Clinton In a Bind Over Keystone

Hillary Clinton, a presumptive candidate for president in 2016, has not yet declared herself on the Keystone pipeline. As Politico reports, she is in a deep bind over the issue, in that support for the pipeline would hurt her in the Democratic primaries and opposition would hurt her in the general election. Politico assesses the dilemma thusly:

If she supports the pipeline, she’ll run afoul of the Democratic Party’s increasingly vocal environmentalist base, as well as climate-minded donors like billionaire Tom Steyer, who has ties to the Clintons. That could provide an opening for a liberal opponent in the 2016 primaries, similar to the way Barack Obama outflanked her with the anti-war left in 2008.

But if she opposes Keystone, she’ll go up against labor unions that welcome the project’s promise of thousands of jobs — along with moderate Democrats and, according to polls, most of the American public.

Clinton has offered no public comments about the pipeline in 3½ years, and until now people in her circle have declined to address it too. But people close to Clinton told POLITICO this week that she won’t weigh in on the project anytime soon, saying it would be inappropriate for her to appear to push either Obama or Secretary of State John Kerry on an issue that’s still under review. . . .

But some in the party are worried. “The nightmare is that Democratic primary voters would put withering pressure on her to come out against the pipeline in the primary, a position that would be a huge liability in the general election,” said former Clinton administration climate aide Paul Bledsoe, who thinks Obama should approve Keystone. “As a general election issue, it’s a no-brainer.”

That pressure is going to increase, said one person with close ties to the environmental movement. “Once Obama makes a decision, then the pressure on HRC will amp up on [Keystone] from mainstream enviros,” the person said in an email. “In the meantime, if I’m Martin O’Malley, Bernie Sanders or any other person running for POTUS regardless of HRC, I would come out loud and hard against [Keystone] as a way of rallying true believers in early states,” especially Iowa and New Hampshire.

Another potential rival in 2016 is Vice President Joe Biden, whom a Sierra Club activist quoted last year as saying during a rope-line greeting that he opposes the pipeline. Biden’s office declined to confirm whether he said that, but it became instant lore among climate activists.

Some Keystone opponents already distrust Clinton based on her one public comment about the pipeline — off-the-cuff remarks at a San Francisco speaking engagement in 2010 in which she said the department was “inclined” to green-light the project.

“We’re either going to be dependent on dirty oil from the Gulf or dirty oil from Canada … until we can get our act together as a country and figure out that clean, renewable energy is in both our economic interests and the interests of our planet,” said the then-secretary of State, whose department was studying the Alberta-to-Texas pipeline’s potential environmental impacts.

Her husband, former President Bill Clinton, also indicated he favors the pipeline during remarks in 2012 that still appear in pro-Keystone television ads.

Some Keystone opponents have repeatedly accused the State Department of favoritism toward the project, including during the years when she was secretary. Climate activist Bill McKibben, co-founder of the group 350.org, also blamed her for the disappointing outcome of international climate negotiations in 2009 in Copenhagen, Denmark, which he called “certainly the biggest foreign policy fiasco of the first Obama term.”

“And she wanted to approve Keystone before there was any data on it,” McKibben said. “So I’d say there’s no huge reservoir of trust just yet.”

Other environmentalists point to the fact that Clinton has made climate change a major theme of several of her speeches in recent months. During March remarks in Arizona, for example, she called for a “mass movement” to tackle the issue.

Privately, Clinton allies said those comments reflect concerns she’s heard from people, some of them donors, about moving the issue to the forefront. . . .

Bledsoe said one person who can take Keystone off Clinton’s plate is Obama, who could neutralize the issue by approving the pipeline.

“Of all the reasons to approve Keystone, clearing the way for Hillary Clinton may be the most salient,” Bledsoe said. “If Obama denies the permit, Keystone will become a massive litmus test issue in the Democratic primary for the left and a huge rallying cry for Republicans in the general election.”

But environmental activists say they’ll continue pushing Clinton to take a stance. Neutrality is an “untenable” position for Clinton, Friends of the Earth President Erich Pica said.

“She’s going to have to have a position on it,” he said in an interview. “She can’t urge young Americans to rise up and lead on climate change if she herself isn’t willing to take controversial positions on projects that exacerbate climate change.”

* * *

Andrew Restuccia and Maggie Haberman, “Hillary Clinton’s  Keystone headache,” Politico.

Keystone Pipeline Stakes

According to Politico, "Greens Call out New Keystone XL Deal," Senate Democrats and the White House have accepted a provision, engineered in the Republican-controlled House of Representatives, mandating that the State Department decide within sixty days whether to approve the Keystone pipeline. The provision was added to a payroll tax cut package that extends the tax holiday on social security, jobless benefits, and the Medicare reimbursement rate to the end of February 2012.

The compromise seems to reverse Obama's decision to put off the decision on Keystone until 2013, but Senate Democrats say it is meaningless because the State Department won't have completed its review in 60 days. On the other hand, the Republicans seem determined to tie the White House's much wanted economic program to approval of the pipeline.

Environmentalists are aghast that Keystone is back on the table so soon and have renewed their threat to sit out 2012 if the pipeline goes forward.  Democrats counter that Obama is playing from a weak hand, made weaker by tepid environmentalist support in the 2010 elections.

