EnergyFactor By ExxonMobil | Pespectives has a new home

On the road to energy security and economic recovery: The facts about equipment destined for Kearl

Oil and natural gas projects, no matter where they are in the world, require significant planning and investment to get them up and running. A casual observer is often unaware of the years of preparation and logistics required – and the amount of economic activity that results – when creating the infrastructure that helps deliver essential energy supplies to the world.

But that’s not the case for citizens of the Pacific Northwest and Montana, who have for some time been reading and hearing about our Kearl Module Transportation Project in the local and national media, as well as on various blogs.

Kearl is an oil sands project being developed jointly in northern Alberta by Imperial Oil Limited, which is largely owned by ExxonMobil, and ExxonMobil Canada. To build what will represent the next generation of responsible and energy-efficient oil sands development, we are planning to deliver large, specialized processing units to the site. The units will travel first by barge through the Columbia/Snake River Inland Waterway System and then by road through Idaho, Montana, and Alberta.

Due to the size of the units, we’ve spent more than two years developing a transportation plan in cooperation with local and state authorities, as well as community members, to ensure these units can travel safely with minimal impact and interruption to local traffic.

We’ve participated in numerous community forums along the route to answer questions and discuss the scope of the project. We completely understand that citizens want to protect their interests and their communities, and we work hard to be responsive.

But recently, some national environmental lobby groups have geared up to oppose the project. Many of these groups are based in Washington, D.C., and their goal is to block oil sands production in general – not to address the concerns of local citizens. In doing so, they’re also ignoring the local economic benefits that many citizens and state and local officials along the route support.

Because these groups are trying hard to make this a media issue to suit their agendas, I thought I should share some key facts and explain the benefits of the project:

Scope of the project: We have applied for permits to carry processing equipment over the 500-mile U.S. highway route through Idaho and Montana. We expect this will take around 12 months, and over this time we’ll have less than one load per day, which will travel mostly at night to reduce traffic concerns. Our move plan will also minimize traffic obstruction in the relevant areas.

Cooperation with state and local authorities: Our Kearl project team has been cooperating with the Idaho and Montana Departments of Transportation since May 2008 to ensure that the route is the safest, least disruptive and most efficient that it can be.

Investments in the local economy: The Kearl project is paying for the road, utility, and other improvements associated with the project, which will significantly benefit states at no taxpayer expense. These include:

  • Burying or raising power lines along the route
  • Making road surface repairs
  • Constructing new turnouts and improving existing ones
  • Modifying overhead signs and traffic signals
  • Posting $10 million bonds in Idaho and Montana for any road / bridge repairs

We plan to spend about $9 million in Idaho alone for this project, which we estimate could generate about $13 million in indirect economic activity for the state. In Montana, where the route is longer, we plan to spend about $41 million, which will generate more than $67 million in indirect economic benefits for the state.

The economic benefits of this project, along with the job creation and infrastructure improvements that are difficult to realize in a recession, have led many locals to support what we’re doing.

It’s jobs, jobs, jobs,” said Montana Governor Brian Schweitzer about the project in May. “It’s $68 million. If somebody else finds $68 million that can be invested in Montana in 2010-2011, I’ll give them my home phone number.”

The jobs created by this transportation project are only a small part of the estimated 343,000 new U.S. jobs that could be created due to oil sands development from 2011 to 2015, according to a recent study. I might also add that in addition to jobs, the argument for the project also favors energy security – Canada supplies about 20 percent of U.S. oil imports, and holds the world’s largest reserves of oil sands, which actually make up about 13 percent of the world’s total oil reserves.

Despite two years of planning and the clear economic benefits, permits for this transportation project are being challenged by some in the environmental lobby. Maybe Jon Hanian, Idaho Governor Butch Otter’s spokesman, said it best late last month:  “This delay costs money and jobs for people in northern Idaho, and in this economy every opportunity is critical to our economic recovery.”

  • Worth a deeper look...