Keystone delays disappoint Houston refining CEO

Delays of the Keystone XL pipeline appear to be frustrating the CEO of at least one Gulf Coast refiner.

LyondellBasell CEO Jim Gallogly said he was unsure if the pipeline that would connect oil sands fields in Canada with the Texas coast would ever be built.

“I think it’s still up in the air,” Gallogly told reporters Monday at the opening of the company’s new research center in Channelview.

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That would be a disappointment, since LyondellBasell’s Houston refinery is geared toward processing heavy crudes similar to oil sands crude from Canada.

“We have a refinery here in the Houston area and that refinery is absolutely perfectly fit to take that heavy crude from Canada, from the tar sands operations, and process it here,” Gallogly said.

He said the refinery currently processes crude from Venezuela, Mexico and Brazil, but said the Keystone XL pipeline would bring a cheaper supply to the region.

“That crude from Canada sells at a steep discount because it doesn’t have the transportation opportunity to come down and be sold here,” Gallogly said. “We’re anxious to see that get approved.”

But he admitted that he was not confident it would happen.

The Keystone XL northern leg to Canada has been delayed by federal environmental reviews. It requires presidential approval to move forward with a cross-border connection.

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Environmentalists have argued that construction of the pipeline would encourage more production of oil sands crude, which emits more carbon into the atmosphere than conventional oil production and could therefore have a larger influence on climate change. They also criticize oil sands crude itself, which is made up of a solid, hydrocarbon-bearing substance called bitumen that has to be diluted for transportation. Diluted bitumen is especially challenging to clean up when spilled, they say, frequently referencing a 2010 spill of the substance into Michigan’s Kalamazoo River that has required a more than $800 million cleanup effort that is ongoing.

Regardless, the southern leg of Keystone XL is nearly complete and will offer another avenue for a variety of oil types to flow south to Gulf Coast refineries.

But the northern connection to Canada is what has most refineries interested in the pipeline.

“I would be so bold as to say it would be a wonderful thing for our country if it were to be approved,” Gallogly said. “Why wouldn’t we want a secure source of cheap feedstock to help supply the refineries that we have today from our neighbor up north?”

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