(The Democratic in-fighting comes along just as I was getting to really enjoy the internecine conflict among the Republican presidential candidates. "I bet you $10,000 that Newt is an unrepentant sinner" is, let us hope, where it goes next.) 


Meanwhile, David Burwell of the Carnegie Endowment for International Peace restates the case that James Hansen and Bill McKibben have been making about the Keystone pipeline:

Keystone XL is more than a political bargaining chip. It is more than a $7 billion capital energy project. It is the Rubicon that scientists, energy analysts, and environmentalists say we must not cross if we are to keep global warming at or below 2 degrees Celsius from pre-industrial times. Build Keystone XL and we lock ourselves into reliance on "dirty" energy sources that will put us over the 2 degrees tipping point. It is "game over."

This 2 degrees limit is not a random number. It is the limit beyond which settled science says we risk a 50-50 chance of severe planetary harm. Imagine a world with 35 percent of all species going extinct; a sea level rise flooding natural and urban infrastructure alike; forced exodus of more than 500 million people from coastal areas; and a deadly migration of tropical diseases toward populations that have not built up resistance. All this within the lifetime of those we care about most deeply -- our children and grandchildren.

Energy analysts are increasingly alarmed at the rate that the world is getting "locked-in" to fossil fuels as its primary energy source. The International Energy Agency, in its annual World Energy Outlook 2011, estimates that we have only until 2017 -- just five years from now -- to fundamentally turn capital investments in energy assets away from fossil fuels if we are to stay within this limit. If not, the best we may be able to achieve is a 3.5 degrees increase. If we delay this shift until 2035, we will be on track for a 6 degrees increase, the consequences of which approach planetary suicide. If we continue to mine tar sands -- the unconventional oils Keystone XL will transport at a rate of up to 800,000 barrels a day -- the lock-in occurs even earlier.

The 2 percent limit is also a legal limit. At the UN climate change summit in Cancun one year ago conferees signed an accord to keep global temperature rise to below the 2 degrees threshold. This commitment was reconfirmed and strengthened at Durban last week. Keystone XL requires a permit from the U.S. state department -- the same agency that negotiated the Cancun and Durban agreements. Given the warnings that scientists, energy analysts, and even insurance company executives are now urgently urging policymakers to heed, the state department has a duty to assess permit issuance against its commitments.

With global consensus now consolidating around the 2 degrees limit, you would think both public and private sector leaders would act -- fast. Yet, as noted recently by Lord Nicholas Stern, former chief economist of the World Bank, major oil, gas, and coal companies proceed to extract these fossil fuels on a business as usual basis. Shareholders seem oblivious to the fact that conversion of resources into proven reserves increasingly relies on risky or destructive exploration in the Arctic, deep oceans, and sensitive ecosystems. Sir Nicholas' conclusion: "either the market has not thought hard enough about the issue or thinks that governments will not do very much."

Environmentalists, understanding that neither private markets nor the political system is capable of responding to the challenge posed by climate change, are determined to stop this pipeline using whatever legal tools are available. If markets, international accords, and public policy won't respond by developing a plan to keep fossil fuel emissions within safe limits, then these resources must simply stay in the ground until an enforceable plan is adopted. Unconventional oils are at the frontline of the fight and Keystone XL is the point of the bayonet. Environmentalists are preparing themselves for trench warfare.

* * *

Even if the Obama administration does not approve the Keystone XL pipeline, it does not mean the project is dead. According to John M. Broder and Dan Frosch of the New York Times, "Politics Stamps Out Oil Sands Pipeline, Yet It Seems Likely to Endure," the oil sands will likely be exploited even if the initial decision at the end of February is negative:

As eager as TransCanada is to build the new pipeline, there is sufficient pipeline capacity for now to carry current production of crude from the Alberta oil sands to American refineries. With relatively minor adjustments, there will be enough space on existing transborder pipelines to handle expected flow until 2018 or later, analysts said.

It is only after 2020, when production of Canadian crude is expected to double from today’s 1.5 million barrels a day, that the pipeline crunch becomes severe. Canadian companies are already planning to expand current pipelines and build new ones to carry oil to the coast of British Columbia for export to Asia.

Notably, however, one such proposed project, Enbridge’s Northern Gateway pipeline from Alberta to Kitimat, British Columbia, has been stopped for at least a year by the Canadian government because of strong opposition on environmental grounds from local landowners and indigenous populations.

Nonetheless, Stephen Harper, the Canadian prime minister, said in a television interview this week that if the United States blocked the Keystone pipeline, Canada would look to China as a market for its oil. “I am very serious about selling our oil off this continent, selling our energy products off to China,” Mr. Harper said.. . .

[E]xperts in oil economics say that the oil is coming out of the ground in any event because of steadily growing global demand and the heavy investment in infrastructure already made in Alberta.

Andrew Leach, an associate professor of natural resources at the Alberta School of Business, said that Canada would continue to develop its oil resources, but that it would need additional pipeline capacity in coming years to meet export demands, whether to the United States or Asia. Slowing or stopping a particular project — Keystone or Northern Gateway, for example — could temporarily slow production in the oil sands, but eventually that resource will be tapped, he and others said.. . .


