The best stimulus plans are from private investment.  Two come to mind in the energy and fuel field that have serious positive and international benefits.  They’re simply pipelines for crude oil.  The significance is in the effects. Better than government stimulus -private stimulus also has a multiplier effect without the bleeding from taxpayers. In the case of oil pipelines, the consumer may even save money allowing more disposable income to be spent on the products and services of other industries.

Meanwhile, for all the U.S. political left’s glorious attempts to remake the facts, the nearly trillion-dollar ‘stimulus’ plan passed nearly a year ago is a dismal failure.  The money spent is gone, the remaining is who knows where to be spent who knows how.  At such heights of budget commitments, Americans should expect better, especially as the money is being borrowed by the government to be paid back by today’s kids in their adulthood.

The Keystone pipeline, a TransCanada project, is going to go through some $12US billion by the end of 2010 with most of it spent in 2009 with just less than half spent in Canada and a little more than half spent in the U.S.   It’s one of the reasons the states the line goes through aren’t in such desperate shape.  The system also has significant impacts across other industries.  The main component, steel for the tubing, has kept the U.S. steel industry off the floor right through the worse of the nation’s recession.  One usually expects steel to be on the front line in recessions, and this time, thanks to oil development, missed the deepest part of the economic dip.

Keystone Pipeline Route Map. Click image for the largest view.

The project will see initial nominal capacity of 435,000 barrels per day, which will be expanded to 590,000 barrels per day in the first quarter of 2011. Keystone ships heavy crude oil to the U.S. Midwest markets and ultimately will get the crude oil to the Gulf Coast through an expansion and extension called Keystone XL, where refineries are better equipped to handle heavier crude.

Keystone XL, another 1,900-miles of 36-inch pipeline extension and expansion, would increase the capacity to 1.09 million barrels per day from Hardisty to Port Arthur, Texas, and other U.S. Midwest markets, with in-service expected in the fourth quarter of 2012 or early 2013. The pipeline system is further expandable to 1.5 million barrels per day at relatively low cost, enhancing future growth opportunities.

Keystone solidifies the central U.S. crude market and also is an asset to get the oil production growth out to markets.  For those consumers, the Keystone project is an oil safety net filled with North American production.  It should make consumers on the coasts a little envious.

The Alberta Clipper, an Enbridge project, consists of a 36-inch diameter pipeline, and associated pumping and terminal facilities, from Hardisty, Alberta to Superior, Wisconsin.  The initial capacity of the line will be 450,000 barrels per day of heavy crude, expandable at very low cost, through the addition of pumping facilities, to 800,000 barrels per day.

Alberta Clipper Crude Pipeline Route. Click image for the largest view.

The 1,000-mile segment is designed to resolve expected capacity constraints and is expected to be in service by mid-2010, complementing the recently completed Southern Access Project as crude oil supplies from Western Canada continue to increase.  With supply from Western Canada oil sands developments expected to grow by as much as 1.8 million barrels per day by 2015, the industry has asked for more pipeline capacity out of the oil sands into the U.S. Midwest markets. The request is driven by oil sands producers and refiners that have long development timelines and need assurance that adequate pipeline infrastructure will be put in place in time to serve their projects.

The line will officially go into service in mid-2010 after the U.S. portion of the pipeline is complete.

Enbridge is also setting up expansion and extensions beyond the Minnesota leg to Superior Wisconsin.  Enbridge is planning to extend the system from its Flanagan terminal south to the petroleum transportation hub in Patoka Illinois.  The expansion runs from Superior Wisconsin to Flanagan Illinois.  Flanagon is becoming a major oil hub.  Just driving down Interstate 80 west of Joliet Illinois on can see the refineries in the distance.

Enbridge Extensions to Alberta Clipper. Click image for the largest view.

The TransCanada and Enbridge projects employ thousands of people across a wide range of contractors. The multiplier on the spending should compare or exceed the stimulus of government projects on a dollar basis.  But the economic impact is being overlooked – the government policy and spending make more interesting news for the media.  Right down the center of the continent is stimulus; a result from the run up in oil prices that for some is a job, others surety of supplies, and for everyone a healthier economy.

One wonders, with the increased production from Canada oil sands and the Bakken formation across North Dakota and Montana getting rolled into new projects just how much ‘stimulus’ is taking place and the multiplier effect.  One thing is for certain; this stimulus is paying off right now, and will continue to benefit the Canadian and U.S. economies for decades to come.  Compare that to the near trillion-dollar boondoggle Congress is spending.


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