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Koch Subsidiary Told Regulators It Has 'Direct and Substantial Interest' in Keystone XL

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.

Oct 5, 2011
(Page 2 of 3 )

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.

A String of Denials from Koch Industries

Koch Industries did not reply to questions about what it meant when it told Canadian regulators it had a "direct and substantial interest" in the Keystone XL. But after InsideClimate News reported on Feb. 10 that Koch Industries was well positioned to benefit from the pipeline, its representatives complained of media bias and denied to Reuters that it had any interest in Keystone XL.

As a result of the InsideClimate News report, Rep. Henry Waxman of California, the ranking Democrat on the House Energy and Commerce Committee's Energy and Power Subcommittee, began looking into the Koch connection to Keystone XL. Koch Industries representatives told Waxman's staff that Flint Hills had no financial interest in the pipeline.

This has "nothing to do with any of our businesses," Koch spokespeople were quoted as telling the congressman's staff members in a May 20 letter that Waxman sent to Reps. Fred Upton (R-Mich.), the Energy and Commerce Committee chair, and Ed Whitfield (R-Ky.), who chairs the Energy and Power Subcommittee.

In that letter, Waxman urged the Republican congressmen to seek documents from Koch Industries that Waxman's own staff had been unable to obtain. At the time, Upton and Whitfield were fast-tracking a bill—which passed the House on July 26 but was ignored by the Senate—that would force the Obama administration to decide on Keystone XL by Nov. 1.

The Energy and Power Subcommittee denied Waxman's request. A subcommittee aide told reporters at the time that the letter was "a transparently political stunt."

The Los Angeles Times has reported that Koch Industries and its employees were the largest single oil and gas donor to members of the Energy and Commerce Committee during the 2010 campaign. That included $20,000 in contributions to Upton, who is leading the charge to block EPA's new rules for greenhouse gas emissions. Upton was once considered a moderate, who had voted for amendments strengthening the Clean Air Act. At one point his website contained a statement, now removed, that "climate change is a serious problem that necessitates serious solutions."

Koch Industries issued a statement after Waxman released his letter to Upton and Whitfield. "As we explained to Representative Waxman's staff ... we have no financial interest in the project," said Philip Ellender, president and chief operating officer for Koch Companies Public Sector. "Given these facts, we are confused about why Koch is being singled out and inserted into these discussions."

In late May, Ellender responded to a second InsideClimate News story, this one about questions raised by Waxman. Ellender told Reuters in an email that "we have no financial stake in the pipeline" and called the article "factually inaccurate." He did not identify any specific inaccuracies.

In June, Koch Industries asked the Los Angeles Times to correct an op-ed written by Michael Brune, executive director of the Sierra Club. Brune described Keystone XL as being "backed" by the Koch brothers.

"Koch is not involved in the Keystone Pipeline project in any way as we have stated publicly and as has been widely acknowledged," Koch spokesperson Melissa Cohlmia said in a letter requesting the correction, which ran on July 15. "This is not a matter of opinion since there are no facts to the contrary."

Keystone XL to Benefit All Oil Sands Players

Koch Industries, like the rest of the oil industry, is well positioned to benefit from a pipeline that would double U.S. oil sands imports.

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