Tarnation: Environmentalists, landowners and Valero await decision on the Keystone XL pipeline 

The town of Wells is easy to overlook, just a few blocks of homes and a school stretching along a busy state highway. Paths that shoot north from the main drag plunge you deep into a forest of towering East Texas pines. In November, construction crews here navigated bulldozers, feller bunchers, and excavators through rows of trees, laying the groundwork for a fight with global implications: the battle over a 1,700-mile pipeline connecting Texas oil refineries to Canada's vast deposits of tar sands.

The Keystone XL pipeline will transport as much as 830,000 barrels a day of bitumen, which has a thick consistency comparable to peanut butter. It's diluted with a cocktail of other petroleum compounds or synthetic crude in order to carry it through pipelines at pressures of up to 1,300 pounds per square inch, and at temperatures as high as 150 degrees.

This diluted bitumen, or "dilbit" in industry speak, was on the minds of many when President Barack Obama, in his inaugural address last week, warned that America needs to quickly respond to the threat posed by our changing climate, saying that "failure to do so would betray our children and future generations." Environmentalists collectively shouted that Obama should start by rejecting the Keystone XL pipeline.

The State Department must ultimately rule on the $7 billion project, owned by Canadian gas-line giant TransCanada, since it crosses international boundaries. Last year the GOP-controlled House handed the president a 60-day ultimatum to either approve or deny Keystone XL, before the State Department even had time to finish its own assessment of whether the project is in the national interest. Obama reacted by rejecting TransCanada's first application, urging the company to resubmit, and signing an executive order that fast-tracked Keystone XL's southern Oklahoma-Texas leg.

Pipeline construction crews have been buzzing across East Texas ever since. And there's mounting pressure for Obama to answer a question his administration has effectively dodged for much of his first term: yes or no to tar sands?

In the "yes" camp are those who say Keystone XL would create jobs and ensure lower prices at the pump by securing a steady supply of friendly oil. Among those urging "no" are environmentalists and some climatologists who fear that digging up and burning Canada's buried oil sands could pump so much carbon dioxide into the atmosphere that Keystone XL could render useless any human attempt to curb emissions and avoid catastrophic climate change.

Just as anti-tar sands activists anxiously await Obama's ruling on the Keystone XL pipeline, so does San Antonio's Valero. As the nation's largest independent refiner, analysts say Valero is perfectly poised to benefit from the increase in tar sands slated to flow into the state.

Valero's refinery in Port Arthur, where the pipeline will terminate, can suck up 310,000 barrels a day of some of the world's lowest-quality crude — like tar sands — and turn it into gasoline, diesel and jet fuel. Valero, which publicly supports the project, is expected to be among

Keystone XL's top tar sands customers. In return, activists have desperately tried to make Valero synonymous with tar sands and Keystone XL, launching hunger strikes, public protest, and organizing in refinery neighborhoods.


Some young protestors grew sick of shouting and sign-carrying by the time construction on Keystone XL began last August. They started locking themselves to machines to stall the pipeline.

Last November outside Wells, sheriff's deputies pepper-sprayed four men who locked themselves to pipe-laying equipment. Authorities broke them loose after hours of consternation, leading them away in handcuffs, one with a foot-long strand of snot dripping from his face. It was one of over a dozen actions that took place at pipeline construction sites late last year.

"Stopping the infrastructure is the reason our campaign exists," says Ron Seifert, an activist with the Tar Sands Blockade group.

But as efforts ramped up in the East Texas woods, blockaders also began organizing in the neighborhoods near the Houston Ship Channel, an area long clouded by petrochemical haze. With local environmental justice groups, they started giving tours of the nearby refineries. They particularly took to Manchester, a small Hispanic enclave that lies in the shadow of Valero's Houston refinery.

"We found a community that's been oppressed for decades," Seifert asserts. Blockaders decided they wouldn't just target the pipeline, but the refiners, too. They started filming, photographing, and interviewing families, hearing common fence-line community ailments: headaches, respiratory problems, asthma, rashes, and cancer. Yudith Nieto, 25, a lifelong resident of Manchester who started organizing with the blockaders, says, "Almost everyone I know here has trouble breathing."

