The United States imports almost half of its oil (49%), and about 25% of our imports come from one country - our friendly neighbor to the North, Canada. Today, Canada supplies more oil to the USA than all Persian Gulf countries combined.
With an estimated 175 billion barrels of technically recoverable oil, Canada has the world’s second largest oil reserves. About 170 billion of those barrels, or 97%, are located in geologic formations called oil sands - a mixture sand, water, clay, and bitumen, a sticky tar-like form of petroleum.
Unlike “conventional” oil, bitumen is too viscous to be pumped without being heated or diluted.
Last Wednesday and Thursday, courtesy of the good folks at American Petroleum Institute (API), I and other bloggers toured two large Canadian oil sands projects near Fort McMurray, Alberta.
The Surmont Project, operated by ConocoPhillips, uses a technology called steam assisted gravity drainage (SAGD) to melt the bitumen so that it can be pumped back to the surface. At each well site, two parallel pipes descend to about 1,000 feet below the surface and then extend horizontally for several thousand feet. Heated steam in the upper pipe melts the bitumen, which then flows back up to the surface through the lower pipe. Natural gas may also be injected in the upper pipe to further reduce the viscosity of the bitumen. Along with the melted bitumen, the lower pipe brings hot water and natural gas back up to the surface for capture and reuse in a closed cycle.
This process is relatively new but within a few years it is expected to dominate Canadian oil production, because about 80% of Canada’s oil sands are too deep to be mined. The Surmont Project, which started production in 2007, currently produces about 23,000 barrels per day (bpd). It is expected to be producing 136,000 bpd by 2015.
The Millennium site, operated by Suncor Energy, relies mainly on mining to access the bitumen. The oil sands here are at a relatively shallow layer - about 350 feet below the surface. Millennium started production in 1967, making it the world’s first commercially-successful oil sands venture and the longest-running oil sands project in Canada.
Millennium’s scale is truly breathtaking. Suncor’s leases (which also include SAGD drilling sites) cover more than 1,800 square kilometers. A fleet of giant trucks with shovels that remove 100 tons of earth at a bite operate day and night. Some trucks remove the “overburden” - a surface layer composed of muskeg (a peat-like substance), clay, and rock, while others dig up the oil sands beneath. The largest of these trucks, which are built by Caterpillar, haul loads up to 400 tons. In a year’s time, the trucks haul about 2,000 loads of overburden and 1,600 loads of oil sands.
The next photo is me pretending to be the master of all I survey. The distant object to the left of my outstretched hand is a monster truck.
After being mined, the oil sands are sent to massive facilities that use water and steam to extract the bitumen from sand and other minerals, separate the bitumen from water, and chemically treat the bitumen until it has the consistency required for transport as crude oil through pipelines.
My reaction to the Millennium project was one of awe. I could not but marvel at the immense scale of market-driven coordination that has turned an otherwise worthless material - sticky, smelly, black sand - into a valuable resource empowering literally millions of ordinary people to enjoy a degree of mobility unknown to the kings and potentates of old.
Some of course may only see - and decry - the industrial footprint, the “scars upon the land,” as the John Denver song put it. What they may not know is that Suncor also engages in land reclamation on a gigantic scale.
The overburden is not only removed, it is also saved, so that it can used to restore landscapes and create habitat after mining operations are completed. In addition, Suncor has developed a process (Tailings Reduction Operation, or TRO) for accelerating the extraction of suspended particles called “mature fine tailings” (MFT) from its tailing ponds (small lakes where water, sand, and clay are sent after separation from the bitumen). After drying, the MFT hardens and is used as landscaping material.
Suncor’s first tailings pond operated for 40 years from 1967 through December 2006. This 220-hectare area today is a contoured medowland with more than 600,000 planted trees and shrubs. Called the Wapisiw Lookout Reclamation, the area’s rock piles provide habitat for small animals, its tree poles provide habitat for raptors, and its wetland provides habitat for aquatic waterfowl. The picture below shows three raptor poles. While our tour group was there, we spotted a black bear cub moving among the hillocks a few hundred yards away.
Canada already ships almost 2 million barrels of oil a day to the USA, but the existing pipeline infrastructure must be expanded not only to handle the larger volumes that Canada will produce in the future but also to transport Canadian oil to U.S. Midwest and Gulf Coast refineries, where it can be turned into gasoline, jet fuel, and other finished petroleum products.
