A Presidential Choice That could Change The World
Opponents of Keystone XL, who are planning a mass demonstration at the White Home on February 17th, 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 burn all the oil in those tar sands, you’d run the atmosphere’s concentration of carbon dioxide from its present 390 elements per million (enough to cause the local weather havoc we’re at the moment seeing) to practically 600 elements per million, which might mean if not hell, then at the very least a world with an identical temperature.” Halting Keystone would not by itself forestall those excessive concentrations, he argued, but would impede the manufacturing of tar sands, cease that “carbon bomb” from additional heating the environment, and create house for a transition to renewables. “Stopping Keystone will purchase time,” he says, “and hopefully that time will be used for the planet to come back to its senses around climate change.”
A Pipeline With Nowhere to Go
Why has the struggle over a pipeline, which, if accomplished, would provide only four% of the U.S. petroleum provide, assumed such strategic significance As in any main conflict, the reply lies in three components: logistics, geography, and timing.
Start with logistics and consider the tar sands themselves or, because the business and its supporters in government favor 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-rich type of petroleum). Alberta has a colossal provide of the stuff — at the very least a trillion barrels in identified reserves, or the equal of all the conventional oil burned by humans for the reason that onset of commercial drilling in 1859. Even when you count only the reserves which are deemed extractible by current know-how, its tar sands reportedly are the equal of 170 billion barrels of conventional petroleum — more than the reserves of any nation except Saudi Arabia and Venezuela. The availability of a lot untapped vitality in a rustic like Canada, which is non-public-enterprise-friendly and the place the political dangers are few, has been a magnet for main international power firms. Not surprisingly, many of them, together with 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 corporations have long exploited. They should be treated in various energy-intensive methods to be converted right into a transportable liquid and then processed even additional into usable merchandise. Some tar sands may be strip-mined like coal after which “upgraded” by chemical processing right into a synthetic crude oil — SCO, or “syncrude.” Alternatively, the bitumen could be pumped from the ground after the sands are uncovered to steam, which liquefies the bitumen and permits its extraction with conventional oil pumps. The latter course of, referred to as steam-assisted gravity drainage (SAGD), produces a heavy crude oil. It should, in turn, be diluted with lighter crudes for transportation by pipeline to specialized refineries outfitted to process such oil, most of which are positioned on the Gulf Coast.
Extracting and processing tar sands is an extraordinarily expensive endeavor, way more so than most standard oil drilling operations. Appreciable power is needed to dig the sludge out of the ground or heat the water into steam for underground injection; then, additional vitality is needed for the various upgrading processes. The environmental dangers involved are huge (even leaving apart the vast amounts of greenhouse gases that the whole course of will pump into the ambiance). The large quantities of water needed for SAGD and people upgrading processes, for example, turn into contaminated with toxic substances. As soon as used, they cannot be returned to any water source that might find yourself in human drinking supplies — one thing environmentalists say is already occurring. All of this and the expenses involved imply that the multibillion-greenback investments needed to launch a tar-sands operation can only repay if the ultimate product fetches a wholesome worth in the marketplace.
And that’s where geography enters the picture. Alberta is theoretically able to producing five to six million barrels of tar-sands oil per day. In 2011, however, Canada itself consumed solely 2.Three million barrels of oil per day, a lot of it supplied by typical (and cheaper) oil from fields in Saskatchewan and Newfoundland. That number just isn’t anticipated to rise appreciably within the foreseeable future. No less vital, Canada’s refining capacity for all sorts of oil is proscribed to 1.9 million barrels per day, and few of its refineries are outfitted to process tar sands-model heavy crude. This leaves the producers with one strategic option: exporting the stuff.
And that’s where the issues actually start. Alberta is an inside province and so can not export its crude by sea. Given the geography, this leaves solely three export choices: pipelines heading east across Canada to ports on the Atlantic, pipelines heading west across 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 natural market, the United States. At current, Canadian pipeline firms do function a lot of conduits that deliver 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. But these traces can carry less than a million barrels of db wti crude oil booster usd index crude per day, and so is not going to permit the large growth of output the trade is planning for the following decade or so.
In other phrases, the one pipeline now below improvement that would significantly increase Albertan tar-sands exports is Keystone XL. It’s vitally vital to the tar-sands producers as a result of it provides the sole short-term — or presumably even long-time period — option for the export and sale of the crude output now coming on line at dozens of tasks being developed throughout northern Alberta. With out it, these initiatives will languish and Albertan manufacturing must be sold at a deep discount — at, that is, a per-barrel worth that might fall beneath db wti crude oil booster usd index production costs, making additional investment in tar sands unattractive. In January, Canadian tar-sands oil was already promoting for $30-$forty less than West Texas Intermediate (WTI), the standard U.S. blend.
