Oil Sands and Pipeline Mythology

Mark Green
Posted August 10, 2011

During my visit to Canada's oil sands region last week, I sensed the concern of energy company officials and others over misinformation that's being spread about oil sands. Ron Liepert, Alberta's energy minister, clearly was puzzled at the idea the United States might reject the proposed Keystone XL pipeline, which would deliver millions of barrels of oil to U.S. refiners and eventually support more than 500,000 jobs.

Yet, it's possible. The State Department is weighing approval of the Keystone XL, with a final decision expected by year's end. In the meantime debate over the pipeline and oil sands continues - and with it the stream of misinformation from opponents of abundant, accessible oil from our neighbor and close ally. One post this week is fairly representative. Working our way through:

Opponents say: Pipeline and oil sands backers are trying to push the Keystone XL through before "responsible" environmental analysis can be conducted.

Facts: In September it will have been three years since U.S. approval for the project was first requested by TransCanada, which would build the $7 billion, 1,700-mile pipeline. Historically, the process has taken 18 months to two years. As for "responsible" analysis, there have been two environmental impact reviews issued by State, in April 2010 and this past April. The second basically affirmed the first, concluding the pipeline would meet environmental and safety standards and that "no new issues of substance" were raised by various opponents.

Opponents say: The pipeline is unnecessary.

Facts: Although an existing pipeline runs from Alberta through the Midwest, it ends at points in Oklahoma and Illinois. The Keystone XL would deliver Canadian oil (and oil from U.S. producers) to refiners in Texas and increase the overall pipeline system's capacity to 1.3 million barrels a day. TransCanada:

"A project of Keystone's magnitude can only be undertaken when there is sufficient demand, need and commitment in the U.S. marketplace. Cleary, there is. ... According to the Energy Policy Research Foundation, Inc. (EPRINC), 'because of production declines in Mexico and Venezuela, U.S. refiners are receiving reduced shipments of heavy crudes ... many of whom long ago made expensive upgrades in complex facilities that favor heavy oil. Additionally, TransCanada is looking to expand the Keystone XL capability by offering Bakken oil producers, located in North Dakota and Montana, a chance to link into the pipeline and send their crude to Gulf Coast refineries for the first time.'"

Common sense is compelling: Why would TransCanada invest $7 billion in a project that isn't needed?

Opponents say: Developing Canadian oil sands will result in greenhouse gas emissions much greater than those associated with other sources of crude oil.

Facts:The Canadian Association of Petroleum Producers (CAPP) notes that a wells-to-wheels comparison of the carbon dioxide emissions from oil sands (mined and recovered from steam-assisted wells) is on par with emissions from Venezuelan and Nigerian crude (see chart).

CAPP also points out that when it comes to transportation fuels (regardless of the crude oil source), about 75 percent of CO2 and other emissions come from vehicle use, not exploration and production.

Here's another point: Even if the Keystone XL isn't built, oil sands crude will go somewhere. TransCanada CEO Russ Girling spoke to Platts:

"Make no mistake, that resource is getting developed. It's the single-greatest driver of the Canadian economy. If the U.S. doesn't want the oil, then somebody else will. ... It's a question of whether you want Canadian oil or you want oil from other places around the globe that don't necessarily share the values which would include environmental protection, protecting rights of workers and other things that Canada strongly stands behind."

As Liepert told me and other visitors last week, China has invested $15 billion in Alberta over the past 18 months. That's significant. So another question: Who has stronger standards for developing, transporting and processing crude from oil sands - the United States and Canada or China?

Opponents say: Oil sands mining operations, like the Suncor Millennium mine I visited, remove forests, desolate the environment and require tailings ponds large enough to be seen from space.

Facts: Suncor's open-pit mine is being filled in as the oil sands is extracted. The company saves the muskeg - the surface layer of spongy, decayed vegetation - so that it can be put back once the pit is filled. Meanwhile, the company has developed new technologies that will require fewer tailings ponds in the future. Those that are used will settle out clay sediments faster and permit speedier water recycling - both allowing quicker restoration of the landscape, such as Suncor's former Pond #1:

As for the impact on Canada's forests, Reason magazine's Ron Bailey, who was on our tour, offered some perspective:

"The Natural Resource Defence Council (NRDC) and other environmental lobbyists are right that mining oil sands does mean ripping up some boreal forest. Let's put that in context. Canada's boreal forest covers 2.2 million square miles, an area that is about 60 percent of the size of the entire United States. So far oil sands production has disturbed about 410 square miles of boreal forest. For comparison, the Chicago metropolitan area covers about 10,000 square miles."

Opponents say: The risk of spills along the proposed Keystone XL is too great, especially where it would cross the Ogallala aquifer in Nebraska. They cite a dozen leaks along the existing Keystone line.

Facts: TransCanada officials say the existing pipeline itself has suffered "zero" leaks. They say a dozen recorded spills have come from pumping station malfunctions, in pipe no larger than a garden hose, and that 10 of the 12 accidents have measured between 5 and 10 gallons. They point out Nebraska already has 21,000 miles of pipeline running through it, and that the Keystone XL would incorporate the latest in pipeline technologies and be monitored by state-of-the art systems capable of isolating suspected incidents within minutes.

More on oil sands and the Keystone XL to come, but here's the bottom line: The oil is plentiful, Canada is willing to supply it and the means to deliver this valuable resource - part of a larger strategy to reduce America's dependence on other foreign sources - is at hand. And jobs, too - up to 20,000 in the pipeline's construction phase alone. Energy, jobs, security. Can Washington take "yes" for an answer?