Wash. Post Fact Checker Wrongly Claims State Dept. Said Majority Of Refined Keystone XL Product Would Remain In The U.S.

Kessler: IHS Finding That Most Refined Keystone XL Products Would Be Consumed In The U.S. “Mirrors The Conclusions” Of The State Department. On March 2, The Washington Post's Glenn Kessler devoted his “Fact Checker” blog to criticizing President Obama's recent statement that the tar sands oil that would flow through the Keystone XL pipeline “bypasses the United States.” Kessler noted that the energy consulting firm IHS Energy recently “concluded that 70 percent of the refined product” from Keystone XL's oil “would be consumed in the United States.” He then claimed that the IHS report “mirrors the conclusions” of the State Department's Final Environmental Impact Statement on Keystone XL, citing portions of the State Department report that addressed the likelihood of crude oil exports -- but not the likelihood that refined products would be exported.  Kessler declared it “especially strange” that President Obama would ignore the State Department's findings on the issue, and later chastised Obama for not “tak[ing] the time to review the State Department report”: 

Current trends suggest that only about half of that refined product would be exported, and it could easily be lower.

A report released in February by IHS Energy, which consults for energy companies, concluded that “Canadian crude making its way to the USGC [Gulf Coast] will likely be refined there, and most of the refined products are likely to be consumed in the United States.” It added that “for Gulf refineries, heavy bitumen blends from the oil sands are an attractive substitute for declining offshore heavy crude supply from Latin America.” It concluded that 70 percent of the refined product would be consumed in the United States.

Enviromentalists [sic] dismiss IHS as a biased source, but the analysis mirrors the conclusions of the State Department's final environmental impact statement on the Keystone XL project. This is what is especially strange about Obama's remarks, as he appears to be purposely ignoring the findings of the lead Cabinet agency on the issue.

[...]

When Obama first started making the claim that the crude oil in the Keystone pipeline would bypass the United States, we wavered between Three and Four Pinocchios -- and strongly suggested he take the time to review the State Department report.

Clearly, the report remains unread. [Washington Post, 3/2/15]

But State Dept. Did Not Find That Majority Of Refined Oil Products From Keystone XL Would Be Consumed In The U.S

State Department's Draft Environmental Impact Statement Said Less Than Half Of Refined Products In Gulf Coast Region “Go To The Domestic Market.” In the “Market Analysis” section of its Draft Supplemental Environmental Impact Statement (DSEIS), the State Department wrote that “almost half of PADD 3 refined products go to the domestic market.” PADD 3 is the name for the refineries in the Gulf Coast region, including refineries in New Mexico, Texas, Arkansas, Louisiana, Mississippi and Alabama. [U.S. State Department, Draft Supplemental Environmental Impact Statement, March 2013; U.S. Energy Information Administration, 2/7/12]

State Department's Final Environmental Impact Statement Noted That Refined Product Export Levels Have “Increased” And “Remain Elevated” in Parts Of U.S. The “Market Analysis” section of the Final Supplemental Environmental Impact Statement (FSEIS) did state that exports of Canadian crude oil are “unlikely to be economically justified for any significant durable trade given transport costs and market conditions,” as Kessler noted. However, the report stated that refined product export levels have “increased” and “remain elevated” in areas of the U.S. where less Western Canadian Sedimentary Basin (WCSB) oil is used. The FSEIS argued that Keystone XL would not cause an increase in refined oil exports, but conceded that “WCSB heavy crude may be refined in the United States and processed into petroleum products that are exported.” From the report:

Finally, according to the modeling analysis above, U.S. product exports are not sensitive to different scenarios of pipeline development. It is possible that WCSB heavy crude may be refined in the United States and processed into petroleum products that are exported. Where less WCSB crudes are used in the United States, U.S. refined product exports remain elevated, in part with crudes from Latin America and the Middle East substituting WCSB crudes. Refined product export levels have already increased and some of the crude used is from foreign sources. As this may already be occurring, it may continue with or without the proposed Project. [U.S. State Department, Final Supplemental Environmental Impact Statement, January 2014]

Groups Opposing Keystone XL Have Noted That Its Oil Would Go To Refineries That Export Most Of Their Refined Products

Oil Change International's Stockman: Keystone XL “Would Serve A Very Specific Set Of Refineries” That “Export More Than 50% Of Their Products.” In response to the IHS report, Oil Change International Research Director Lorne Stockman noted that IHS's conclusions were based on the “entire [PADD 3] market” when in fact Keystone XL would only serve a set of “export oriented refineries” that are located next to deep water berths and geared towards exports:

IHS states that only a third of [U.S. Gulf Coast] refined products are exported and this would not change with more Canadian crude. They therefore claim that 'most' of the products refined from the KXL crude would stay in the United States. But what they failed to point out is that the pipeline would serve a very specific set of refineries within the Gulf Coast refining market, not the entire market (known as PADD 3). These refineries in east Houston, Port Arthur, Texas and Lake Charles, Louisiana export more than 50% of their products. Their location next to deep water berths, and their product slate that is configured for popular export products such as diesel and petcoke, mean they lead the booming refined products export market in the US Gulf Coast in a way that refineries farther east and inland do not. [Oil Change International, 2/23/15]

Stockman and NRDC's Swift: Keystone XL Refineries Already Export “Over Half” Of Their Refined Products And “Are Very Likely To Be Exporting An Even Larger Share.” In response to a similar article by the Washington Post Fact Checker from November, Stockman and Natural Resources Defense Council (NRDC) Staff Attorney Anthony Swift wrote: “By only considering exports of certain refined products and including 'Gulf Coast' refineries that don't have access to the coast and wouldn't be supplied by Keystone XL, the Fact Checker underestimates the percentage of refined product being exported by coastal refineries in the Gulf Coast -- concluding only 35% is exported. It's actually over half.” Citing the most recent available data from the Energy Information Administration, Stockman and Swift noted that "[c]oastal refineries in Texas and Louisiana produced about 6 million [barrels per day] of refined product, of which they exported 3.1 million [barrels per day] last month -- over half of their production."  They also cited several industry statements about exports as evidence that going forward, “refineries interested in heavy tar sands from Keystone XL are very likely to be exporting an even larger share of their product.” [Natural Resources Defense Council Switchboard Blog, 11/20/14]