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Daniel J. Graeber

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Is it Time to Abandon the Oil Sands Debate?

Is it Time to Abandon the Oil Sands Debate?

Canada's natural resources minister told delegates at the International Energy Forum in Kuwait that his country was on the cusp of becoming an "energy superpower." Canada ranks No. 6 in terms of global oil production, but much of its crude exists in the form of oil sands. European leaders are considering a measure that would classify oil sands as an environmental issue, prompting Canada to threaten to take the issue to the World Trade Organization. With the U.S. political system in a deadlock over Canadian crude, the Ottawa government is now working to convince the international community that the global market is in jeopardy if polices "discriminate against oil sands."

Drill-happy critics of the Obama administration are painting the Keystone XL oil pipeline planned from Alberta as a panacea to U.S. economic woes. Because of debates over the planned route through Nebraska, however, the White House has pushed the issue aside for now. The pipeline company behind the project, TransCanada, has opted for a smaller leg in the United States while the Canadian government has thrown its support behind the Northern Gateway pipeline meant for Asian exports.

Canadian Natural Resources Minister Joe Oliver said his presence at the IEF summit in Kuwait proved his country was "an emerging energy superpower." Canada has around 175 billion barrels of proven oil reserves, which means it’s the only non-OPEC member in the global top five, just behind Saudi Arabia and Venezuela.

European leaders in March were unable to reach a decision on whether or not to characterize oil sands as an environmental issue. Critics of oil sands note that its production releases much more CO2 into the atmosphere compared with regular crude oil and its tendency to sink in water makes it a particular concern if spilled. Some critics have dubbed it the dirtiest form of oil on earth and advocate an outright ban. The European government is set to consider the issue by June.

Oliver, however, complained to IEF delegates that any policy that would discriminate against oil sands would be harmful to the global market and overall energy security. Last year, the global economy was threatened by a loss of crude oil from war-torn Libya, OPEC's No. 7, so sidelining oil sands from Canada could be much more severe.

"Our government believes that the free market is the most efficient and cost-effective means to ensure the proper allocation of resources for the development and supply of energy," said Oliver.

Just as Obama said there's no "silver bullet" that can magically push U.S. gasoline prices to something American consumers consider fair, there's nothing in a global market that's easily replaced. Singling out Canadian oil means potentially sidelining an oil supply larger than Iran's, something a depressed European economy could hardly stomach. But as with Iranian crude, if the Europeans don't want it, they don't have to buy it. While that's an oversimplification of the issue, the world still needs as much oil as it can get. Europe is embracing a greener economy. But until global economic engines run on something other than petroleum products, when Canadian crude oil is at stake, it's time to just let it flow.

By. Daniel J. Graeber of Oilprice.com

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  • Philip Andrews on March 19 2012 said:
    With all this hooha about oil sands, could someone please for the sake of the uninitiated layman such as myself please give a simple pros and cons comparison, sort of side by side table of oil sands vs normal oil?

  • Richard on March 19 2012 said:
    I, personally, would be much more willing to support the oil sands development if I felt like a real effort was being made to reduce the carbon intensity of extraction and improve environmental impacts.
    As it stands, the oil companies have been cutting corners on their environmental assessments, and have been constantly green-washing to make themselves look good. Add to that, a recent study shows that their so-called world class reclamations may never return to anything resembling a natural state, and we've got a problem. The Canadian government has been no better, essentially approving every proposed project without giving it due diligence.
    If I felt that either the oil companies or the Harper Government actually cared about anything other than their bottom line, I may feel differently about the oil sands. There is a long way to go until we get to that point.
    Should the debate end? No way. This debate is the only thing encouraging some sort of environmental responsibility in Alberta, because the Canadian government has shown it couldn't care less.
  • Tim on March 19 2012 said:
    One of my favourite quotes is as follows: "It takes exactly ZERO information to have a VERY strong opinion about something." This is true for religion, politics and especially about energy, including oil sands development. The Province of Alberta is the ONLY jurisdiction in all of North America to actually have a C02 tax. That's right, folks, $15 (CAD) per tonne, for all Alberta emitters over 100,000 tonnes per year. Alberta is roundly considered by major oil producers (who have to compare where to spend their capital dollars, between one area that has investable oil(sands) and the other regions available to them). Richard above doesn't "feel" that oil sands devlopers are making efforts to reduce C02 intensity. However, in the last decade, on average, a 30% reduction has been achieved. Facts trump feelings. How do I know this? My engineering work with several University of Alberta professors (and their students) who are actually doing the hard work. With math. Not feelings. As for the Harper government, they are a conservative government and so they prioritize the economics of the oil sands (the "bottom line" that Richard vilifies, as somehow being instrinsically negative for every reader of this article).
  • Richard on March 19 2012 said:
    If you like facts, here is a good one: emissions intensity is currently trending upwards in the oilsands. 2010 saw a rise of 2% in emissions intensity.


    Even within the oilsands, there is such a thing as low-hanging fruit. In this case it is the mine-able oil sands. Now that they are increasingly using in-situ techniques, watch emissions intensity continue to rise.
    If you would provide a link for your "fact" that "in the last decade, on average, a 30% reduction has been achieved", I would welcome it, because according to the report above, that 30% reduction has come since 1990 - significantly longer than a decade. 1990 was also the early stages of oilsands development, so rapid operational improvements can be expected as operations are scaled up.

    The fact of the matter is that oilsands emit more than other sources of oil. It is also true that environmental assessments have been inadequate, leading to public outcry and a complete re-vamping of the assessment program. If the oil companies want the debate about their product to end, they need to improve their performance.
  • Brian Kaytor on March 28 2012 said:
    Why do we listen to other countries on our oil sands.It is up to our elected officials to make sure that with todays technology and great minds we mine this resource that is needed for ourselves and our allies to the south.We also need a strong committment from the energy companies to adhere to the rules and always make things better as new technology comes along.Those new findings should be financed by all oil companies,in this country.Exactly how many Canadian companies actually own 100 % interest in the Sands.And like the one comment I read of one fellow as to if you do not like it then do not buy it.
    Lets remind ourselves that even in our Country we import alot of foreign oil were as we should be looking at moving our oil down East to refine rather than impoting it from other countries.Build a few pipelines going east more refineries and forget about going south with the raw material and sell them the finished grade.Doing this would increase jobs that would give a good living to alot of Canadians both out west and east.

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