In March 2008, the U.S. State Department granted TransCanada Keystone Pipeline a permit authorizing the company to construct pipeline facilities from Alberta to refineries in Illinois and Oklahoma.
Then in June 2008, Keystone proposed to build an extension, called the Keystone XL Pipeline, to move Canadian oil to refineries in Port Arthur and Houston, Texas. Initially, Keystone XL would be able to deliver 700,000 bpd of heavy crude to U.S. refineries.
From 2010 to 2035, this “shovel ready” project could create 85,000 U.S. jobs, provide $71 billion in U.S. employee compensation, and boost cumulative U.S. GDP by $149 billion, according to the Canadian Energy Research Institute.
Predictably, green pressure groups and their allies on Capitol Hill have mounted a campaign to block the Keystone project, alleging that the pipeline will expose neighboring communities, aquifers, and wetlands to oil spill risk and increase America’s “dependence” on “dirty” energy. Let’s briefly consider these accusations.
The State Department’s massive April 2010 Environmental Impact Statement (EIS) notes that the pipeline “would be designed, constructed, and maintained in a manner that meets or exceeds industry standards and regulatory requirements” (ES 6.13.3). Although some leaks and small spills are bound to occur, “There would be a very limited potential for an operational pipeline spill of sufficient magnitude to significantly affect natural resources and human uses of the environment” (ES 6.13.2). If zero risk of even minor spills is the only acceptable standard, then no petroleum should ever be shipped anywhere. That may be what green groups ultimately have in mind. Such a standard, however, would condemn mankind to Medieval squalor, not enhance public health and welfare.
By “dirty,” Keystone XL opponents refer to the fact that the process of transforming oil sands into petroleum emits more carbon dioxide (CO2) than conventional petroleum extraction. However, whatever Canadian oil does not get shipped to the United States will eventually go elsewhere - mainly to China and other Asian countries, which are investing billions of dollars in Canadian oil sands projects. Just last month, for example, the Chinese company CNOOC agreed to buy Canadian oil sands producer OPTI for $2.1 billion. On a life-cycle basis, shipping oil to China is more carbon-intensive than shipping oil to the USA, because it must be transported on mammoth CO2-emitting tankers.
As for the Keystone XL Pipeline itself, yes it will deliver more Canadian oil to U.S. refineries, but this will mostly offset declining oil shipments from Mexico and Venezuela. Thus, “the incremental impact of the Project on GHG [greenhouse gas] emissions would be minor,” concludes State’s EIS (ES 6.14.2). Again, if no incremental CO2 emissions is the only acceptable standard, then U.S. policy should be to prevent unemployment from falling below 9%, because there’s nothing quite like a deep recession for cutting CO2 emissions.
The long and the short of it is that building the infrastructure to deliver oil from friendly, democratic, politically-stable, environmentally-fastidious Canada is in the U.S. national interest, as the State Department concluded in March 2008. The review process has dragged on, with State in March 2011 issuing a Supplemental EIS that affirms the findings of the earlier document. In May, the House Energy and Commerce Committee held a hearing on legislation to expedite a presidential decision on Keystone XL, and in July the House passed H.R. 1938, the North American-Made Energy Security Act, by 279-147. The bill would require the President to issue a final order granting or denying a permit to construct Keystone XL by no later than November 1, 2011.
Global demand for oil is growing and America will continue to import oil over the next 25 years even if biofuels and electric vehicles achieve unexpected breakthroughs. As Mark Milke of the Fraser Institute explains in a new report, what this means is that blocking Keystone XL and restricting U.S. access to Canadian oil would not move the world closer to some imaginary environmental utopia. The effect, rather, would be to increase U.S. imports from unsavory regimes where corruption is the norm, environmental safeguards are weak, autocrats brutally suppress dissent, and women are denied economic opportunity and equal protection of the laws.
Alas, I suspect this is actually one of the main reasons green groups oppose Keystone XL. They would like us to believe (a) that oil is a rapidly dwindling resource from which we will soon have to decouple our economy anyway, and (b) that using oil = sending $$ to OPEC. The vast potential of Canada’s oil sands and Canada’s emergence as the leading source of U.S. petroleum imports fractures both pillars of that scaremongering narrative.
