee and Three Rivers refineries, and that we recently opened a pipeline to our Ardmore, Okla. refinery in order to process domestically produced oil stored at Cushing.
Lastly, I dispute the statement that Valero was “behind last year’s attempt to overturn California’s clean fuel standards.” As the operator of two refineries in California, Valero was among the supporters of Proposition 23, which would have postponed implementation of California’s carbon dioxide cap-and-trade regime until the economy improved in that state. Prop 23 had nothing to do with clean fuel standards.