Oil sands

Tar Sands a Risky Bet for Investors

Long-term, the story is the same, if not worse, for investors. A new report released by Innovest Strategic Value Advisors says that even with a recovery in oil prices, tar sands projects will not be economically viable. It's an analysis that has left investors surprised and perplexed, according to Yulia Reuter, author of the report, who presented it last week at the annual Riskmetrics Canadian Proxy Season Briefing in Toronto.

Solve Climate

The idiocy of burning large amounts of clean natural gas to make large amounts of dirty oil in a way that leads to terrible water pollution, air pollution and habitat destruction simply blows the mind.

Tar Sands Don't Fit in the Clean Energy Economy

On February 19 President Obama will visit Canada. Prime Minister Stephen Harper has asked to discuss a North American agreement on global warming and energy, and it has been widely reported that under such a deal he will seek to shelter the tar sands in Alberta from the same greenhouse gas cuts that other polluters must make.

We can not be on be on the path to fight global warming and build a clean energy future by ignoring the facts. The tar sands are one of the most destructive projects on earth. They produce oil that has three times the carbon impact per barrel in the production process as regular oil while leaving a long term legacy of toxic tailings lakes and Boreal forest destruction.

There is a better way. Both the U.S. and Canada have tremendous economic potential in new energy industries and energy efficiency. The tar sands industry must do its fair share in reducing emissions as we make the transition to a new energy economy in North America.

Tell President Obama that he needs to stay on course to a clean energy future.

via Obama2Canada

This is a new cross-border effort by a whole host of Canadian and US environmental big guns including Greenpeace, Environment Defence, the Dogwood Initiative, etc. aimed at lobbying Obama on the Oil (Tar) sands of Alberta.

A few years ago, only 4% of all Americans knew that Canada was the their largest supplier of oil. So, any efforts aimed at educating Americans on where their oil comes from and the dirtiness of the process involved is welcome.

Once again, I will say that the future of the Oil Sands is not in Canadian hands, but in American hands. No Canadian government will turn off the tap, not now in this recession, not 3 years from now when we are on our next boom. It is going to take American pressure and the institution of a robust climate change mitigation program in the US. We shall see what happens in 2-3 years time.

I do not believe this campaign will make any difference whatsoever, Obama is in Canada for something like 3 hours, and presumably will have other things to talk about.

Obama, Oil and Canada

America's dependence on oil is one of the most serious threats that our nation has faced. It bankrolls dictators, pays for nuclear proliferation and funds both sides of our struggle against terrorism. It puts the American people at the mercy of shifting gas prices, stifles innovation, and sets back our ability to compete.

Obama’s speech on energy (Solveclimate)

A short, punchy, powerful speech. Two things – First, Obama stresses again and again the necessity to reduce oil consumption and “the dependence on foreign oil”. He mentions wind, solar and efficiency as the three best ways to get there. There is no mention of increasing imports from Canada, the US’ largest supplier. Of course, when he mentions “bankrolling dictators”, Stephen Harper does come to mind 🙂 But the rest of it is puzzling, look at this bar chart of The US’ top 15.


Really, not too many “unfriendly” countries on the list, It is dominated by the US neighbours Canada and Mexico, and friend, ally and vassal state Saudi Arabia. Yes, there is some Venezuela, but this whole oil imports from unfriendly dictators frame in inaccurate.

But from the Canadian side of the border, we see things differently. >99% of oil exported from Canada goes to the US, so in essence, our only customer. Any reduction in demand from the US could seriously derail Alberta’s economy. On the other hand, if the US is willing to overlook the seriously dirty nature of Canada’s oil, not that Canadian NGOs haven’t mentioned it to Obama recently, it will not have any problems shifting its buying patterns to favour Canadian oil over Saudi Arabian/Venezuelan oil, at least in theory.

The US has not attempted to do anything that drastic in many years, so all oil is bought and sold in the world market and price rules, but it will be interesting to see what happens. My view is that any serious carbon legislation will undermine the oil sands’ dirty oil. But we shall see.