On November 29, the blockaders escalated. Diane Wilson, a longtime environmental justice and jail reform activist, locked her neck to an oil tanker truck with a bicycle U-lock. Friend and fellow activist Bob Lindsey Jr. did the same. "Quite frankly, the Gulf Coast is a sacrifice zone," Wilson told the Current once released from the Harris County jail. "I have no time for holding hands, walking around in circles, and demonstrating. There has to be pressure."

The initial stated goal was to disrupt oil coming into the Valero refinery; the company says Wilson and Lindsey were not on Valero property and questions whether they were even locked to trucks destined for its refinery. In jail, Wilson and Lindsey began what would become a 46-day hunger strike. Their demands: that Valero end its support of the Keystone XL pipeline and reject any oil from the pipeline in the future. The wish list evolved. They wanted Valero to clean up and compensate Manchester, and then they wanted Valero to pull out of the community entirely.

Valero spokesman Bill Day readily dismisses the effort. "Pretty much everything they have said about it (Keystone XL), about our refinery and the refining process has been incorrect," he says. "At first we thought they were misguided and a little naïve. But now they're actually spreading misinformation."

The group continues to claim Valero's Houston refinery, which sits in a free trade zone that exempts it from import and export taxes, is positioned to handle diluted bitumen once it starts flowing from Canada to the Gulf Coast.

Not true, says Day. Valero says its Houston refinery is in the process of being retooled to handle even more light, sweet crude, particularly of the variety that's being pumped in record amounts across South Texas' Eagle Ford Shale region. In fact, at a January 8 presentation to investors, Valero announced plans to spend upwards of $280 million to build a crude oil "topper" at the refinery to help the company process more of the light crude.

As for the protesters, "They can speak for themselves, but I would call into question their refining experience," Day says.

The "crappy stuff"

Valero's Port Arthur refinery was first built in 1901, just months after the oil discovery at Spindletop, the East Texas gusher that sparked the modern U.S. oil revolution.

The San Antonio company bought it in a sweeping 2005 acquisition that made Valero America's largest oil refiner. Sprawled across 4,000 acres, Port Arthur is among the most advanced and important of Valero's 16 refineries, analysts say. Before Valero bought it, the refinery's owners had already invested $850 million building a coker and hydrocracker on site, equipment that processes heavy, so-called "sour" crude full of sulfur. Last month Valero finished installing another $1.5 billion unit designed to process even more of it, including tar sands crude, and turn it into diesel. Valero is completing similar upgrades at its Gulf Coast refinery in Norco, Louisiana.

Valero's business model relies on squeezing profit from cheap, low-grade sour crude, with sales increasingly focused on the export market. In a September 2011 presentation, Valero told investors how the newest upgrades at Port Arthur would let it "process over 150,00 barrels/day of high-acid, heavy sour Canadian crude." In the presentation, the company explicitly detailed an export strategy, drawing a wave of condemnation from Keystone XL critics — a crucial argument for the pipeline has been that Keystone XL will keep America's tanks full with cheap gasoline. Because Valero's Port Arthur refinery also sits in a free trade zone, the company could carry out that long-term strategy tax-free.

With crude supplies from Mexico, South America, and the Middle East dwindling, Valero spokesman Day says Canadian oil sands would fill the void. "We are simply asking to be able to take that Canadian crude to replace diminishing supplies of heavy crude from elsewhere," he says.

In 2009, when TransCanada took its case before Canadian regulators, the pipeline company identified six shippers, or customers, that had signed long-term contracts and would account for 76 percent of Keystone XL's initial capacity. Three of those identified customers, including Valero, have major refineries in Port Arthur.

"People have described this as an 'investment' or a 'partnership' or something like that," says Day. "None of that is true." Valero's first agreement with TransCanada has expired. As it stands, "Valero just says that we're a supporter of the pipeline, that we want that oil."

