A Presidential Decision That might Change The World
Opponents of Keystone XL, who’re planning a mass demonstration on the White Home on February seventeenth, have additionally come to view the pipeline battle in epic terms. “Alberta’s tar sands are the continent’s largest carbon bomb,” McKibben wrote at TomDispatch. “If you could possibly burn all of the oil in these tar sands, you’d run the atmosphere’s focus of carbon dioxide from its current 390 elements per million (sufficient to trigger the climate havoc we’re currently seeing) to nearly 600 parts per million, which would mean if not hell, then a minimum of a world with the same temperature.” Halting Keystone wouldn’t by itself stop these excessive concentrations, he argued, however would impede the manufacturing of tar sands, stop that “carbon bomb” from additional heating the environment, and create house for a transition to renewables. “Stopping Keystone will buy time,” he says, “and hopefully that time can be used for the planet to come back to its senses round local weather change.”
A Pipeline With Nowhere to Go
Why has the fight over a pipeline, which, if completed, would supply only four% of the U.S. petroleum supply, assumed such strategic significance As in any major conflict, the reply lies in three components: logistics, geography, and timing.
Begin with logistics and consider the tar sands themselves or, as the business and its supporters in government desire to name them, “oil sands.” Neither tar nor oil, the substance in query is a sludge-like mixture of sand, clay, water, and bitumen (a degraded, carbon-wealthy type of petroleum). Alberta has a colossal provide of the stuff — at the least a trillion barrels in recognized reserves, or the equivalent of all of the typical oil burned by people since the onset of commercial drilling in 1859. Even if you depend only the reserves that are deemed extractible by present know-how, its tar sands reportedly are the equivalent of 170 billion barrels of typical petroleum — more than the reserves of any nation besides Saudi Arabia and Venezuela. The availability of a lot untapped vitality in a rustic like Canada, which is private-enterprise-pleasant and the place the political dangers are few, has been a magnet for main worldwide energy companies. Not surprisingly, lots of them, including ExxonMobil, Chevron, ConocoPhillips, and Royal Dutch Shell, have invested heavily in tar-sands operations.
Tar sands, however, bear little resemblance to the conventional oil fields which these firms have long exploited. They have to be handled in numerous energy-intensive methods to be transformed into a transportable liquid after which processed even additional into usable merchandise. Some tar sands could be strip-mined like coal after which “upgraded” by means of chemical processing right into a synthetic crude oil — SCO, or “syncrude.” Alternatively, the bitumen might be pumped from the bottom after the sands are uncovered to steam, which liquefies the bitumen and allows its extraction with standard oil pumps. The latter course of, often known as steam-assisted gravity drainage (SAGD), produces a heavy crude oil. It must, in flip, be diluted with lighter crudes for transportation by pipeline to specialised refineries equipped to course of such oil, most of that are positioned on the Gulf Coast.
Extracting and processing tar sands is an extraordinarily expensive undertaking, far more so than most typical oil drilling operations. Considerable energy is required to dig the sludge out of the ground or heat the water into steam for underground injection; then, additional energy is required for the assorted upgrading processes. The environmental dangers involved are enormous (even leaving apart the huge amounts of greenhouse gases that the whole course of will pump into the atmosphere). The large portions of water needed for SAGD and those upgrading processes, for example, turn into contaminated with toxic substances. Once used, they cannot be returned to any water supply that might find yourself in human drinking provides — one thing environmentalists say is already occurring. All of this and the bills concerned mean that the multibillion-greenback investments wanted to launch a tar-sands operation can solely pay off if the final product fetches a wholesome price in the market.
And that’s the place geography enters the picture. Alberta is theoretically able to producing 5 to six million barrels of tar-sands oil per day. In 2011, nonetheless, Canada itself consumed solely 2.3 million barrels of oil per day, a lot of it provided by standard (and cheaper) oil from fields in Saskatchewan and Newfoundland. That number shouldn’t be anticipated to rise appreciably in the foreseeable future. No less significant, Canada’s refining capability for all kinds of oil is restricted to 1.9 million barrels per day, and few of its refineries are geared up to process tar sands-style heavy crude. This leaves the producers with one strategic choice: exporting the stuff.
And that’s the place the problems really start. Alberta is an inside province and so can’t export its crude by sea. Given the geography, this leaves only three export options: pipelines heading east across Canada to ports on the Atlantic, pipelines heading west throughout the Rockies to ports in British Columbia, or pipelines heading south to refineries within the United States.
Alberta’s most well-liked option is to send the preponderance of its tar-sands oil to its largest pure market, the United States. At present, Canadian pipeline corporations do operate a variety of conduits that ship a few of this oil to the U.S. notably the original Keystone conduit extending from Hardisty, Alberta, to Illinois after which southward to Cushing, Oklahoma. However these lines can carry less than one million barrels of crude per day, and so will not permit the huge expansion of output the trade is planning for the following decade or so.