The oil industry continues to invest in Canadian oil sands because such projects are expected to produce a steady stream of crude for decades, said Philip Budzik, a research analyst at the Energy Information Administration, a federal research organization. He said that over time, costs and the energy required to extract the oil would come down as technology improved.

“In an era of limited accessibility to overseas oil resources and in contrast to conventional oil fields that produce at their peak production level for only three to six years before going into decline,” Mr. Budzik said, “long-lived productive assets such as oil sands provide a company some insurance as to its long-term financial viability.”

He said that canceling Keystone would probably slow the rate of increase of oil sands production, but only until new routes to Asia or North America were found.

12/25/11

Canadian Oil Sands and Geopolitical Perplexities

 

Michael Levi’s analysis of the Canadian oil sands, sponsored by the Council on Foreign Relations in 2009, has something to upset just about everybody, but is also somehow (weirdly) the voice of the establishment. He thinks that the “potential climate damages and energy security advantages of oil sands development are both widely overblown.” I would say, on the contrary, that the potential environmental damages and energy security advantages of oil sands development are insufficiently appreciated.

Actually, there is considerable evidence for “insufficient appreciation” in Levi’s study itself: he notes that exploitation of the oil sands entails the destruction of forests and the pollution of water, over and above additional carbon emissions. “Large projected increases in mining projects could significantly strain freshwater resources. . . . The oil sands’ environmental impacts extend beyond climate and water: mining developments, in particular, require substantial forest clearing and generate large ‘tailings ponds’ in which toxic wastes from the oil sands operations are stored.”

So far as energy security is concerned, he notes in his 2009 study that “the energy security benefits of robust Canadian oil sands production are real. . . . Perhaps the greatest impact of expanded oil sands exploitation would be a diversion of revenues away from adversarial governments—an important outcome—though this benefit would exist regardless of whether the United States was the ultimate consumer. In addition, the United States would benefit from buying oil from a country that would spend more of the proceeds on U.S. goods, and world oil markets would also gain from shifting to supply chains that are less vulnerable to terrorism.”

Having established these substantial advantages, Levi goes on to warn that they are “not as large as some might intuitively assume.” Oil “is traded on a global market . . . Oil sands exploitation will not fundamentally change the global oil picture. . . . U.S. vulnerability to oil price volatility and to price manipulation by OPEC or any large individual producer will not be significantly diminished by shifting imports to the oil sands.”

Those are reasonable caveats, but it turns out that the number one reason the energy security argument has been exaggerated is that it wouldn’t affect military deployments in the region. The “need for U.S. military commitments in the Middle East” will not decline even if oil sands are exploited to the hilt. “While U.S. commitments in the Middle East may have strong historical ties to oil, current U.S. commitments are anchored in other fundamental problems. In particular, the long-term challenges posed by transnational terrorism, by Iran’s pursuit of nuclear weapons, and by threats to Israel’s security will require strong U.S. security commitments in the Middle East regardless of whether oil is also a major regional concern.”

In effect, Levi is saying that the real contribution oil makes to military expenditures in the Middle East is insignificant, as we would want to rule the region anyway.

I find this argument dubious: 

First, we should be looking to limit our “strong U.S. security commitments in the Middle East,” to reconsider the war on terrorism, to have a different policy toward Iran and Israel. If you are looking to do those things, it makes sense to limit your (otherwise growing) dependence on the world oil market and develop resources closer to home.

Second, the “historical ties to oil” evident in US policy should not be so readily dismissed as operative factors in a speculative argument about what will sustain, in the future, US military commitments in the region. It has been a conditioning factor in our past relations, and so should not be so cavalierly taken off the analytical table.

Somewhat paradoxically, it may also make sense, if you want to maintain rather than limit US military involvement in that arc of crisis, that you should seek to limit the pricing power of the oil producing countries. Many among the imperial hawks and neoconservatives have certainly seen this point and have sought to fashion US energy policy around that belief.

For both non-interventionists and (some) interventionists, it would seem, reducing U.S. dependence on the world oil market in general, and on the Persian Gulf in particular, is a good thing. For the world as a whole, however, even cautious projections of supply growth rely on substantial increases in Saudi Arabia and Iraq. The world's dependence on Persian Gulf oil is not going away in the next generation.

6/29/11

Carbon Emissions of Oil Sands and Competitors

 This table from is from Michael Levi, "The Canadian Oil Sands: Energy Security vs. Climate Change" (Council on Foreign Relations, 2009). As Levi notes:

The average life cycle emissions associated with a barrel of oil sands crude currently exceed those from the average barrel of oil consumed in the United States by about 17 percent. This is due mainly to emissions from production and upgrading, which are nearly three times higher for the average barrel of oil sands crude than for the average barrel of oil consumed in the United States. 

