As I wrote recently, the Nov. 9 announcement by Enbridge and Enterprise Products Partners that they were forging ahead with the Wrangler Pipeline from Cushing, Okla., to the Gulf Coast, seemed proof that Keystone XL would have a hard time justifying its business model.
Now comes more proof, of the whiplash headspin variety. Yesterday, Nov. 23, Wrangler's owners announced that after only two weeks they had decided to suspend the project in favor of an easier, quicker solution -- reversing the Seaway Pipeline, which currently covers the same route from south to north. The 669-mile-long Seaway line is projected to carry up to 400,000 barrels per day of crude to the Gulf Coast by early 2013.
Granted, those 400,000 barrels will only carry a small part of North America's new oil boom, which I have discussed in previous posts (most recently here). But Seaway's capacity is roughly equal to the projected volume of Keystone XL's Phase 3, which would cover the same ground and was seen as a cash cow for the longer Keystone XL route reaching north to the Alberta tar sands.
If two savvy pipeline operators didn't see enough potential volume on that route to make money from both Wrangler and Seaway, why would Keystone XL make money on that route? This has nothing to do with the many environmental concerns about Keystone, but it could be a game-changer nonetheless.