By Senator James Inhofe, EPW
Washington, D.C. - Today, following an investigation by the Republican staff of the Senate Committee on Environment and Public Works into the Environmental Protection Agency’s (EPA) science panels on ozone and particulate matter, Senator James M. Inhofe (R-Okla.), Ranking Member on the EPW Committee, called for the Obama EPA to put a halt to its plan to reconsider the National Ambient Air Quality Standards (NAAQS) for ozone. EPA is expected to announce within days its decision to tighten the ozone NAAQS, which is largely based on the recommendations of the Clean Air Science Advisory Committee (CASAC). Yet findings from a new Senate investigation put the impartiality of CASAC in question.
“Today I am calling on the Obama-EPA to halt its plan to move forward with the reconsideration of the ozone standard,” Senator Inhofe said. “EPA Administrator Lisa Jackson has repeatedly said that she is basing her decision on the recommendations of CASAC. Yet an investigation by my staff has uncovered an apparent lack of impartiality and financial conflicts of interest among the members of EPA’s science advisory panels. EPA is clearly politicizing the science, all in the name of an environmental activism that will destroy jobs. This further undermines the scientific integrity of the Obama Administration, and in particular, the EPA.
“These findings cannot be taken lightly: EPA estimates that the cost of compliance for the ozone standard could be $90 billion a year, making it the most expensive environmental regulation in history. Additional studies have projected that the rule could cost upwards of a trillion dollars and destroy 7.4 million jobs. With such an enormous price tag and so many jobs at stake, it is absolutely unacceptable for this rule to be based on dubious science.
“President Obama does not have to go through with this: his EPA is bound neither by science nor law to revise this standard. In 2008, the Bush EPA tightened the standard significantly from 0.084 ppm to 0.075 ppm, and state and local communities are already making great strides in air quality as they work to meet that standard. Instead of acknowledging this progress, EPA is showing its decision to be purely political by further tightening the standard in order to appease the environmental left.
“Given that the Obama EPA is not obligated to act and is apparently basing its rulemaking on the advice of those who lack scientific objectivity, the Agency is showing itself to be bent on creating needless economic pain, killing jobs and stifling economic growth at a time when our nation can least afford it. EPA should halt this agenda at once and make it a priority to restore the balance between environmental progress and economic growth.”
Senator Inhofe sent a letter to the Inspector General of the EPA Arthur A. Elkins asking him to investigate further whether EPA’s management of two Clean Air Act Advisory Committees has resulted in panels that lack impartiality and serve as a “rubber stamp” of EPA’s policy objectives, circumventing both the law and Administration policy. Importantly, these committees played a key role in the advisory process for the pending tightening of the National Ambient Air Quality Standards for ozone and particulate matter (PM). Senator Inhofe has requested that the EPA IG report back to Congress with its findings by September 19, 2011.
The investigation by EPW Republicans of EPA’s management of its advisory committees found:
- Lack of Impartiality: EPA has violated its own Peer Review Handbook by selecting members who have publicly taken sides on the issues in question and thus lack the required impartiality. In direct conflict with the recommendations of the National Academies, EPA has also repeatedly asked authors of key studies to opine on their own work by including them on panels that are reviewing reports based on their research.
- Failure to Balance Perspectives: EPA has also violated the requirements of the Federal Advisory Committee Act (FACA) by failing to assure the resulting panels are balanced in terms of the viewpoints presented. In the two cases examined, no experts with publications supporting a contrary view were selected to balance the 30 to 40 percent of the members included on the panels who have taken public positions.
- Failure to Rotate Members: EPA has disregarded Administration policy to rotate membership on standing panels to avoid creating “regulars”. On key panels, members are now serving 12 year terms.
- Financial Conflict of Interest: EPA has repeatedly selected panel members who are benefiting from millions of dollars in EPA research grants, creating both the appearance and likelihood of a conflict of interest.
By Alan Caruba
The problem with the Environmental Protection Agency is that it has “protected” the nation into a place where corporations flee to other nations, exporting jobs no longer available here. When not doing that, it is destroying the ability of whole industries - particularly energy - and of our agricultural dynamo to function.
In late July, the Sacramento Bee reported that “There are fewer undocumented immigrants in California - and the Sacramento region - because many are now finding the American dream south of the border.” While America struggles to survive its regulatory juggernaut, “Mexico’s unemployment rate is now 4.9 percent, compared with 9.4 percent joblessness in the United States.”
What’s wrong with that equation? Everything!
