Obama encounters a hard sell with energy industry officials

BY ROD WALTON World Staff Writer
Friday, March 23, 2012
3/23/12 at 4:56 AM

Transcript: Read President Obama's remarks during a visit to the TransCanada Pipe Yard near Cushing.

CUSHING - Energy industry officials expressed respect for President Barack Obama but skepticism about his visit to the nation's largest crude oil storage hub Thursday.

The president touted his "all of the above" energy policy and noted that domestic oil drilling and production has increased on his watch. He also pointed out that U.S. oil imports have declined 1 million barrels per day in the past year.

Obama vowed support to "fast track" permitting for the southern leg of the Keystone XL Pipeline from Cushing to Gulf Coast refineries.

"We are drilling all over the place" but pipeline capacity isn't keeping up, Obama said during a speech at a pipe yard near Cushing used by Keystone builder TransCanada Corp. "There's a bottleneck right here because we can't get enough of the oil to refineries fast enough."

Sounds good, but industry officials argued that Obama was only telling part of the story.

"I think it's good to see Cushing in the news; it's so important to U.S. energy," SemGroup Corp. and Rose Rock Midstream LP CEO Norm Szydlowski said after Obama's talk.

"I hope the president will support the entire Keystone project. All of this attention and dissension over our energy is, more than ever before, reason to finally come together to craft and adopt a coherent national energy policy."

The Obama administration earlier this year rejected TransCanada's permit application for the Keystone XL leg from the Canadian border to Steele City, Neb., citing environmental concerns about the route through Nebraska's Sand Hills. A middle leg from Steele City to Cushing is already in operation and bringing Canadian crude into the hub.

"It is very disingenuous for the president to take credit for the pipeline's construction when he has said no on several occasions since the pipeline permit was filed," said Mike Terry, president of the Oklahoma Independent Petroleum Association. "In spite of his disruptive policies, Oklahoma producers are moving this state and country forward by drilling wells and discovering record amounts of oil and natural gas. We can only hope that President Obama will learn something from coming to the heart of the oil patch."

Obama, meanwhile, touted U.S. oil production growth during his term. Energy Information Administration statistics indicate that domestic crude production grew from 4.95 million barrels per day in 2008 to 5.67 million barrels per day last year.

"My administration has approved dozens of oil and gas pipelines, including one from Canada," Obama said. "Anyone who suggests we're suppressing oil production is not paying attention."

The public, however, is paying rapt attention at the pump. Regular unleaded gasoline has jumped to an average $3.53 per gallon in Tulsa from less than $3 in December.

Obama's Republican opponents point repeatedly to the rising prices. Presidential candidate Newt Gingrich has vowed that, if elected, his policies would push gasoline down to $2.50 per gallon.

The U.S. uses 20 percent of the world's energy but produces only 2 percent of it, Obama pointed out. Crude oil prices, and thus gasoline, are impacted by global events such as the potential nuclear crisis with Iran.

"Just drilling won't bring down gas prices," he said, while championing growth in solar, wind and biofuels production.

Why not try, industry officials countered.

"Unfortunately, his energy policy is more about fiction than reality," Terry said. "Although alternative energy has its place, even in Oklahoma, only in a pipe dream will alternatives replace the wonderful God-given resources beneath Oklahoma soil."

Magellan Midstream Partners LP CEO Mike Mears said pipeline systems are the safest and most cost-effective methods to transport crude oil from wellhead to terminals and refineries.

"Over the next decade, thousands of miles of new pipelines will be necessary to complement the increase in domestically manufactured crude oil, natural gas and other liquid energy," Mears said.

Tulsa-based Magellan and Rose Rock hold two of the Cushing hub's biggest tank capacities for crude oil at 12 million and 7 million barrels, respectively. Overall capacity at the Cushing terminals exceeds 60 million barrels.

Drilling during the Obama era

	2011	2010	2009	2008
U.S. oil production	5.67M	5.47M	5.36M	4.95M
Oklahoma	204,000	190,000	184,000	175,000

*Barrels per day average.

Source: Energy Information Administration

Original Print Headline: Obama makes his case on energy

Rod Walton 918-581-8457
rod.walton@tulsaworld.com

Associated Images:

President Barack Obama: He vowed support to "fast track" permitting for the southern leg of the Keystone XL Pipeline from Cushing to Gulf Coast refineries.