Spox: Anti-Keystone Report Contains Inaccuracies About Koch Industries

Koch Industries says International Forum on Globalization report has glaring errors

October 22, 2013

A new report claiming to demonstrate a large Koch Industries stake in the proposed Keystone XL (KXL) pipeline is riddled with factual inaccuracies, the company said on Tuesday.

The report says that Koch stands to make $100 billion from the pipeline, which is widely supported by the American public but has been delayed as the State Department weighs its approval.

State must approve oil pipeline projects that cross international borders. Keystone’s proposed pipeline would transport crude from Northwestern Canada to refineries on the Gulf Coast.

A report released on Monday by the International Forum on Globalization (IFG) claims that the pipeline would directly benefit Koch Industries, a frequent target of political attacks due to the libertarian leanings of the company’s owners, Charles and David Koch.

"IFG crunched the numbers and puts forth a compelling answer to why the Kochs have used their influence networks to push for fast-tracking of pipeline—$100 billion in potential profits," the report claims.

That assertion made headlines, since Koch has repeatedly insisted that it has no financial interest in the pipeline.

However, the group’s calculations actually show that the pipeline would produce $100 billion in potential revenues, not profits.

The report notes that Koch Exploration Canada holds about 2 million acres of land above Canadian crude in Alberta, near the primary on-ramp for the pipeline, and hence will benefit from its transportation to U.S. markets.

Koch spokesman Melissa Cohlmia said the report misrepresented Koch’s role in the area by presenting leased land as Koch’s property.

"Keystone XL will be a net negative financially for Koch," due primarily to a reduced flow of Canadian crude to the company’s Pine Bend Refinery, Cohlmia explained.

Enbridge, another Canada-to-U.S. pipeline, currently carries crude from Alberta to Pipe Bend. Keystone could mean "less Canadian oil sands coming into our Pine Bend Refinery, thus reducing the amount of we are refining," Cohlmia said.

The IFG report actually admits as much, though it downplays the finding. Koch "has to produce 8 billion barrels [of crude] before KXL begins to provide it with a net profit" due to "profit prevented" by competition to Pipe Bend, according to the report.

"We don’t believe it is achievable," Cohlmia said of the 8 billion barrel figure. The IFG report provided no calculations to the contrary, and did not respond to multiple requests for comment on Koch’s response or critiques of its methodology.

Cohlmia pointed to other errors that she said undermine the report’s conclusions.

The Keystone pipeline "would connect to Port Arthur, Texas, where the Koch Pipeline Company (KPC) already has a major hub servicing the Gulf Coast, an area that harbors half of all U.S. oil-refining capacity," the report notes.

"This positions KPC to benefit from toll price increases due to increased demand for their pipeline capacity in the gulf region as a result of KXL," it claims.

However, the KPC pipelines that serve Port Arthur carry chemicals, not oil, to facilities owned by Koch subsidiary Flint Hills Resources.

"These lines cannot transport crude oil, making this entire premise inaccurate," Cohlmia said. "Also, the Keystone XL Pipeline that would carry oil sands will not and cannot connect to these chemical lines."