In other words, the only pipeline now under development that would considerably develop Albertan tar-sands exports is Toluene Equipment Keystone XL. It’s vitally vital to the tar-sands producers as a result of it affords the only real brief-term — or possibly even lengthy-time period — option for the export and sale of the crude output now coming on line at dozens of initiatives being developed across northern Alberta. With out it, these projects will languish and Albertan production must be sold at a deep low cost — at, that’s, a per-barrel price that might fall under production prices, making additional funding in tar sands unattractive. In January, Canadian tar-sands oil was already selling for $30-$40 less than West Texas Intermediate (WTI), the standard U.S. mix.
The Pipelines That Weren’t
Like an military bottled up geographically and more and more on the mercy of enemy forces, the tar-sands producers see the completion of Keystone XL as their sole practical escape largest petrochemical companies in canada route to survival. “Our greatest downside is that Alberta is landlocked,” the province’s finance minister Doug Horner stated in January. “In truth, of the world’s major oil-producing jurisdictions, Alberta is the just one with no direct access to the ocean. And until we solve this downside… the [price] differential will stay large.”
Logistics, geography, and eventually timing. A presidential stamp of approval on the building of Keystone XL will save the tar-sands industry, ensuring them enough return to justify their massive investments. It will additionally undoubtedly prompt extra investments in tar-sands initiatives and additional manufacturing will increase by an business that assumed opposition to future pipelines had been weakened by this victory.
A presidential thumbs-down and resulting failure to construct Keystone XL, however, might have lasting and severe penalties for tar-sands production. In any case, no other export link is prone to be completed in the close to-term. The other three most generally mentioned options — the Northern Gateway pipeline to Kitimat, British Columbia, an expansion of the prevailing Trans Mountain pipeline to Vancouver, British Columbia, and a plan to use existing, standard-oil conduits to carry tar-sands oil across Quebec, Vermont, and New Hampshire to Portland, Maine — already face intense opposition, with initial development at finest still years sooner or later.
The Northern Gateway undertaking, proposed by Canadian pipeline company Enbridge, would stretch from Bruderheim in northern Alberta to Kitimat, a port on Charlotte Sound and the Pacific. If completed, it might permit the export of tar-sands oil to Asia, the place Canadian Prime Minister Stephen Harper sees a significant future market (despite the fact that few Asian refineries could now course of the stuff). However unlike oil-friendly Alberta, British Columbia has a powerful professional-environmental bias and lots of senior provincial officials have expressed fierce opposition to the challenge. Furthermore, beneath the country’s constitution, native peoples over whose land the pipeline would have to travel should be consulted on the project — and most tribal communities are adamantly opposed to its building.
Another proposed conduit — an growth of the present Trans Mountain pipeline from Edmonton to Vancouver — presents the same set of obstacles and, just like the Northern Gateway venture, has aroused strong opposition in Vancouver.
This leaves the third choice, a plan to largest petrochemical companies in canada pump tar-sands oil to Ontario and Quebec and then employ an present pipeline now used for oil imports. It connects to a terminal in Casco Bay, near Portland, Maine, where the Albertan crude would start the long trip by ship to these refineries on the Gulf Coast. Although no official motion has yet been taken to allow the use of the U.S. conduit for this goal, anti-pipeline protests have already erupted in Portland, together with one on January 26th that attracted more than 1,400 folks.
With no different pipelines in the offing, tar sands producers are increasing their reliance on deliveries by rail. That is producing boom times for some long-haul freight carriiers, however will never show adequate to maneuver the hundreds of thousands of barrels in added day by day output anticipated from initiatives now coming on line.
The conclusion is apparent: without Keystone XL, the worth of tar-sands oil will remain substantially decrease than conventional oil (as well as unconventional oil extracted from shale formations within the United States), discouraging future funding and dimming the prospects for elevated output. In other phrases, as Bill McKibben hopes, a lot of it will stay in the ground.
Business officials are painfully conscious of their predicament. In an Annual Data Form launched at the top of 2011, Canadian Oil Sands Limited, proprietor of the largest share of Syncrude Canada (one of the leading producers of tar-sands oil) noted:
“A extended interval of low crude oil prices might affect the value of our crude oil properties and the extent of spending on development projects and could result in curtailment of production… Any substantial and extended decline in the worth of oil or an prolonged unfavorable differential for SCO compared to either WTI or European Brent Crude would have an antagonistic effect on the revenues, profitability, and cash flow of Canadian Oil Sands and sure have an effect on the power of Canadian Oil Sands to pay dividends and repay its debt obligations.” The stakes in this battle could not be larger. If Keystone XL fails to win the president’s approval, the business will certainly grow at a far slower tempo than forecast and probably witness the failure of costly ventures, leading to an trade-huge contraction. If authorized, however, production will soar and international warming will occur at an excellent faster fee than beforehand projected. In this fashion, a presidential resolution can have an unexpectedly decisive and lasting impression on all our lives.
Michael Klare is a professor of peace and world safety studies at Hampshire College, a TomDispatch common and the author, most lately, of The Race for What’s Left, simply published in paperback. A documentary movie primarily based on his guide Blood and Oil will be previewed and ordered at www.bloodandoilmovie.com. You may follow Klare on Facebook by clicking right here.