Wow, The Keystone Story Just Got A Bit More Complicated -- This Is Huge -- Yes, Virginia, There Is A Santa Claus

Updates

August 29, 2019: update here, same as the January 26, 2017, update.


January 26, 2017: update, dated August 22, 2016. 

Original Post

 

For background: back in the 1990's it was clear that the US needed a new source of oil. Studies suggested that western Canada could supply the US all the oil it needed, but it was heavy oil and US refineries were built to refine light oil.

So, US refineries spent billions converting their ability to refine heavy oil (including Venezuela heavy oil) in existing refineries along the coast. No one even imagined there would be any issue transporting Canadian heavy oil to the Gulf coast refineries. But then something funny happened in Nebraska.

The Keystone XL was killed; all hell broke loose; there was a resurgence in the US railroad industry, pipelines were reversed; and engineers starting working the problem of refining all that light sweet oil no one knew about in the 90's in refineries that had been converted to heavy oil at great, great expense.

I believe the issue of converting refineries is still being worked, and I believe RBN Energy recently had an essay about blending light and heavy oil that the current US refineries could use.

That brings me up to date. Whether it's accurate or not, I don't know. That's my worldview.

Now, what would happen if like a Greek tragedy, deus ex machina, a reservoir of heavy oil, just like Canada's heavy oil happened to be located right next to those US refineries along the Gulf coast that had expected to refine western Canadian heavy oil?

It would be too fantastic. It would a true deus ex machina. It would be even something Hollywood could not make believable on the big screen.

But that's apparently what the Financial Post is reporting: God, or Allah, or someone more powerful than President O'Bama is so upset about the Keystone being killed, that he/she/it placed 7.5 billion bbls of Canadian heavy oil right next to the Gulf coast refineries. To put an exclamation point to the story, he/she/is placed 350 million bbls of that oil just 50 feet below the Alabama and Mississippi surface.

At the linked article:

The two southern US states signed a memorandum of understanding over the weekend to explore the potential of oil sands resources in the Hartselle Sandstone play that stretches from north-central Alabama to northeastern Mississippi.

The development is estimated to contain 7.5 billion barrels of oil sands, with 350 million barrels located within 50 feet of the surface, according to the MoU, citing evaluations done in the 1980s. The two states are situated close to the Gulf Coast refineries that consume heavy oil from Canada.

From the linked article at wiki, deus ex machina is:

a plot device whereby a seemingly unsolvable problem is suddenly and abruptly resolved, with the contrived and unexpected intervention of some new event, character, ability, or object. Depending on how it is done, it can be intended to move the story forward when the writer has "painted himself into a corner" and sees no other way out, to surprise the audience, to bring a happy ending into the tale, or as a comedic device.

I cannot make this stuff up. This is quite incredible.

And we haven't even explored the "peak oil" angle of the story.