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Koch Brothers Positioned To Be Big Winners If Keystone XL Pipeline Is Approved

Obama’s bitterest political enemies already import and refine 25 percent of oil sands crude reaching the U.S., and stand to profit from an increased flow

Feb 10, 2011
(Page 2 of 3 )
David and Charles Koch

That would send at least an additional $2 billion from American consumers to Canadian and multinational oil interests, despite the increase in supply. Given its deep involvement in the Canadian petroleum industry, the Koch brothers' operation stands to snare some of the windfall. 

Deeply Involved in Oil Sands Trade

Kert Davies of Greenpeace, who last year issued a report on the Koch brothers' $50 million expenditure to finance climate change skepticism, guessed that Obama was not aware of the central role the libertarian brothers play in the Canadian crude oil trade.

"That's a very good question. I doubt that he personally is cognizant of that," Davies said. "But we do know that Koch Industries already imports a ton of tar sands into the U.S."

An unknown amount of company profits — figures are unavailable as the company is privately held — come from the Pine Bend Refinery near St. Paul, Minnesota, which supplies 30 to 40 percent of Wisconsin's transportation fuel and a large percentage of the jet fuel used at the Minneapolis-St. Paul International Airport. 

About 80 percent of what the Koch refinery processes is heavy crude from Alberta's oil sands, a company spokesperson told the media last year. The oil that reaches the refinery is supplied through the Koch brothers' Flint Hills operation in Calgary, the company's website says.

Pine Bend is capable of refining up to 320,000 barrels per day of predominantly Canadian crude oil, most of it sourced in Alberta's oil sands. Every day, the U.S. imports about 1 million barrels of oil from Alberta's oil sands mines, and about 2 million barrels of Canadian oil overall.

This means that the oil sands crude which reaches the Pine Bend refinery on American soil accounts for about a quarter of the total supply reaching the U.S. from Alberta's tar sands mining operations.

The company says the Pine Bend refinery is among the largest processors of heavy crude in the United States. Its various fuel products are distributed via a 537-mile pipeline system in Minnesota and Wisconsin that the Koch brothers also own, as well as via truck and rail. 

Figures on other quantities of tar sands oil that Koch interests handle out of their Calgary operations are not publicly available. According to the Flint Hills Resources Canada website, the Koch Industries subsidiary has more than 90 customers and offers "physical and financial marketing capability related to a large selection of Canada’s crude oil streams."

White House Visit

It is unclear whether the president or his advisers are aware of the extent of the Koch brothers involvement in tar sands imports or have tried to quantify the economic benefit they could derive from the Keystone XL pipeline.

Obama has not shown his cards on the pipeline permit, even after Canadian Prime Minister Stephen Harper made a personal appeal for swift approval at a White House meeting last week.

At a carefully scripted press conference after a private meeting of the two leaders, Obama made no mention of energy when speaking warmly about Canada, the nation's largest trading partner. The president said trade with Canada supported 1.7 million U.S. jobs.

Harper used a vastly different figure. He said 8 million U.S. jobs depend on trade with Canada, and he made a point to underscore the energy issue, in both his English and French remarks.

"Canada is the largest, the most secure, the most stable and the friendliest supplier of that most vital of all America's purchases: energy," he said.

After they finished with their prepared remarks, a Canadian reporter asked Harper if he had discussed the pipeline permit with President Obama. The prime minister said that "we did discuss the matter you raised," but he provided no fresh details, only a rambling rationale for why approval of the permit would be in the American interest. When Harper was done, the president offered no comment. He quickly took the next question.

Until the visit from Harper, all eyes had been on Hillary Clinton and the State Department, which is officially weighing the pipeline permit. The application was cruising toward a swift and barely noticed approval early last year, but the BP oil catastrophe in the Gulf of Mexico provoked a closer look as environmental security became a national concern.

The 1,959-mile pipeline would cut through Montana, South Dakota, Nebraska, Kansas and Oklahoma to refineries in Texas, and crisscross the Ogallala Aquifer, which Americans living in the Midwest rely on for fresh drinking water as well as irrigation.

Last July, the EPA rolled up its sleeves and called a time out. The agency deemed the State Department's environmental review of the Keystone project as "inadequate," the lowest possible ranking. EPA raised concerns over a potential oil spill over the Ogallala aquifer.

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