Koch Subsidiary Told Regulators It Has ‘Direct and Substantial Interest’ in Keystone XL Tar Sands Pipeline

A document filed with Canada’s Energy Board appears to cast doubt on claims by Koch Industries that it has no interest in the controversial pipeline.

In recent months Koch Industries Inc., the business conglomerate run by billionaire brothers Charles and David Koch, has repeatedly told a U.S. Congressional committee and the news media that the proposed Keystone XL oil sands pipeline has “nothing to do with any of our businesses.”

But the company has told Canadian energy regulators a different story.

InsideClimate News has another scoop on the connection between the Kochs and the Keystone XL Tar Sands Pipeline.

Previously Climate Progress reported on their work showing that Obama’s pollutocratic political enemies now import and refine 25% of tar sands crude and stand to profit from an increased flow.

What follows is an excerpt (with permission) from the latest InsideClimate story by Stacy Feldman:

In 2009, Flint Hills Resources Canada LP, an Alberta-based subsidiary of Koch Industries, applied for—and won—”intervenor status” in the National Energy Board hearings that led to Canada’s 2010 approval of its 327-mile portion of the pipeline. The controversial project would carry heavy crude 1,700 miles from Alberta to the Texas Gulf Coast.

In the form it submitted to the Energy Board, Flint Hills wrote that it “is among Canada’s largest crude oil purchasers, shippers and exporters. Consequently, Flint Hills has a direct and substantial interest in the application” for the pipeline under consideration.

To be approved as an intervenor, Flint Hills had to have some degree of “business interest” in Keystone XL, Carole Léger-Kubeczek, a National Energy Board spokeswoman, told InsideClimate News. Intervenors are granted the highest level of access in hearings, with the option to ask questions. The Energy Board approved Canada’s segment of the pipeline with little opposition, and Flint Hills did not exercise its right to speak.

InsideClimate News contacted the Flint Hills manager who filed the Canadian document. She referred questions to Koch Industries general counsel Mark Holden, who did not return calls. Neither did Koch spokespeople.

The State Department, which must approve the project because it crosses an international border, has spent three years reviewing the 1,375-mile U.S. leg of the pipeline proposal. Its decision, which is expected by the end of the year, will be the most far-reaching environmental decision of Barack Obama’s presidency so far.

The project’s supporters say the pipeline is needed because it would deliver a secure supply of oil from a politically stable ally and produce much-needed jobs during the recession. Opponents contend it would increase global warming emissions and raise the threat of oil spills in sensitive areas along the route. They also argue that gasoline prices in the Midwest would increase and that much of the 830,000 barrels of oil the pipeline could send into the United States each day would go to foreign markets.

Currently, Canadian crude can be pumped only as far as the U.S. Midwest, where a crude oil oversupply is keeping regional oil prices low. The Keystone XL would clear that bottleneck, send Canadian oil to the Gulf Coast and open access to world markets, creating a massive business opportunity for tar sands players.

“There’s no ability to access world markets, and that’s the reason why WTI [Midwest oil pricing] is depressed. Keystone XL will relieve that issue,” said Chad Friess, an oil and gas analyst at UBS Securities Canada Inc. in Calgary, Alberta. “Pricing is expected to improve as it comes on stream.”

A 2009 market analysis conducted for TransCanada, the Alberta-based company that hopes to build the pipeline, projected that it would create a $3 per-barrel increase, at minimum, for Canadian heavy crude in the Midwest. Canada’s petroleum producers would benefit most from the price hike. The report predicts their annual revenues would increase $2 billion to $3.9 billion in 2013.  But the entire industry—including the refineries and shipping businesses where Koch Industries has concentrated its efforts—would also profit….

Deep Involvement in Oil Sands Trade

The controversy over the Kochs and the pipeline was sparked by an InsideClimate News report from February. That analysis, also published on Reuters.com and later cited by various news organizations, found that Flint Hills is deeply involved in the Canada-Alberta oil sands trade and is well positioned to benefit if more heavy crude is exported to the United States.

The Koch brothers own nearly all of Wichita, Kan.-based Koch Industries, the second-largest private company in the United States. The energy and manufacturing conglomerate earns an estimated $100 billion in annual revenue from its network of subsidiaries—a mix of oil, gas, pipeline, chemical, fertilizer and paper and pulp companies. In addition to its Canadian operation, Koch’s Flint Hills subsidiary operates oil refineries in Alaska, Texas and Minnesota as well as a dozen fuel terminals in the Midwest and Texas.

The Koch brothers have donated millions to Republican candidates and conservative movements, bankrolling groups involved in Tea Party causes and in campaigns to deny climate change science and the need for cleaner energy. Through their Flint Hills subsidiary, they underwrote the failed 2010 ballot initiative that would have suspended California’s landmark law capping greenhouse gases.

The United States already gets nearly a quarter of its oil, about 2 million barrels every day, from Canada. Half of it comes from Alberta’s tar sands patch, where Flint Hills is responsible for shipping close to 25 percent of the oil sands crude being piped into the United States.

At the other end of the proposed Keystone XL supply chain, in the Texas refining corridor, Koch Industries has been upgrading its Corpus Christi refinery to be able to handle harder-to-process blends of tar sands, according to industry reports.

For the rest of this important story, click here.  Kudos to InsideClimate for their continued outstanding reporting on this important subject.

Koch Industries repeats its non-denial denial here.

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