Actual emissions from individual oil sands projects vary widely: according to a recent RAND study, oil sands’ production and upgrading emissions range from 70 kg to 130 kg per barrel; this is equivalent to exceeding the life cycle emissions from the average barrel of oil consumed in the United States by 50 kg to110 kg per barrel, or 10 percent to 20 percent. Other sources from a diverse range of viewpoints provide similar estimates. Average oil sands production emissions could increase with a shift from natural gas to dirtier process fuels like coal or raw bitumen, or decrease due to technological improvements; the latter trend has recently dominated.

The roughly 1.2 mb/d of current oil sands production is thus responsible for a premium of about 40 million tons of CO2 emissions each year compared to conventional oil. This is equal to about 5 percent of Canadian emissions, 0.5 percent of U.S. emissions from energy use, and slightly less than 0.1 percent of global emissions—a small piece of the emissions picture. If oil sands production increases as expected and the emissions entailed in producing each barrel are not reduced, that contribution will roughly triple by 2030, making oil sands a huge relative contributor to Canadian emissions but still a relatively marginal one in the U.S. and global contexts.

 Here is a long table of all the Canadian oil sands projects, from an industry association.

6/3/11

Order to Suspend Keystone 1 Pipeline Operations Reversed

On Friday, the New York Times reported that the US government found that the continued operation of the Keystone 1 pipeline "without corrective measures would be hazardous to life, property and the environment." That looked like a big deal; then, the next day, came word that the decision had been overturned. Given the language of the original order, the rapidity of the change raises the question whether political higher-ups were responsible for the reversal. Here is the original story:

After a series of spills, the United States Department of Transportation has ordered the TransCanada Corporation to suspend operation of its one-year-old Keystone 1 pipeline, which carries oil extracted from oil sands in the Canadian province of Alberta to the United States. The so-called “corrective action order” was issued by the department’s Pipelines and Hazardous Materials Safety Administration.  

“Effective immediately, this order prevents TransCanada from restarting operations on their Keystone crude oil pipeline until P.H.M.S.A. is satisfied with the ongoing repairs and is confident that all immediate safety concerns have been addressed,” the agency said. It issued the order in response to two incidents in May involving oil leaks from small-diameter pump-station pipe fittings.  

Transcanada’s Keystone1 is under particular scrutiny because the company has applied to build and operate a much larger pipeline, the Keystone XL, which will run from Canada all the way to refineries on the Gulf of Mexico. That pipeline will pass under some of the Midwest’s most productive farmland and through its major aquifer.

Just last month, the Keystone 1 pipeline suffered two leaks, according to the Sierra Club, one of which involved over 10,000 gallons of oil. Leaks could prove dangerous and economically damaging.  

Environmental experts have raised concerns about the possibilities of leaks from Keystone XL, in part because TransCanada has in the past been granted waivers that effectively allow it to use thinner steel than would normally be required in the United States. They add that the company’s s pipelines are particularly vulnerable because oil from tar sands is more corrosive than conventional oil and is pumped under higher pressures and temperatures.  

“I find that the continued operation of the pipeline without corrective measures would be hazardous to life, property and the environment,” Jeffrey Wiese, an administrator at the department, wrote in issuing the order. 

Secretary of State Hillary Clinton has to decide whether to approve the Keystone XL project and is expected to render her opinion by the end of the year. In reaching a decision, she will have to weigh both energy and environmental concerns to determine whether the pipeline is in the national interest.

Oil Sands a Big Deal for Big Oil

From Steve Levine:

For years, companies from around the world have poured into Alberta in order to sample the oil sands, a massive concentration of bitumen containing some 170 billion barrels of proven recoverable reserves and more than 1.7 trillion barrels in place. Unlike liquid hydrocarbons, bitumen traditionally has been mined and is thus visible, and the price of extraction has been relatively high, but there were no exploration costs, and hence no dry holes. Neither was there political risk: unlike Libya, Canada was highly unlikely to erupt in civil war; nor, like Venezuela, was it liable to nationalize anyone’s oil property. 

Yet somewhere along the road between that bout of nibbling and now, the oil sands have assumed more profound significance in the eyes of the industry. Exxon, a bellwether and the largest of the super-major companies known as Big Oil, is signaling that the oil sands are a hot, strategic play. At a time when the super-majors are barred from more than 75 per cent of the world’s known oil reserves, located in petro-states that wish to develop the hydrocarbons themselves, Alberta’s bitumen belt represents a profoundly shrewd, core, geostrategic hold. “The resource is bigger than the Saudis,” says Amy Myers Jaffe, director of the Energy Forum at Rice University in Houston, Texas. “The bottom line: There is no risk and no geologic constraint.” . . . 

[At the nucleus of the super-majors] are two anchors – LNG and Canada’s oil sands, both of which are humongously large components of Exxon’s and Shell’s reserve base. For Shell, the Athabasca oil sands deliver 250,000 barrels of oil a day, a large eight per cent slice of its daily global production of 3.1 million oil equivalent barrels; Exxon’s Alberta holdings are producing more than 200,000 barrels a day, or about five per cent of its 4.8 million barrels of daily global output, with more to come. So not only are both unconventional; they are also both long on Alberta. . . . 

