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CanadianValue
CanadianValue
Articles (4624) 

Mr. Obama Needs to Realize That “Tar Sands” Oil Can Power Chinese Cars Too

April 07, 2011

I saw a few things in the news yesterday. One was oil crossing $109 briefly which is kind of jaw dropping. The second was that Saudia Arabia is pushing forward with unconventional energy sources because of concern over their rapidly growing domestic energy demand. The third was that President Obama hinted at not approving the Keystone Pipeline expansion because of concern over the dirty “tar sands”.


The Keystone Pipeline XL is a $13 billion proposal that would expand the existing Keystone pipeline that delivers oil from Canada to the central States by 500,000 barrels per day and also extend it to the Gulf Coast refineries.


Obama made the following comments:


"These tar sands, there are some environmental questions about how destructive they are, potentially, what are the dangers there, and we've got to examine all those questions."


In other words he thinks there should likely be a deferral of a decision on whether the pipeline should be approved. Last week the New York Times came out with this article saying that the United States should say NO to the pipeline:


http://www.nytimes.com/2011/04/03/opinion/03sun1.html


Later this year, the State Department will decide whether to approve construction of a 1,700-mile oil pipeline from Canada to the Texas Gulf Coast called Keystone XL. The underground 36-inch pipeline, built by TransCanada, would link the tar sands fields of northern Alberta to Texas refineries and begin operating in 2013. The department should say no.


State is involved because the pipeline would cross an international boundary. Secretary Hillary Rodham Clinton first said she was “inclined” to support it, but has lately sounded more neutral. An environmental assessment carried out by her department last year was sharply criticized by the Environmental Protection Agency for understating the project’s many risks. The department has since undertaken another environmental review that will soon be released for public comment. It needs to be thorough and impartial.


Advocates of the Keystone XL, which include the Canadian government, the oil industry and its allies in Congress, argue that a steady supply of oil from a friendly neighbor is the answer to rising oil prices and turmoil in the Middle East. But the Energy Department says the pipeline would have a minimal effect on prices, and there is already sufficient pipeline capacity to double United States imports from Canada.


The environmental risks, for both countries, are enormous. The first step in the process is to strip-mine huge chunks of Alberta’s boreal forest. The oil, a tar-like substance called bitumen, is then extracted with steam or hot water, which in turn is produced by burning natural gas. The E.P.A. estimates that the greenhouse gas emissions from tar sands oil — even without counting the destruction of forests that sequester carbon — are 82% greater than those produced by conventional crude oil.


The project poses a major threat to water supplies on both sides of the border. Turning two tons of tar sand into a barrel of oil requires four times as much water as producing a barrel of conventional oil. Operations in Alberta have already created 65 square miles of toxic holding ponds, which kill migrating birds and pollute downstream watersheds, a serious matter for native communities.


In the United States, the biggest potential problem is pipeline leaks. The Keystone XL would carry bitumen — which is more corrosive than crude oil — thinned with other petroleum condensates and then pumped at high pressure and at a temperature of more than 150 degrees through the pipeline.


Last July, an older bitumen pipeline in Michigan spilled 800,000 gallons of the stuff into the Kalamazoo River. A new TransCanada pipeline that began carrying diluted bitumen last year has already had nine spills.


The Keystone XL would cut diagonally across Montana and the Nebraska Sand Hills — a delicate region of porous, sandy soils — to northern Kansas before heading south to the Gulf. It would also cross the Ogallala Aquifer, a shallow underground reservoir of enormous importance for agriculture that also provides drinking water for two million people. A pipeline leaking diluted bitumen into groundwater could have disastrous consequences.


For this reason, Senators Mike Johanns and Ben Nelson of Nebraska have vigorously opposed the planned route of the Keystone XL. Still, political pressure to win swift approval has been building in Congress. Moving ahead would be a huge error. From all of the evidence, Keystone XL is not only environmentally risky, it is unnecessary.



I get the environmental concerns — I really do. But I think that care needs to be taken in delaying too long on this, as Canada has another party with deep, deep pockets that would love to have oil from those dirty “tar sands”. You know who I’m talking about. They have been buying pieces of “tar sands” properties right and left. All it would take is a pipeline to the west coast of Canada instead of to Texas.


Here are some of China’s major oil sands transactions:



  • $817 million invested in Penn West’s Peace River Oil Sands

  • $4.65 billion invested in Syncrude

  • 60% Stake in two Athabasca Oil Sands Properties (amount unknown)

  • 16% Stake purchased in MEG Energy


China wants and needs all of the oil supply it can secure. The United States does too, they just don’t seem to realize how badly they are going to need it yet.

About the author:

CanadianValue
http://valueinvestorcanada.blogspot.com/

Rating: 4.0/5 (11 votes)

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