There have been estimates that Valero might want a lot of that oil, as much as 20 percent of the pipeline's initial capacity once it goes online — something Valero spokesman Day calls pure media conjecture. Brian Youngberg, an energy analyst who covers Valero for the investment firm Edward Jones, predicts Valero could wind up taking even more than that should Keystone XL go online. Valero can buy it up cheap, and sell the diesel it churns out at a premium in the developing world, he says.

"They really don't want that higher quality stuff," Youngberg says, "They want the crappy stuff."

Land grab

Along with the environmental impact tied to mining the Canadian tar sands, much of the controversy surrounding Keystone XL has centered on the communities and landowners that lie in the pipeline's path.

Diluted bitumen will eventually flow through a 36-inch pipeline buried under a stretch of Mike Bishop's 20 acres in Douglass, Texas, a small town bordering the Angelina River in Nacogdoches County. The 64-year-old ex-Marine says surveyors first showed up on his property in 2008. "I ran those sumbitches off," Bishop scoffs. TransCanada returned with a temporary restraining order, a lawyer, and a sheriff's deputy. The company eventually made what Bishop calls a low-ball compensation offer, which he promptly rejected.

When TransCanada took Bishop to court and won the right to condemn and take some of his land, the parties entered mediation and arrived at a dollar figure Bishop accepted in November. Bishop turned around and sued TransCanada for fraud in December, saying the company's permit application claims it will run conventional crude oil through the pipeline, not tar sands.

"This is not conventional crude oil, clear and simple," he says. "Diluted bitumen is not conventional crude." Bishop also claims that he signed his current contract with TransCanada under duress, being threatened by an eminent domain land grab.

Bishop got a temporary restraining order to stop bulldozers last month, but days later TransCanada countered and the judge lifted it. TransCanada has decided to run the pipeline through Bishop's front yard, uprooting trees and tearing up a large garden about 120 feet from his door. Off-duty sheriff's deputies routinely sit outside pulling guard duty for the company. "It's like a goddamn war zone," Bishop says.

Some 50 miles north sits the town of Reklaw, population 379. It's not just green energy-pushing environmentalists fighting the Keystone XL pipeline, but concerned East Texans like Reklaw Mayor Harlan Crawford.

Months before activists started locking their bodies to pipe-laying machines, Crawford joined a lawsuit against TransCanada. He fears the pipeline, which crosses the Carrizo-Wilcox Aquifer that provides all of Reklaw's water and portions of it to several other nearby towns, would endanger the region.

"I mean, you heard what happened in Kalamazoo, right?" Crawford says.

In July 2010, a pipeline owned by Enbridge, another Canadian company, saw a sudden pressure drop. Repeat calls to a 911 dispatcher in Marshal, Michigan, reported a noxious petroleum smell. By the time a utility worker spotted oil in a creek the next day, more than a million gallons of diluted bitumen had gushed out, flowing downstream to taint some 30 miles of the Kalamazoo River.

The Enbridge cleanup has already cost some $725 million and counting. Among the largest onshore oil spills in U.S. history, the case got little immediate attention, eclipsed by the Deepwater Horizon explosion months prior that sent crude spewing into the Gulf.

TransCanada's own Keystone I, Keystone XL's predecessor currently connecting Albertan oil sands to Illinois refineries, had a tough first year in operation. It saw 21 spills in Canada and the U.S., most of them small, and was temporarily shut down by the Pipeline Hazardous Materials Safety Administration. The pipeline spilled 500 barrels, or some 21,000 gallons, in Brampton, North Dakota in May, 2011.

"Bottom line: this is going to be the safest pipeline ever built," company spokesman David Dodson says of Keystone XL. Operators monitoring the flow can control valves along the pipeline's path to quickly isolate any sections, should they rupture. Dodson says Keystone XL will be the most advanced pipeline ever constructed.

But some are still wary of TransCanada's spill estimate for Keystone XL, which amounts to 11 spills of 50 barrels or more over its 50-year lifespan. Dr. John Stansbury, a University of Nebraska researcher who consults for the U.S. Army Corps of Engineers, in 2011 released his own study of the proposed line.