The oil sands – by far the largest slice of Exxon’s current slate of 1.6 million barrels in new projects planned over the next five or so years – are part of Exxon’s gamble that unconventional oil and gas will save it from the dust bin. Over the last five years, the company has almost doubled the percentage of its resource base comprised of unconventional resources such as oil sands, LNG and gas fraccing plays to a whopping 40 per cent. Conventional oil and gas are just nine per cent of currently planned major projects. 

This does not mean that the oil industry, already whipped and tossed by expropriation, the rise of national oil companies, plus the turbulence of war, hurricanes and terrorist attack, is moving unhampered into these unconventional plays. A vocal number of Canadian and American environmentalists reject the assertion that the oil sands are a necessity – that the resource, the second-largest volume of oil on the planet next to Saudi Arabia’s, comprises half the world’s known reserves unencumbered by national oil companies, and so must be exploited for both economic and security reasons. 

These critics say that greenhouse gas emissions and water demands make the oil sands unfit as a primary energy source. The super-majors, oil companies from China, Norway and Thailand, and the Alberta government have offered concessions including an active tax on carbon emissions, but otherwise have fought back. There seems little if any chance that the provincial jewel will go underdeveloped. The advantages of the oil sands have been simply too tantalizing to ignore. . . .

Today, reserve replacement remains the key issue, but the stakes are far more momentous than the mere massaging of numbers. For the gas-guzzling United States, the oil sands are a geostrategic asset – a large, long-term supply of oil directly next door and wholly invulnerable to the vagaries of politics that plague so many reservoirs around the world. 

For Exxon, Shell and the others, the resource offers salvation from another bane of oil drillers – production decline, an annual average drop of six per cent to eight per cent in a field’s productivity that sets in immediately once extraction begins. Because of field decline, companies are forced to find new oil every year to compensate not only for what they drill, but for the average field decline, too. It is an extraordinarily difficult feat, particularly if you are, like Exxon, a gigantic super-major producing 4.8 million barrels of oil a day, meaning that you must somehow acquire in excess of one-and-a-half new supergiant oilfields every year.

In the absence of environmental considerations, the case for the oil sands is unassailable. The economic and security advantages are real and significant, as Levine insists. In the presence of those considerations, however, the case is severely weakened.

It is easier to predict what will happen--there is indeed "little if any chance that the provincial jewel will go underdeveloped"--than to say with certainty which set of objectives (the mitigation of economic and strategic insecurity as against the mitigation of environmental catastrophe) is most worthy of pursuing in the here and now.

If blocking the oil sands meant simply "off-shoring" emissions to heavy oil producers elsewhere (Saudi Arabia, for instance), there would be an increase in strategic vulnerability and no significant environmental gain. If the United States refused to be a market for Canadian oil sands, China would undoubtedly step up to the plate.

Oil sands are grim from just about every environmental standpoint imaginable, but its competitors are also not without sin, and its strategic advantages are substantial.

Both "Climate hawks" and "Peak oilers" are vitally engaged in understanding the interaction between "man and nature." They are both keen on "bringing nature back in" to the understanding of the human predicament. But their respective analyses point to profoundly different conclusions with regard to the development of the oil sands.

The Great White Big Bad North

From the UK Guardian, a sharp critique of Canada's campaign for tar sands:

Newly released government memos have exposed a secret war that Canada is waging in Europe to kill clean energy policies and ensure no market closes to the dirtiest crude in the world – the tar sands of Alberta. 

The decline of easily accessible oil has set in motion not a shift to renewable energy but a frantic race for the filthiest, hardest-to-extract and most geographically remote fossil fuels. The prize resource are the tar sands: a sludgy bitumen found in northern Alberta whose conversion to oil requires a uniquely destructive, energy-intensive and costly process. To extract the vast deposit – trailing only Saudi Arabia's in reserves – the industry is stripmining a pristine Boreal forest the size of England, guzzling one of the planet's largest watersheds, poisoning downstream native communities, and emitting three times more carbon than conventional oil production. The planetary scars from the largest industrial project in history can already be seen from outer space. 

The dream of the tar barons scouring new frontiers should be familiar to the British: that the sun never sets on their pipeline empire. Canada's laboratory has provided an environmentally disastrous but extremely profitable model – which they now want to export everywhere: Congo's rainforests, Russia's remote basins, the US desert, Jordan, Venezuela, Madagascar and even Trinidad and Tobago. 

But the road to these spoils leads through Europe. While the continent doesn't import any Canadian crude, the oil giants and their government backers realise a European fuel quality directive that would slap a dirty label on tar sands to promote cleaner transport fuels could set the global standard – and effectively shut the door on Alberta's exports. "Our fear is that if something happens in the EU and it is spread in other countries … we could have roughly one third of the world's population subscribing to regulation or legislation that mitigates against our oilsands," a provincial minister in Alberta said last year. It is also sure to raise the heat on European oil companies to withdraw their enormous and growing investment in tar sands industries.

Hence the public relations blitzkrieg, conducted since 2009 through missions in key cities: London, Paris, Brussels, Oslo, Berlin and the Hague. Headquartered in England, an "oil sands team" run by Canada's foreign ministry has mounted the offensive. They've monitored green groups; furiously lobbied against the fuel quality directive; coordinated junkets to Alberta for EU parliamentarians; and targeted international journalists in an attempt to improve media coverage. The British government appears to have succumbed to the campaign and is working to block the EU from singling out the larger carbon footprint of the tar sands.  

