The company's Flint Hills subsidiary already has an oil terminal in Hardisty, Alberta, the starting point of the Keystone XL. It sends about 250,000 barrels of diluted bitumen a day to a heavy oil refinery it owns near St. Paul, Minn., making that refinery "among the top processors of Canadian crude in the United States," the company website says.
Flint Hills is not among the six shippers that have already signed contracts to send their oil through the Keystone XL. But Steven Paget, vice president of energy infrastructure at FirstEnergy Capital, an oil and gas brokerage firm based in Calgary, said every oil sands player would benefit from the pipeline, because the price of all Canadian crude would rise.
Most of Alberta's heavy oil is currently shipped to the Chicago area or to Cushing, Okla., the world's largest oil storage facility and the point where prices are set for U.S. crude. Stockpiles at Cushing are depressing crude prices in the country's midsection below the global benchmark and pinching profits across the entire tar sands supply chain.
The price spread on Tuesday was nearly $25, with the global benchmark, known as the Brent crude oil marker, trading at just below $100 and the Cushing price, known as West Texas Intermediate or WTI, settling at a one-year low of about $76. "Once this [Cushing] bottleneck is relieved, the expectation is that WTI will appreciate to something closer to world oil prices," said Friess of UBS.
Paget, the FirstEnergy Capital analyst, said "such a pricing differential will be too attractive to [oil sands] shippers. They will sign up for commitments to ship ... to the Gulf," growing their operations and bottom lines.
Refiners that have upgraded their Gulf Coast plants to handle heavy crude are especially well positioned to take advantage of a new gush of oil.
A 2010 analysis by Accufacts Inc., an energy consulting firm that focuses on pipelines, identified Koch's Corpus Christi plant as one of 22 Gulf Coast refineries—out of more than 50—that is now capable of refining "a significant volume of blended bitumen," the type of crude that would flow through the Keystone XL. The report was prepared for the Natural Resources Defense Council and was based on data from the U.S. Energy Information Administration, a division of the Department of Energy.
The Accufacts report predicted that 90 percent of the 500,000 barrels of Keystone XL bitumen expected to eventually reach the Gulf each day would be handled in refineries on the line's route in the Houston and Nederland, Texas areas. It said 10 percent could be handled in Corpus Christi and elsewhere along the Gulf Coast via connecting pipelines.
Refining heavy crudes, which are cheaper to purchase than light varieties, is profitable for refiners, Paget said. "By buying cheaper oil, it reduces their costs. They may have to make more capital expenditures. But for the long term, their input costs will be [recovered] later."
Friess said that while producers will benefit most from the pipeline, refineries along the Gulf—which he described as the "most sophisticated refineries in the world"—will profit, too, because they'll be able to outbid other refining markets for Canadian crude.
Droitsch, the NRDC adviser, said the entire industry is banking on an Obama green light by year-end. "The pipeline basically sends an overall signal to industry that they can continue with their expansion plans."