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If We Build It, They Will Come: Is the Keystone XL Unstoppable?

Apr 1, 2013 | Uncategorized


Oil Eyes thumbMotiva’s Port Arthur refinery is too immense to comprehend from one vantage point. It sits on 4,600 acres of marshland a mile northeast of the rotted-out central business district of a Gulf Coast town that white families abandoned 40 years ago. Motiva’s heavily guarded five-lane entrance has the look and feel of a military compound in an Islamic Republic. Inside the six-mile perimeter, yellow buses move workers between tank batteries, 30-story crude distillation units, and hydrocrackers that produce gasoline and diesel.

Motiva’s owners—Royal Dutch Shell and the Kingdom of Saudi Arabia’s state-owned Aramco—have completed a $10-billion expansion that required 700 miles of new pipe and came in $3 billion over budget and two years late.

When CEOs Peter Voser and Khalid Al-Falih stood beneath company banners and ceremonially opened a valve on May 31 of last year, Al-Falih congratulated himself for his company’s resolve.

“Rather than cut and run, we pressed ahead with our longterm commitment,” he said, according to Reuters. “We’re confident the return of the investment, despite the cost, will be very healthy.”

A week later, a few gallons of “caustic” used to sweeten the cheap, sour crude the refinery was redesigned to process accidentally leaked into a pipe and vaporized when exposed to temperatures between 300 to 400 degrees Fahrenheit. There was no apparent environmental threat, according to a remarkable postmortem done by Reuters when Motiva refused to speak to the press. But one large processing unit that was just coming on line was destroyed.

Motiva’s $10 billion wager increased to $10.3 billion when its $300 pipestill had to be rebuilt. Today, the refinery is cooking heavy, South American and Saudi crude and making money for its investors. But at 600,000 barrels of daily capacity, Motiva only wins big if Secretary of State John Kerry signs off on the Keystone XL pipeline.

The magnitude of the investment, with one refinery in Texas spending more than the Canadian company developing the pipeline, defines the odds confronting environmentalists working to stop a $7 billion pipeline designed to move the dirtiest oil on the planet from Canada to the Gulf Coast.

The campaign that environmental groups are conducting has been organized, visible, and impressive, and has included  marches, protest, and acts of civil disobedience across the country. On Presidents Day, 35,000 pipeline opponents gathered at the White House and hundreds were arrested.

But environmental nonprofits cannot compete with corporations in the campaign that is conducted indoors. At $2.2 million, TransCanada Corp., which is building the pipeline, has spent more money lobbying State Department officials than the environmental organizations collectively have spent on their modest lobbying campaign.

Like the other corporate interests behind the campaign to build Keystone XL, TransCanada hires from the A-List.

One example: In 2010, Friends of the Earth filed a Freedom of Information Act request for communication between TransCanada lobbyist Paul Elliott and the State Department, where the decision for a presidential permit will be made because the pipeline crosses an international boundary.

At the time the FOIA request was filled, Elliott had billed TransCanada $310,000 for work in 2010. (In 2012, he billed for $850,000, according to OpenSecrets.org.)

Most lobbyists go out of their way to avoid the perception that they are trading on past relationships. Yet when Politico questioned Elliott’s bigfoot bona fides in 2001, he fired back in an e-mail:

“On the Hillary Clinton for president campaign, its (sic) true I was not a senior official. I was responsible for getting the candidate’s name on the ballot in countless states and hand picking nearly two thousand pledge delegates committed to former Senator Clinton.”

Elliott’s history with Clinton’s political appointees at the State Department allowed him work at the top of the food chain. He relentlessly pursued Mara Toiv, the executive assistant to Clinton Chief of Staff Cheryl Mills, to arrange meetings for TransCanada’s CEO and other executives. In one internal e-mail, Toiv told a colleague that she and Mills knew Elliott from the campaign.

Elliott also worked a friend in the U.S. Embassy in Ottawa, who told him in an e-mail that, “It’s precisely because you have connections that you’re sought after and hired.”

“Environmental groups don’t have access at that level,” said Friends of the Earth Climate and Energy Coordinator Damon Moglen.

It is, in fact, access that only money can buy.

Seven environmental groups opposing the pipeline collectively spent $1 million between 2008 and 2012, according to ThinkProgress. In the same period, 31 corporations and trade associations spent a combined $59.8 million.

On February 23 of this year, Friends of the Earth sued the State Department, which had failed to respond to a second Freedom of Information Act request that focused on other TransCanada lobbyists with close ties to Hillary Clinton.

They include Gordon Giffin at McKenna, Long & Aldridge, and James Blanchard at DLA Piper, who were fundraising bundlers for Clinton’s 2008 campaign. Griffin was also Bill Clinton’s ambassador to Canada. DLA Piper was the largest source of corporate and PAC contributions to Hillary Clinton in 2008. Friends of the Earth is also requesting correspondence between the State Department and James Berman, who was the director of delegate selection in Barack Obama’s 2008 primary campaign (after working 17 years for Richard Gephardt, a Democrat who served as both Majority Leader and Minority Leader in the House).