Canada's foreign team has also been getting cozy with big oil corporations they call "like-minded allies". They've held numerous secret meetings with BP, Shell, Total and Norwegian Statoil to share "intelligence" and discuss joint initiatives. The plans run to the very top: Canada's prime minister, Stephen Harper himself, met covertly with Total's CEO in Paris in June 2010, after a visit with French President Sarkozy. Total has since announced plans to pump $20bn into their Alberta projects by 2020. 

Harper's Conservative party now has majority control of a government that is the most rightwing in modern Canadian history. He will eagerly execute a philosophy befitting the son of an oil executive. This means the construction of pipeline corridors – to the south through midwest US states, to the eastern seaboard, and to the west carrying crude for shipment to China and beyond – with the goal of converting Canada into a "global energy powerhouse". Output will increase five-fold to 5m barrels of dirty oil a day by 2040. The cost to the global climate is incalculable. 

The good news, however, is that the Canadian government is losing the wider battle over hearts and minds. "Oil sands are posing a growing reputational problem [in Europe], with the oil sands defining the Canadian brand," states one government memo anxiously assessing the "resurgence of highly critical public campaigns" on the continent. The Keystone XL pipeline that would run through the US heartland has faced stiff resistance, and is currently under review by Secretary of State Hilary Clinton. And on the home front, the world's top political risk consultancy Eurasia has acknowledged that the opposition of scores of First Nations (indigenous peoples) to the westward "Gateway" pipeline may be insurmountable: "Native land claims scare the hell out of investors," they note. . . .

Looking on the bright side, it is apparently not true that director Peter Jackson is planning to shoot the Hobbit in Alberta, "with the tar sands as the set of the dark land of Mordor."

Oil Sands Projections from CERA

Canada produces about 2.9 million barrels per day of oil; about half of that (1.5 mbd) was derived from the tar sands in 2010. The United States imports about 2 mbd from Canada. (See the May 4, 2011 "This Week in Petroleum" report of the Energy Information Administration for these figures.)

A new report from Cambridge Energy Research Associates, according to the Calgary Herald, predicts that over the next 25 years $2.077 trillion will be invested in building and maintaining the oilsands, including "$253 billion in initial capital for construction and $1.8 trillion for operation, maintenance and sustaining capital."

“The projects ... that were delayed are now back being developed again, there are more projects, some projects have moved forward in time,” said CERI president and chief executive Peter Howard in an interview. “The net result is there is the potential for more money to be invested than what we had suggested in 2009. “And with more money comes more jobs, more gross domestic product, etc.”  

Under its “realistic scenario,” oilsands production capacity will ramp up from about 1.7 million barrels per day now to 2.1 million bpd by 2015, 4.8 million by 2030 and 4.9 million by 2035, the study shows 

In 2008, CERI projected oilsands production of over five million bpd by 2015, and over six million bpd by 2030 [emphasis added]. In November 2009, it revised that estimate lower, predicting that $309 billion will be spent over 35 years to increase output from 1.4 million bpd to 1.7 million bpd in 2015, 4.5 million bpd in 2030 and 5.3 million bpd by 2041.

That's quite  a tumble:

In 2008, CERA says over 5 mbd by 2015.
In 2009, CERA says 1.7 mbd by 2015.
In 2011, CERA says 2.1 mbd by 2015.

Given this record, what exactly are we to believe? When making projections, do firms such as CERA ever acknowledge past mistakes? Why didn't the reporter press Howard on his dubious record of prophecy?

Instead of predicting production, it makes a lot of more sense to make estimates of likely production given various price assumptions. Here are two graphs with data from the Energy Information Administration (via Michael Levi's study on the oil sands for the Council on Foreign Relations) that do so:

Alberta Oil Sands

In Situ Mining of Oil Sands

Cleaning Up the Oil Sands in Alberta (from ClimateWire, December 16, 2010)

It is known as in situ, an alternative form of oil-sands extraction for bitumen more than 490 feet beneath the earth. The deep bitumen is not mined, but pumped out of the ground after being loosened with hot steam.

It is not yet the primary mode of production in the oil sands, but it will be, considering that 80 percent of the overall reserves are too deep to be extracted through traditional mining.

The leased area for in situ is 16 times greater than the entire mining region, according to the Pembina Institute, an environmental think tank based in Canada.

Without the massive trucks, factories and large "tailings" ponds of waste that have caused waterfowl deaths and bad press for the mining sector, in situ may help Canada win a public relations war.

Yet this next generation of oil sands extraction is raising concerns among environmentalists because of climate change. In situ produces more greenhouse gases per barrel of oil than traditional oil-sands mining, which in turn generates more heat-trapping gases than conventional oil drilling, such as that in the Middle East.

In situ may be less of an eyesore than mining, environmentalists say, but it is going to worsen the oil sands' carbon footprint when the country can least afford it. It also has the potential to destroy more swaths of the country's boreal forest than mining because of the sheer number of planned in situ facilities.