Putting aside the debate over debt and wasteful spending, at the heart of the economic stagnation that has been occurring is the Environmental Protection Agency. It is an agency of pure malice and a place that arrogantly cites bogus health statistics while issuing rules and regulations that are strangling the economy.
James Hammerton of Freedom Works recently noted that “The EPA is in the process of completing and finalizing 30 major regulations and 170 major policy rules that would impose hundreds of billions of dollars of compliance costs on the economy.” Only Congress can stop this.
Long after the global warming hoax was exposed, the EPA continues to insist that carbon dioxide, a gas vital to all life on Earth, has to be regulated. Even after the administration’s failed effort to get Cap-and-Trade legislation passed, the EPA relentlessly pursues this policy.
In brief, the claim is that carbon dioxide (CO2) in the atmosphere is causing global warming. Therefore it must be reduced. Who produces CO2? Everyone! Humans exhale about six pounds of it a day. Every kind of energy use for manufacturing, for transportation, for the production of electricity, all this and more generates CO2 emissions. All this and more represent the core elements of our economy.
Why would you want to “trade” CO2? Well, by selling and trading “carbon credits”, millions of dollars can be made by the exchanges set up for that purpose. Utilities and manufacturing facilities would all have to buy the credits in order to stay in business. The whole global warming hoax was devoted to this scheme and, of course, those advocating it were all going to get obscenely wealthy while the cost of everything increased for the rest of us.
The problem for the EPA is that the Chicago exchange set up to trade carbon credits has long since closed its doors after revelations in November 2009 that a handful of climate modeling scientists had rigged the models to show a warming trend when, in fact, the planet had entered a cooling cycle in 1998!
Sensing that its ability to destroy the economy is slipping away, the EPA has been readying regulations allegedly based on the nation’s air quality. The problem they face is that the air over the U.S. is as clean as it has ever been. With the exception of places like Los Angeles, air quality has never been better. The EPA is literally trying to regulate dust that drifts in from Africa or airborne soot that arrives from Pacific volcanoes.
Regarding its proposed Ozone rules, John Engler, the president of the Business Roundtable, noted that “There’s nothing reasonable or balanced about the Environmental Protection Agency’s proposal to tighten national air-quality standards for ozone emissions at this time. For one thing, it’s premature, coming a full two years before the EPA is scheduled to complete its own scientific study of ozone emissions in 2013.” Not surprisingly, 2013 is likely to be the year that the U.S. has a new president and a Congress made up primarily of politicians devoted to debt reduction and the elimination of waste.
There is not enough time, nor space to describe how crazed the EPA is, but let me share just one example. The EPA recently told New York City that it will have to build a $1.6 billion-plus cover of a reservoir to prevent contamination of cryptosporidium, a water-born pathogen that causes diarrhea, from getting into its water system.
As the Wall Street Journal noted, “There’s one problem. The pathogen hasn’t been found in the reservoir despite years of tests and is barely present in the city.” Never mind, the EPA is claiming that the cover would “prevent between 112,000 and 365,000 cases annually”!
It gets worse, “New York City has already spent nearly $15 billion since 2002 for federally-mandated water projects, with the feds chipping in less than 1% of the costs. Next year it will finish building a $1.6 billion ultraviolet facility - the largest in the world - to disinfect water even more than it already does.”
That is just a snapshot of the billions in costs the EPA is right now trying to impose on a nation that is already $14 trillion in debt.
Here’s a suggestion. Close down the EPA entirely. Let the States determine what should be done regarding their air, water, and other environmental standards. The nation could save itself trillions by just ridding itself of the crazies running the EPA.
Icecap Note: Don’t buy any of the EPA’s bad science based claims and the coordinated efforts by groups like the American Lung Association, LWV to imply the EPA is acting only to ensure health. The ads with the baby carriage and coughing child or girl with oxygen mask are total abominations. No one wants air pollution. Indeed our air is far cleaner than it was decades ago. The modern day EPA’s regulatory attack on America is about a natural non harmful gas, CO2 that has NO ill health effects. Remember with every breathe we take, we emit 40,000 pppm CO2 into air at 397 ppm. In our homes around the dinner table, in the classrooms and workplaces, CO2 levels can reach 2000 ppm. The slow increase of ambient levels of CO2 only benefits plant growth, which is why nurseries pump CO2 into the greenhouses.