The Pipelines That Weren’t
Like an military bottled up geographically and increasingly at the mercy of enemy forces, the tar-sands producers see the completion of Keystone XL as their sole sensible escape route to survival. “Our largest problem is that Alberta is landlocked,” the province’s db wti crude oil booster usd index finance minister Doug Horner stated in January. “In reality, of the world’s major oil-producing jurisdictions, Alberta is the just one with no direct entry to the ocean. And until we resolve this drawback… the [price] differential will remain massive.”
Logistics, geography, and at last timing. A presidential stamp of approval on the building of Keystone XL will save the tar-sands trade, ensuring them sufficient return to justify their massive investments. It might also undoubtedly immediate extra investments in tar-sands tasks and further manufacturing increases by an industry that assumed opposition to future pipelines had been weakened by this victory.
A presidential thumbs-down and resulting failure to build Keystone XL, nevertheless, might have lasting and extreme penalties for tar-sands manufacturing. In any case, no different export link is prone to be completed in the close to-term. The opposite three most generally discussed choices — the Northern Gateway pipeline to Kitimat, British Columbia, an growth of the present Trans Mountain pipeline to Vancouver, British Columbia, and a plan to make use of current, typical-oil conduits to carry tar-sands oil across Quebec, Vermont, and New Hampshire to Portland, Maine — already face intense opposition, with preliminary development at best nonetheless years in the future.
The Northern Gateway mission, proposed by Canadian pipeline company Enbridge, would stretch from Bruderheim in northern Alberta to Kitimat, a port on Charlotte Sound and the Pacific. If accomplished, it might permit the export of tar-sands oil to Asia, where Canadian Prime Minister Stephen Harper sees a big future market (despite the fact that few Asian refineries could now process the stuff). However not like oil-pleasant Alberta, British Columbia has a robust pro-environmental bias and plenty of senior provincial officials have expressed fierce opposition to the project. Furthermore, under the country’s constitution, native peoples over whose land the pipeline must travel must be consulted on the challenge — and most tribal communities are adamantly opposed to its development.
One other proposed conduit — an enlargement of the present Trans Mountain pipeline from Edmonton to Vancouver — presents the same set of obstacles and, just like the Northern Gateway undertaking, has aroused robust opposition in Vancouver.
This leaves the third possibility, a plan to pump tar-sands oil to Ontario and Quebec after which employ an current pipeline now used for oil imports. It connects to a terminal in Casco Bay, close to Portland, Maine, the place the Albertan crude would begin the lengthy trip by ship to those refineries on the Gulf Coast. Though no official action has yet been taken to allow the usage of the U.S. conduit for this objective, anti-pipeline protests have already erupted in Portland, together with one on January twenty sixth that attracted greater than 1,400 people.
With no other pipelines within the offing, tar sands producers are increasing their reliance on deliveries by rail. That is producing growth instances for some long-haul freight carriiers, however won’t ever prove ample to move the millions of barrels in added each day output expected from tasks now coming on line.
The conclusion is apparent: without Keystone XL, the price of tar-sands oil will stay considerably lower 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 words, as Bill McKibben hopes, a lot of it’s going to stay in the ground.
Industry officials are painfully conscious of their predicament. In an Annual Data Form released at the end of 2011, Canadian Oil Sands Restricted, owner of the biggest share of Syncrude Canada (one of the main producers of tar-sands oil) famous:
“A prolonged interval of low crude oil costs might have an effect on the worth of our crude oil properties and the extent of spending on growth initiatives and could lead to curtailment of production… Any substantial and extended decline in the value of oil or an extended destructive differential for SCO in comparison with either WTI or European Brent Crude would have an antagonistic effect on the revenues, profitability, and cash circulate of Canadian Oil Sands and likely have an effect on the flexibility of Canadian Oil Sands to pay dividends and repay its debt obligations.” The stakes in this battle could not be higher. If Keystone XL fails to win the president’s approval, the industry will certainly develop at a far slower pace than forecast and probably witness the failure of costly ventures, resulting in an trade-wide contraction. If approved, nevertheless, production will soar and global warming will happen at a fair quicker fee than beforehand projected. In this manner, a presidential choice could have an unexpectedly decisive and lasting impact on all our lives.
Michael Klare is a professor of peace and world security research at Hampshire Faculty, a TomDispatch common and the author, most just lately, of The Race for What’s Left, simply revealed in paperback. A documentary film based mostly on his ebook Blood and Oil may be previewed and ordered at www.bloodandoilmovie.com. You’ll be able to comply with Klare on Facebook by clicking here.
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