"Canada won't be able to meet their targets under the Kyoto Protocol largely because of their ever-increasing emissions from oil sands. More in situ development won't help that," said Danielle Droitsch of the Pembina Institute.

Her comments come as Canada is under scrutiny for lowering greenhouse gas reduction targets for 2020 to tie its policies to the United States'. At international climate negotiations this month, Canada said it would not support commitments past 2012 under the Kyoto Protocol as long as other large emitters like the United States fail to ratify the treaty.

* * *

On a recent tour of oil sands operations in Alberta, the differences between mining and in situ were stark.

At a Suncor mining operation, a canyon-like pit is home to massive shovels dumping dark, bitumen-rich earth into truck after truck, which move on the horizon like ants circulating through an anthill. They deliver their loads to a building where the bitumen gets extracted from clay, sand and water in bubbly caldron-like machines splattering oily liquid.

All around the complex are tailings ponds of waste, which hold small amounts of bitumen mixed with water, clay and sand. Ponds run by other companies have proved toxic to birds, which have died by the hundreds at some locations in the province and subjected the industry to lawsuits.

Amid public outcry and government regulations, companies are spending millions to clean up the ponds and reclaim the land. This month, seven companies announced they would collaborate on research to reduce tailings waste.

No such obstacles plague an in situ plant two hours down the road, operated by Cenovus on a site called Christina Lake. There, the main above-ground visual is a surgical pipeline network in the snow mixed with patches of buildings and roads. There are no tailings ponds, shovels, trucks or pit mines.

"This is basically what you're going to see for the next few decades as far as in situ disturbance," explained Drew Zieglgansberger, a senior vice president at Cenovus, pointing at forest sprinkled with occasional wells and white pipes.

There are two main in situ methods, but the one being used by companies like Cenovus -- steam-assisted gravity drainage -- is the one projected to grow the most. It involves using natural gas to heat steam, which is then injected underground via a well.

The steam loosens the bitumen underneath the earth, where gravity drains it into a second well below the steam-filled pipe. Water and bitumen are then pumped to the surface, where they are separated before being piped to a refinery.

With in situ, there is no need to break up bitumen from clay or other materials, since the oil comes to the surface relatively pure.

Partially because in situ technology is newer to Alberta than mining, it makes up a lower percentage of oil sands production, standing around 45 percent. It will become the majority mode of production by 2015, according to Alberta's Energy Conservation Resources Board, or ERCB.

The higher greenhouse gas emissions over mining come mainly from in situ's reliance on natural gas. "We're burning a cleaner fossil fuel to get a dirtier fuel," explained Zieglgansberger.

Just how much "dirtier" in situ is on the greenhouse gas front is a matter of debate, however.

A report from IHS Cambridge Energy Research Associates this year, for example, reported that one in situ process produced roughly 23 percent more greenhouse gases than oil sands mining methods. The Pembina Institute estimates that in situ is 152 percent more greenhouse gas-intensive than mining, per barrel.

There are similar discrepancies in the figures on the oil sands overall, with some numbers reporting that the industry spews at least 20 to 40 percent more greenhouse gases than traditional oil drilling, while others state it is more in the range of 6 percent.

The differing numbers result from different ways of calculating the life-cycle emissions of the oil sands, according to Droitsch of Pembina.

Industry tends to calculate the "well to wheels" number for emissions, which includes greenhouse gases emitted when oil-sands oil is burned in a vehicle, along with production emissions. Their argument is that 75 percent of emissions associated with the oil sands comes from a tailpipe, and that transportation should be considered in evaluations of the oil sands.

"With most of the emissions from the oil sands, you're just as much to blame as me," said Zieglgansberger to reporters.

Many environmentalists focus on the "well to tank" number, which accounts for oil sands production only. In their view, the key point in terms of climate change is how extraction and processing of oil sands fuel compares to traditional oil drilling. The inclusion of transportation emissions camouflages the real climate impact, said Droitsch.

There are additional ways to tinker with the estimates, including calculating emissions associated from diluted rather than pure bitumen.

Companies are doing extensive research to decrease greenhouse gas emissions, partially to reduce costs. They also don't know the future of natural gas prices, which need to stay low enough in comparison to oil prices for oil sands processing to be competitive, Zieglgansberger said.

Cenovus, for example, is investigating injecting butane with steam underground to assist with loosening bitumen. In theory, that should lower the amount of natural gas and steam, and thus the emissions and price tag of the process.

Of 50 company research projects, 35 are dedicated to lowering greenhouse gas emissions, said Zieglgansberger. In the next decade, the industry is going to be able to get its "steam to oil" ratio low enough through new technology that emissions will parallel those of conventional oil drilling, he said.

That doesn't change the fact that the emissions from the oil sands could triple from 2008 levels by 2020, according to green groups.

The Albertan government also has invested more than $2 billion on carbon capture and storage technology, although some of that work is focused on coal plants. Carbon capture and storage has yet to be proved at scale.

It is "a small portion of the answer" for oil sands emissions, said Stringham of CAPP. Efficiency is the main way industry will cut greenhouse gases, he said.

In 2007, the Albertan government required facilities emitting more than 100,000 metric tons of greenhouse gases yearly to reduce their emissions intensities by 12 percent from predetermined baselines.

