A tale of two pipelines

No, not this one. Not the other one, either.

An excellent story from Greenwire today on the controversy over new EPA greenhouse gas regulations briefly contained a common misconception about a proposed oil refinery in South Dakota.

First, a bit of background. The refinery, which Hyperion plans to build near Elk River Point, South Dakota (just across the state line from Sioux City, Iowa), would be the first new refinery built in the United States since 1976. It would essentially double the refining capacity of Minnesota, Wisconsin and the Dakotas combined, and would also double South Dakota’s carbon emissions footprint.

Two pipelines are involved: Keystone 1, built by TransCanada, is currently operating in eastern South Dakota, not terribly far from the Hyperion site. Keystone XL, which would also be built by TransCanada, is in the planning stages and has yet to be approved by the State Department.

The story (which was quickly and courteously corrected by reporter Gabriel Nelson) said that the controversial Hyperion refinery would be supplied by the equally controversial Keystone XL pipeline.

The confusion is understandable – Midwest Energy News made the same mistake in October when quoting from a story in the Iowa Independent. Earlier media coverage has discussed the Keystone 1 pipeline as a possible supplier.

Thankfully, Paul Blackburn from Plains Justice was able to clear things up. Here’s what he shared at the time:

  • Keystone XL would pass through western South Dakota, hundreds of miles from the Hyperion site.
  • Hyperion’s capacity would be 400,000 barrels per day. The Keystone 1 pipeline, which is closer, has a capacity of 591,000 barrels per day, 530,000 of which is locked up in long-term contracts averaging 17 years.
  • TransCanada’s VP overseeing the Keystone pipeline system had said in a public meeting that his company would not be shipping to Hyperion.
  • Pipeline companies make more money the farther they ship the oil, so TransCanada has no incentive to ship only as far as South Dakota and leave the rest of its capacity unused.
  • So in order for Hyperion to function, it would need to either build a link to the Keystone XL pipeline or find some other way to ship crude oil from Canada.

    Photo by Shannon Patrick via Creative Commons

    2 thoughts on “A tale of two pipelines

    1. Good article Ken, One correction. It would be located near Elk POINT, SD, 15 Miles north of Sioux City, IA.