Will a decision on the Keystone XL pipeline be tied to emissions action by the Obama administration? During today's OnPoint, Cindy Schild, senior refining and oil sands manager at the American Petroleum Institute, discusses the impact of the Keystone decision on the future of clean energy and emissions in the United States. Schild also weighs in on whether Congress should intervene to guarantee any oil coming from the Keystone XL pipeline and refined in the Gulf is sold to the U.S. market.
Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Cindy Schild, senior refining and oil sands manager at the American Petroleum Institute. Cindy, thanks for coming on the show.
Cindy Schild: Thanks for having me.
Monica Trauzzi: Cindy, the White House, as Heather Zichal hinted last week, that the administration would likely be moving forward with Clean Air Act regulations for emissions reduction from existing power plants. There's some behind-the-scenes talk about whether an announcement like that could be tied to a Keystone approval. What are you hearing on that front and what's your take on the likelihood of something like that happening?
Cindy Schild: We're not hearing anything on the timing or what it may or may not be tied to regarding the decision on Keystone. At this point we are waiting for the final environmental impact statement, and then there'll be a national interest determination. So from a timing standpoint, we'd love to see it the sooner the better. We've been thinking it could be approved at this point already. So what it's linked to, it's certainly been a project that's been a political football, so it may or may not be linked to another effort.
Monica Trauzzi: From what you've seen from the Obama administration, do you think a move like that would be likely?
Cindy Schild: I think anything is potential in this debate. Any of the projections that we've seen so far in this process going on nearly five years, and it's been one delay after another or one switch or change of plans. So as far as timing and which direction they go and how they tie it or what they may or may not tie a decision to, who's to know?
Monica Trauzzi: Do you believe that the Keystone debate has become sort of the symbolic debate over whether the Obama administration is going to move forward with clean energy and take the United States into its clean energy future?
Cindy Schild: I absolutely think it has become a symbol. I think it's become a symbol for an off oil agenda or a climate change direction more than any of the debate is about the project itself. So certainly towards moving a cleaner energy agenda in their views. You know, you look at the nature of a lot of the oil that we're talking about, it's comparable to oils we're already refining in this country.
Monica Trauzzi: But it's oil. We're talking about emissions here, so it's not clean energy.
Cindy Schild: Sure, and we are certainly supportive of all forms of energy. We believe all forms should be part of the equation. We just don't believe that a government should pick winners or losers, and one form should be penalized. And when you look at all projections going out for the next foreseeable future, we have oil and gas being the majority of the energy source that consumers are going to use. And they're not interchangeable either. You can't just have wind run your car in a day. So it's going to be a process.
Monica Trauzzi: We had climate activist Tom Steyer on the show recently, and he said that people around the world are watching what the president will do on Keystone like hawks, and it's going to impact how they behave towards the United States, and also the kinds of decisions that they make in their own countries. On the international stage, how big of a negotiating challenge could the approval of the pipeline cause for the United States?
Cindy Schild: I think if the president wants to be a leader on this project as was discussed with Mr. Steyer, I think one way to lead is to follow what your Americans, what your constituents are saying. And in this country we're looking at the Americans, poll after poll shows vast support for this project, for building the project, for Canadian oil sands in general. You look at our relationship with Canada. We're the number one trading partnership with Canada. You look at the economic benefits of oil sands, aside from just this one project, one pipeline project, is tremendous. Ninety cents on the dollar we have returns from our trade with Canada. We don't get that from other countries. Venezuela 27 cents. And the job creation of developing this resource and refining it in the U.S. So we can add value by bringing it to our U.S. refineries and making it into more valuable products.
Monica Trauzzi: You mentioned the polling. API released a poll recently showing that the majority of Americans support the pipeline. But even if Americans support it, isn't it the responsibility of the president to look long distance in the future and make projections on what's best for reducing emissions and moving the country towards a clean energy future?
Cindy Schild: Sure, absolutely. And when you look at what Canada is doing, and when you look at our country and the progress that we have made, it had been progress, and it has been significant. It's an issue that the industry takes seriously, and certainly is something that the president should be looking at, but in the right ways. And when you talk about long term, absolutely we should be looking long term as opposed to myopically, as opposed to making it about one particular project that time and time again the State Department, other assessments have proved, really isn't about climate change, wouldn't impact climate change. This is a resource that is being developed. There are five other pipelines on the table to bring it to market. So whether that goes to the US or elsewhere is going to be up to the market. And if we want to invest in our energy future and the benefits for our consumers, we need to be looking at that long-term strategy, and the president should absolutely be.
Monica Trauzzi: And there's been a lot of speculation on where exactly the Keystone oil would go once it's been refined in the Gulf. Is there a deal to be made with refiners, if it's the intention of the U.S. to benefit from this oil? Can a deal be struck with the refiners to keep the oil here at home?
Cindy Schild: I think that we certainly, personally, in my organization, I would not support any government interference in the marketplace. You've seen the supply flows change, you see the industry which has a history of bringing fuels, quality fuels, reliably to consumers. So we wouldn't be supportive of policies that are going to restrict that. When you look at our exports now, last year, 2012, 90 percent of the fuels of the crude refined was kept here at home, and of that 10 percent exported, more than half of that was products that we don't even use here in this country. So it is important to have all the information when making decisions as well.
Monica Trauzzi: How are refiners preparing themselves for a potential influx of Canadian crude if the pipeline is approved?
Cindy Schild: Good question, and the refinery component is certainly one that is another part of this equation, and the jobs there, the jobs that can be maintained again in the value added. So the oil that would come from Canada's oil sands down to the Gulf -- this pipeline running from Canada, or Alberta, down to our Gulf Coast refineries -- would be of heavier nature, and the oil that we used to import and used to refine more frequently in the Gulf was from Venezuela and Mexico, also heavy blends. So largely our refining complex in the Gulf is already heavily equipped, have invested billions of dollars to be able to process this heavier crude, which is quite similar to the crudes already being refined there. So they've made the capital investments. They still have to meet the same air emission standards, and the same stringent fuel quality standards. So nothing changes based on the crude oil that is entering the refinery. And one other point that is often left out of this conversation as well is 25 percent of the capacity of this pipeline will be picking up domestic crude, the light crude oil that we are producing in the U.S. So there are two types of oil in this pipeline.
Monica Trauzzi: All right, Cindy, we're going to end it right there. Thank you for coming on the show.
Cindy Schild: Thank you.
Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.
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