Tar sands smog seen worsening

Pollution will continue to plague Alberta’s oil sands despite plans to pipe harmful greenhouse gases deep underground, according to documents obtained by the Toronto Star.

Part of the task of cleaning up the oil sands involves capturing carbon dioxide emissions and storing them in geological reservoirs in western Canada.

But chemicals linked to acid rain, respiratory problems and ozone depletion could escape into the atmosphere at an even faster rate, thanks to an estimated tripling of production from one million barrels a day in 2007 to 3.4 million barrels a day in 2017. That could occur despite proposed national caps on air contaminants.

By capturing about 200 megatonnes a year of carbon dioxide, sequestration as carbon dioxide storage is known is expected to reduce greenhouse gas emissions by almost 80 per cent in 2017, says an Environment Canada study obtained under the Access to Information Act.

But, the study notes, “there are emissions of CO2 and air contaminants resulting from the generation of the energy required by carbon capture and storage facilities. The CO2 emissions offset the volumes captured by the facilities, while the air contaminant emissions add to the load on the environment.

Note that two out of the three main political parties in Canada (The Conservatives and the Liberals) support the expansion of this environmental disaster. Also, resource exploitation is controlled by the individual provinces and Alberta is almost united in support for its prime bread winner. So nothing will happen unless there is external (Read American) pressure. Harper is making a lot of noise about working with Obama on energy and climate policy in an effort to get ahead of this pressure, so we shall see what happens. If the US moves ahead aggressively on policy, the Tar Sands could lose its biggest customer and that would be all she wrote.

Gulf States spending more on Clean Energy than Canada

Gasoline sells for 45 cents a gallon. There is little public transportation and no recycling. Residents drive between air-conditioned apartments and air-conditioned malls, which are lighted 24/7

Still, the region’s leaders know energy and money, having built their wealth on oil. They understand that oil is a finite resource, vulnerable to competition from new energy sources.

So even as President-elect Barack Obama talks about promoting green jobs as America’s route out of recession, gulf states, including the emirates, Qatar and Saudi Arabia, are making a concerted push to become the Silicon Valley of alternative energy.

They are aggressively pouring billions of dollars made in the oil fields into new green technologies. They are establishing billion-dollar clean-technology investment funds. And they are putting millions of dollars behind research projects at universities from California to Boston to London, and setting up green research parks at home.

Meanwhile, we in Canada are pushing hard to completely ignore environmental concerns as we push to expand the incredibly dirty tar sands. I read an interesting New York Times article recently, summarizing the issues with this dirty oil. Of course, the CO2 emissions, and the incredibly nasty effects of mining, water pollution, etc. are well documented. One fact stuck in my head – The cost to replace one tire in one of the earth moving vehicles is $60,000. What a wasteful enterprise on such a grand scale, whose only purpose is to carry on business as usual when business as usual is going to result in catastrophic climate change in the not so distant future.

The Waxman cometh for Alberta Oil Sands

Representative Henry A. Waxman of California ousted Representative John D. Dingell of Michigan from his post as chairman of the influential Committee on Energy and Commerce on Thursday, giving President-elect Barack Obama an advantage in his plans to promote efforts to combat global warming.

via Longtime Head of House Energy Panel Is Ousted – NYTimes.com

Why is this big news for Canada? Because Waxman would like to ensure that the US not allow any alternative fuel that has a bigger CO2 lifecycle impact than the conventional fuel it replaces to be used by the US government, as enshrined in US law.

I don’t foresee a bright future for this dirty Oil Sands, with oil now dipping below $50 a barrel, and money short, even the economics (without any carbon pricing) do not make sense. We are probably 4-5 years away from commercial plugin hybrids. In the medium term, gasoline consumption is going to decline, and there’s nowhere we can sell this oil to if the US drops out as a buyer.

Oil Sands work even with carbon pricing

via RAND_TR580.sum.pdf application/pdf Object.

More on this later, but according to this lifecycle analysis, oil produced from the oil sands of Alberta can be cost competitive with crude oil even if carbon costs are taken into account.

However, ramp up of production will lead to very high water usage and massive local and regional impacts.

In other words, Alberta, you’re screwed, rest of the world, you’ll die at the same rate!