As U.S. oil production continues to grow in the midst of the hydraulic fracturing boom, proponents of domestic drilling argue it will help the U.S. break free from oil-related relationships with countries like Saudi Arabia — which holds among the most harrowing human rights record in the world. The same argument is made in favor of the Keystone XL Pipeline, which would transport Alberta tar sand oil to oil refineries in the Gulf of Mexico.
Yet a recent partnership uncovered in the heart of Texas shows a growing alliance with the Saudis on U.S. land that stands to benefit from domestic oil production and the expansion of the Keystone XL pipeline.
An April 4 article in the New York Times revealed a “strategic outpost” in the deserts sands of Texas — an oil refinery owned by Saudi Aramco and Royal Dutch Shell.
The refinery ownership is split down the middle by Saudi Aramco, the world’s largest oil company, and Royal Dutch Shell, a U.S. company. Saudi Aramco is key to the global industry, as it holds a monopoly over Saudi Arabia’s oil-rich land, home to 260 billion barrels of oil reserves.
The Motiva oil refinery just overwent a $10 billion makeover expansion — it now serves as the largest processor of petroleum, diesel and gasoline in the U.S., and it stands to benefit greatly from the approval of the Keystone XL Pipeline.
Keystone XL Pipeline expansion proposal: too big to fail
A report published in 2011 by the publication Bizmology indicates the then-proposed expansion was being created specifically to cater to Canada’s Alberta tar sands oil, which can only be transported by the Keystone XL pipeline.
The Saudi-U.S.-owned refinery has been working on its expansion since 2006. During its expansion in 2011, Bizmology reported that more than 40,000 truckloads of concrete were needed for the project, along with 78,000 tons of structural steel and 600 miles of pipeline.
Its investment is expected to yield amazing results if the Keystone Pipeline is approved this month by President Barack Obama. Already, the refinery produces 6 million gallons of gasoline per day and 3.4 million gallons of U.S. diesel.
While the pipeline is being sold to the American people as a project that would lead to energy independence from countries like Saudi Arabia, that’s not the case — Saudi Arabia stands to gain from its approval.
The alliance with the Saudis in this oil endeavor only deepens the economic ties between the U.S. and Saudi Arabia, a country responsible for funding the same Islamist extremist organizations the U.S. is “at war” with, such as al-Qaeda. The circular logic of funding the enemy only continues under the new refinery partnership.
The U.S. location allows the Saudis to remain in the oil business, keeping it connected to the profit expected to come from Canada and the U.S., while also provided a reliable destination for its crude oil to be refined and exposed to the U.S. market.
“The Saudis are securing a home for their heavy crude,” Oppenheimer and Company Oil Analyst Fadel Gheit told the Times. “But there is no question that security is also part of the equation. In Saudi Arabia, oil and politics always mix.”
Brett D. Woltjen, production manager at the refinery, attempted to distance the company’s partnership with the Saudis in a recent interview with the Times, claiming Khalid Al-Falih, Saudi Aramco’s CEO, has little involvement in Texas refinery operations.
“He does have his team of people but it’s small. It doesn’t feel like we’re being invaded,” he said.
Saudis benefit from Keystone
In 2011, Motiva Enterprises was considered to be moving ahead with an expansion of its Port Arthur oil refining facility at a time when U.S.-based refineries were closing at unprecedented rates. According to the Energy Information Administration, the number of refineries existing in the U.S. had been cut in half by 2007.
Its expansion came at a surprising time, considering the climate of refinery closures. But for the two oil companies, there was a market to be found with Canadian crude oil, which the refinery was created to handle.
The only barrier to that market would be a formal disapproval of the pipeline by President Barack Obama, who is expected to make his final decision regarding the project this month. On April 18, he’ll attend a meeting regarding Keystone XL in Nebraska, where he is expected to reveal whether he supports the pipeline or not.
Obama has twice delayed his decision, claiming a need for more studies relating to the environmental impact of the proposed expansion.
In March, the State Department released a report claiming Keystone would not have a negative impact on climate change, citing the rationale that the Alberta tar sands oil would continue to be extracted, regardless of pipeline approval.
That same month, a poll released by the Pew Center for People and the Press indicated just 23 percent of the population opposed approval of the pipeline. This, however, was before an ExxonMobil oil spill in Arkansas, resulting from a pipeline transporting Alberta tar sand oil from Illinois to Texas.
The spill, occurring in a residential neighborhood, dumped more than 12,000 barrels of oil and water into neighborhood yards and streets, and drew attention to potential problems associated with expanded pipeline construction in the United States.
The Sierra Club, an environmental organization opposed to the pipeline, has cited the toxic nature of Canadian tar sand oil, saying that when — not if — spills occur, it will create scenarios in which cleanup becomes increasingly difficult, and nearly impossible.