Looking at historical data, known information about this type of pipeline, and the type of oil it would carry, Stansbury concluded that Keystone XL would likely see 91 significant spills. Stansbury also suggested it could take TransCanada as long as two hours to shut the pipeline down in the event of a spill; TransCanada estimates it could shut down the flow of diluted bitumen in less than 12 minutes.

Against this backdrop, Reklaw's Crawford took his case to nearby town leaders and convinced them to join forces, forming a sub-regional planning commission that would demand the attention of state and federal leaders. They eventually joined the Sierra Club in seeking an injunction against the Army Corps of Engineers, which would issue permits for the southern section of the Keystone XL pipeline through Oklahoma and through East Texas. The Sierra Club sued in an Oklahoma federal court, saying the streamlined approval of the pipeline would not account for East Texas wetlands that would be permanently altered.

A judge wouldn't grant an injunction, and the case now sits in a federal appeals court.

Meanwhile, the pipeline's construction marches along.

"Oil is Oil"

Far less attention has been paid to the refinery communities that would actually take in the diluted bitumen from Keystone XL. Canadian tar sands oil has faced stiff criticism from environmental groups, who say the stuff is far dirtier than what's coming in from the Middle East or South America, despite Canadian government and industry group claims to the contrary.

In the U.S., tar sands oil already fuels cars and trucking fleets, and it's used in producing anything from aluminum cans to asphalt.

In 2010, a San Francisco-based outfit called Forest Ethics launched a campaign encouraging American companies to boycott tar sands oil and, specifically, the refineries that process it. Using data from the federal Energy Information Administration, which tracks imports of unprocessed crude, Forest Ethics compiled a list of nearly 50 U.S. refineries that already handle tar sands oil. Included were ExxonMobil's Baytown refinery, BP's Texas City refinery, and Valero's Port Arthur refinery. Forest Ethics got 14 companies, including Trader Joe's and Whole Foods, to stop fueling their trucking fleets from any of the refineries on their tar sands map.

Josh Mogerman tracks tar sands-related developments for the Natural Resources Defense Council. "Industry likes to say, 'oil is oil,' and that's just not the case," Mogerman contends. "This stuff is heavier, dirtier, and nastier, and it comes with a significant increase in pollution." Mogerman points to BP's Whiting, Indiana refinery, where five years ago the company completed a nearly $4 billion expansion to process more heavy Canadian crude. NRDC staffers weren't convinced when the company claimed emissions of several pollutants would actually decrease following the expansion, so they got to digging through thousands of pages BP had filed with the state.

"The math wasn't right," Mogerman says. BP assumed new flares installed on site, which burn off waste gases and can be a major source of pollution, would produce no emissions. EPA eventually agreed with many of the complaints the NRDC filed with the agency and intervened in 2009, prodding BP to agree to pay an additional $400 million in increased pollution control measures.

Mogerman worries that the prospect of Keystone XL has and will push refiners to expand their capacity to handle tar sands in areas already hard hit by the petrochemical industry, like Texas' Gulf Coast. In 2011, Houston Mayor Annise Parker expressed that very same concern in a letter to the State Department, as did the EPA when it called the State Department's environmental assessment of the Keystone XL pipeline "inadequate." EPA urged the department to "provide a clearer analysis of potential environmental and health impacts to communities from refinery air emissions and other environmental stressors."

One 2010 Sierra Club report links emissions from tar sands refineries to prenatal brain damage, asthma, and emphysema. And yet EPA has conducted no evaluation of its own.

Where it goes

One place where Valero is sure to refine the tar sands oil from Keystone XL is Port Arthur, where a quarter of the population live below the poverty line and the per-capita income is two-thirds the Texas average.

Hilton Kelley grew up on the front lines of toxic exposure in Port Arthur's predominantly black west side, situated literally across the tracks.

"We get our daily dose of toxins for sure," Kelley says, either from Valero or the litany of other petrochemical facilities nearby. Kelley grew up within eyesight of the giant Motiva refinery, breathing air laced with elevated levels of potent toxins like benzene, sulfur dioxide, hydrogen sulfide, and 1,3-butadiene.