I spoke to Moglen three days after the lawsuit was filed. Friends of the Earth was going to court, yet he was encouraged by John Kerry’s record on environmental protection. Moglen said if the Kerry State Department would begin its environmental assessment anew, a careful examination of the project’s impact of the environment would be enough to stop it.

He added that there was another theory informing the lawsuit. Friends of the Earth wanted to know if lobbyists had engaged in one final push to get the pipeline approved by the State Department before John Kerry replaced Hillary Clinton.

Three days after I spoke to Moglen, the State Department released a draft supplemental impact statement that might have confirmed his suspicions. The report found no environmental justification to deny a presidential permit for the pipeline, eliminating the environmental equation from a decision Obama put off in 2012, when he described a previous environmental impact statement as a “rushed and arbitrary” response to an unreasonable deadline imposed by the Congress.

The new environmental impact statement leaves the president stranded in Port Arthur, where he is left to answer: Is the pipeline in the United States’ economic and energy interests?

The answer is likely to be “yes.”

Like much of Texas, this city at the terminal  point of the Keystone XL pipeline is betting on the boom. And there is a sense of inevitability here regarding Canadian tar sand oil. Motiva is only one of four refineries in Port Arthur, situated in industrial districts where they pay negotiated fees in lieu of property taxes. Valero’s refinery, immediately southwest of Motiva, has also increased its capacity and retooled itself to process more than 150,000 barrels a day of what a company press release describes as “high-acid, heavy sour, Canadian crude.” Motiva and Valero could swallow up most of the 830,000 barrels Keystone XL will move south each day.

“Between here and Corpus Christi, we have the five largest refineries in the United States,” Port Arthur Chamber of Commerce President Bill McCoy told me in an interview in his office.

“Oil is this county’s life blood. Multiply 600,000 barrels a day times the price of one barrel of oil. That’s what that pipeline means to us on the Gulf Coast.”

McCoy dismissed concerns about the high-sulfur Canadian oil.

“People say this is dirty oil and the Motiva expansion will make the air dirtier,” McCoy said. “But that’s an efficient modern plant. These modern plants clean oil.”

There is little daylight between the Port Arthur Chamber of Commerce and organized labor.

“You are in a corner of Texas that is pro-business and pro-oil,” Eric Hamilton told me. Hamilton is the chairman of the United States Steelworkers group at Motiva.

“There are some people who oppose the pipeline,” Hamilton said. “A large group of farmers and ranchers is against it.”

“But this pipeline is a good thing,” Hamilton said. “From my personal point of view, we need oil to run our refineries and the pipeline gets us a more diverse source of oil.”

Hamilton cautioned that the industry should not get a “free pass” on the environment, because “historically, they have a poor record.” His concern was the local environment in a city with four refineries and several chemical plants.

Hamilton leads a workgroup of 750. The union workforce at Motiva includes another USW work group of 150 as well as 100 members of the International Brotherhood of Electrical Workers, out of approximately 1,600 employees.

For organized labor, the Keystone XL pipeline means union scale plus overtime in a state where the minimum wage is often the maximum wage and climate change is an abstract issue.

James Hansen, the NASA climate scientist and Columbia professor who has been a bellwether on climate change since the 1980s, warned that it is “game over” for the climate if the Canadian tar sands are developed. And “Canada’s tar sands contain twice the amount of carbon dioxide emitted by global oil use in our entire history.” Hansen’s message doesn’t seem to register on the Texas Gulf Coast.

Beyond refined oil products, Robert Rauschenbeg and Janis Joplin are Port Arthur’s most noteworthy exports. Rauschenberg “got out as soon as I got out of the Navy,” he told me in a 1997 interview in Houston. Joplin learned her chops listening to the Boogie Kings at the Big Oaks across the river in Vinton, Louisiana, then left for Austin as soon as she graduated from high school.

The city has since been shaped by a much larger white diaspora driven by federal court orders enforcing the 1954 Brown v. the Board of Education decision—in the early 1970s.

And by the proximity of the refineries. Wealth followed white flight. In Port Arthur, where blacks and Hispanics are 71 percent of the population, median household income is $32,178. Median household income in Port Neches, which is 91 percent white and three miles from what once was a central business district in Port Arthur, is $52,729.

Demographics change, but Port Arthur remains a refinery town. Friends of the Earth’s Moglen says that a reasonable assessment of the environmental impact of the pipeline would take into account the effect of increased production in an industrial community already heavily impacted by air and water pollution—in a region that environmental activist Diane Wilson describes as a “national sacrifice zone.”

Yet the State Department has green-lighted the decision for Obama and it appears that corporate lobbying has prevailed. Environmental organizations might have more success in the courts, where money is not completely determinative.

Leaving Port Arthur, I saw an elderly man standing in front of a brick house in tidy African-American neighborhood that sits in the shadow of the Motiva refinery. I asked if he was ever concerned about the fumes.

“Not me,” he said. “That’s the smell of money.”

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