Companies failing to meet that target must pay a carbon price of $15 per metric ton into an Albertan-run fund. The industry says the fund is boosting development of clean energy technologies, while environmentalists criticize the penalty as a weak one that is a financial drop in the bucket for most companies.

However, the ultimate fate of in situ may not rest with arguments about climate change. Albertan government official Andy Ridge said the province will not consider a cap on emissions if the United States is not doing the same.

"Canada needs the rest of North America to move before we can go any further on our own regulatory framework. We can't put our industry at a disadvantage," said Ridge, Alberta's director of the Climate Change Secretariat.

In the meantime, challenges to in situ are coming over other issues. Yesterday, a peer reviewed report from the Royal Society of Canada reported that the cumulative impact of in situ on groundwater and surface water, such as lakes and wetlands, needs to "be better understood." In situ uses less water overall than mining, but there are "uncertainties" about groundwater contamination, the Royal Society said.

There are also concerns about the woodland caribou, an endangered species in Canada whose habitat happens to overlap with swaths of the in situ region. The landscape footprint per barrel of oil of in situ is lower than mining, but more forest could be lost overall with in situ because of the number of planned in situ facilities.

"If you want in situ and oil sands development, you will not have caribou at their traditional levels," said Stan Boutin, a biological sciences professor at the University of Alberta who published a peer reviewed paper this year on the species.

The Albertan government is examining the possibility of conservation areas off-limits to development, but the "devil will be in the details" of any proposal, said Boutin.

Dave Ealey, a spokesman for Alberta's Sustainable Resource Development, said he disagreed that in situ had a greater overall impact on forestland than mining. The main issue with in situ is straight "cutlines" through the forest that allow wolves to move easily to attack caribou, he said. They are common with in situ because of the building of pipeline infrastructure.

The government is working with industry to try and reduce the size of the cutlines and reclaim cutline areas, he said. "We are fully aware of the challenges," he said.

At Cenovus, cameras have been erected around the pipelines to monitor the movement of animals such as caribou, although no patterns have been detected yet because the program is in its "infancy," said a company official.

Slowing down development would risk hundreds of jobs and economic growth, other oil sands backers say. The Albertan government collects roughly $3 billion in royalties from oil sands projects in a budget with $34 billion in revenue.

Some of those funds are funneled into local communities in desperate need of money for schools, health clinics and projects. At Cenovus headquarters, Mayor Peter Kirylchuk said in situ development has transformed his county, which is in the heart of in situ country.

The Lac La Biche budget which Kirylchuk oversees jumped from $19 million in 2007 to $44 million this year. The county is about to roll out a new fitness and health center with millions of dollars in donations from companies operating in situ facilities.

"We couldn't have built it without them," said Kirylchuk. "Our corporate sponsors came through in a big way."

Tar Sands

http://www.fe.doe.gov/programs/reserves/oilgas_educational_posters.html

Oil Shale and Tar Sands in 3 Western States

The site from which this map is taken has a lot more on the oil shale and tar sands situation in Colorado, Utah, and Wyoming.

Tar Sands and Shale Oil: Subprime Carbon Assets

"Subprime carbon assets" was Al Gore's choice expression in An Inconvenient Truth regarding Tar sands. But about them one thing is clear: there is lots and lots of energy in them thar Tar sands, subprime though they may be.

Tar sands in Canada and Venezeula are not equivalent to oil, as Chris Vernon explains: "A barrel of tar-sand oil reserves isn’t the same as a barrel of conventional oil reserves since it can’t support the same level of flow rates. We currently have around 1000 billion barrels of conventional oil reserves and these support a flow rate of around 31 billion barrels per year (84-85mbpd). If these 3500Gb were equivalent we could expect today’s tar sands and oil shale to support flow rates as high as 109 billion barrels per year (300mbpd). It is clearly impossible to draw 300mbpd from these reserves so they aren’t equivalent to conventional reserves from a peak oil point of view."

A debunker of Peak Oil notes that "In a way, tar sands are the best oil source. You can't pump them very fast, so they have two virtues: they will slow down our consumption, and they will last a very long time."

The biggest defect of tar sands and other unconventional sources is that they require for their exploitation the use of a tremendous amount of energy. Their energy return on investment is miserably low by comparison with oil itself. On every score, their environmental impact is grim.

If you take seriously the case for global warming and all that follows, the Tar sands option is the kiss of death; by comparison coal looks terrific. Both, however, would do less harm if a reliable way were found to capture and sequester carbon emissions--another question surrounded by considerable uncertainty.

The existence of these vast oilsand reserves is an important fact. It constitutes a potential corrective to the Peak Oil view and introduces another complication in calculating reserves. Reserve calculations based on these "unconventional" sources lead experts such as Peter Odell to conclude that carbon fuels will dominate the 21st century.

One possibility has to be allowed for: Developing the tar sands in Canada and Venezuela, to sustain our dependence on energy, will seem to many a tempting route, the prospect of climate change be damned.

It's just like the smoker thinking about quitting who is always weighing present need against an uncertain great hereafter, except that "humanity" has no center of decision. Even if half want to quit smoking, what will drag the other half along?