A decade ago, University of Texas Medical Branch epidemiologist Marvin Legator, who has since died, began studying Port Arthur's west side, comparing residents there to a control group in Galveston with similar racial and economic makeup. Legator found approximately 80 percent of residents in Port Arthur reported cardiovascular and respiratory problems. Meanwhile, in Galveston only 30 percent reported cardiovascular problems, and only 10 percent reported respiratory issues.

For more than a decade, Kelley has relentlessly fought to improve air quality and reduce toxic emissions impacting Port Arthur's fenceline communities.

"We do not want the Keystone XL pipeline coming to this area," he said "We've made that known to the State Department, the EPA, Valero, everybody."

Valero spokesman Day says its Port Arthur expansion consists of upgrades to adequately control for air pollution, and that the company has secured all the necessary permits from regulators. Besides, Valero will continue to refine heavy crude whether or not Keystone XL is approved, he says.

"We believe this pipeline would bring a heavier crude than we've ever dealt with before," Kelley insists. "Sulfur emissions increase, and then we see more asthmatic patients going to the hospital."

Kelley speaks with a cautious realism brought on by years of activism. "We've made our position known, that we don't want that pipeline coming into this area, but that's about all we can do right now," he says.

"We're not chaining ourselves to fences, locking ourselves up to anything or getting arrested. We're staying within the law."

Others aren't so committed to lawfulness. Following their arrests outside Valero's Houston refinery, the hunger strikers and tar sands blockaders drafted a long letter they delivered to Valero just after Christmas. It was filled with demands the company is unlikely to take seriously. Earlier this month protesters stormed TransCanada offices across the country as part of a concerted mass action. In Westborough, Massachusetts, students superglued themselves together in an office lobby. Activists occupied Houston's TransCanada headquarters with a homemade "KXL pipe monster" crafted out of bed sheets.

And it's no longer just the young blockaders willing to face arrest. With Obama's decision about Keystone XL expected in the coming months, the Sierra Club last week announced that for the first time in the environmental group's 120-year history members will use civil disobedience to try to stop the pipeline.

Back in November, in an attempt to stall Keystone XL's construction, protesters outside Wells took to the trees. They sat in platforms suspended 50 feet in the air by lines tethered to heavy equipment on the ground. When demonstrators below tried blocking a cherry picker, brought in to pluck protesters from their treetops, authorities again broke out the pepper spray.

Onlookers jeered when an elderly woman got dosed in the face. Recovering from the sting, she considered the nearby deputy, and spat, "He was just hateful."

With the tree-sitters removed, their supplies crashed to the ground when authorities cut their platform support lines.

And the construction resumes.

Andrew Oxford contributed reporting

September 19, 2008:
U.S. State Department receives application from TransCanada to build the 1,700-mile Keystone XL pipeline, and announces it will conduct an environmental impact assessment.

April 16, 2010:
State Department releases a draft environmental impact statement, which claims the pipeline will have little adverse environmental impact.

December, 2010:
Meetings begin between State Department and recognized Indian tribes.

April 2011:
State Department updates environmental impact assessment after criticism from environmental groups and worries from the EPA. State begins public meetings in six states along the
pipeline route.

August 2011:
State Department starts 90-day review period to determine whether the pipeline is in the national interest.

October 2011:
Nebraska lawmakers call for a special session to debate the Keystone XL pipeline and its environmental assessment, worried the pipeline will run over the state's environmentally sensitive Sand Hills.

December 23, 2011:
Obama signs bill to extend the payroll tax cuts. Attached to the bill is a provision requiring the president to decide on the Keystone XL pipeline within 60 days.

January 18, 2012:
Obama rejects the Keystone XL pipeline, saying the State Department doesn't have time to fully weigh the project.

February 2012:
TransCanada announces it will file another application for the pipeline. Obama agrees to fast-track the southern Oklahoma-Texas section of the pipeline.

January 22, 2013:
Nebraska Governor Dave Heinemann approves the pipeline's revised route through his state. The move puts further pressure on Obama to make a decision.




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