Guest Post: Are Canadian Oil Policies Misguided?

Tyler Durden's picture

Submitted by Daniel Graeber of OilPrice.com

Are Canadian Oil Policies Misguided?

The provincial government in Alberta is mulling new rules that would require the oil industry to cut greenhouse gas emissions tied to oil sands production by as much as 40 percent per barrel. The measure may be part of the federal government's push to allay Washington's concerns about the Keystone XL pipeline. Some of the concern surrounding the production of oil sands, the type of oil designated for the controversial pipeline, is that it's more carbon intensive to produce than conventional oil. Alberta's government has expressed concern that it won't be able to meet its emission targets without new rules, though some in the oil industry may be already ahead of the game. While emissions may be part of the debate over the controversial cross-border pipeline, a financial analysis suggests the Canadian government is looking in the wrong direction.

Alberta Premier Alison Redford was in the United States last week trying to shore up support for the Keystone XL oil pipeline. The U.S. government hosts a town hall meeting in Nebraska later this month to vet public comments on a draft environmental assessment from the State Department. That report found that, overall, the environmental threat from oil sands production would remain with or without the pipeline. The Canadian government, however, is under pressure to find ways to allay some of those environmental concerns to move the project forward.

A law that went into force in 2007 requires companies exploiting the vast oil sand deposits in the country to cut their emissions by 12 percent of their base level and put around $15 into a technology fund for every ton they go over that limit. Calgary officials say it's important not only for the provincial government, but for the federal government as well, to let Washington know it's serious about the environment. Part of the controversy over Keystone XL is tied to emissions, so it's imperative that Canadian Prime Minister Stephen Harper sets the right tone as the pipeline conversation gains momentum.

Norwegian energy company Statoil, however, suggested last week it wasn't waiting around for the legal process to sort itself out on emissions. In 2012, the company said it increased its oil sand production by 60 percent while at the same time cutting its CO2 intensity by more than 20 percent. While part of its stewardship, like tree-planting and land reclamation, may be just good public relations, it said it aims to cut CO2 intensity by 25 percent by 2020 and reach the 40 percent mark five years later. Regional Vice President Stale Tungesvik said Statoil would continue to work to improve not only its oil recovery, but its carbon footprint as well. Statoil plays no direct role in the Keystone XL pipeline.

A report last week from the Canadian Imperial Bank of Commerce finds that while Keystone XL would be a boost for oil sands trade, it's just "one of several important pieces of the puzzle for Canada's energy sector." The CIBC World Market report finds that, with U.S. shale oil production competing for the same transportation networks, the Canadian government needs to capitalize on emerging Asian economies, not U.S. trends, if it's expected to realize the full benefits of its oil riches.

"The world will still need Canada's crude, given still ample demand growth ahead for Asia, and we doubt supply-demand conditions will permanently sustain prices below Canadian project break-evens," said CIBC Chief Economist Avery Shenfeld. "But it's increasingly important that Canada move on one or more of the alternative pipelines to get our product headed Asia's way."

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malikai's picture

They shouldn't be using natgas to extract/upgrade it in the first place.

They should be using nukes to power the upgraders and heat the tar in-situ.

But that's just my thoughts in terms of EROEI.

css1971's picture

They're going to have to to hit those targets. Point being then you might as well just roll out nukes on a large scale.

James_Cole's picture

"The world will still need Canada's crude, given still ample demand growth ahead for Asia, and we doubt supply-demand conditions will permanently sustain prices below Canadian project break-evens," said CIBC 

When CIBC - AKA the worlds most inept bank - says something, assume the opposite. 

BigInJapan's picture

True.

True.

But it was Bank of Montreal that actually managed to lose track of my account.

Bank book and ATM card in hand they once looked at me and told me they couldn't find my account.

I still have the cashcard.

Ahh memories of Canadian banks and their ridiculous fees...

cougar_w's picture

"it said it aims to cut CO2 intensity by 25 percent"

Translation: We cannot reduce CO2 emissions at all, not even 1%. So we're going to do some calculations and plant a certain amount of trees or restore some wetlands, and claim that we're offsetting our CO2 emissions by a like amount.

Plants are always carbon-neutral; any carbon (as CO2) they remove from the biosphere (atmosphere in this case) is eventually returned when the plants die and decay or are eaten by some animal. For cover crops this turn around usually happens the same year. For trees maybe a few years to a few decades. But the lifetime of CO2 in the atmosphere is 2,000 years. So any "offset" method that cycles back in anything under 2,000 years is just a 6 minute pitstop in a 12 hour long endurance race. Virtually meaningless.

The only way to "offset" human-mediated fossil carbon emissions from the mining of fossil fuels is to find a way to deep bury the carbon again, a process that took natural systems million of years to accomplish on any kind of scale. And to bury it in a way that it stays buried for 5,000 years at least and a million years being optimal.

Never going to happen. Ever. There is no way to do it I don't care what you claim, and nobody is going to spend one thin dime (US$) to prove it either way when success can only be measured across 80 generations.

So all this is just fraudulent bookeeping by the oligarches of the oil fields. Same old same old -- anything for profit, lie if you have to. They will mine every lump of coal, pump every barrel of oil, and dig up every square yard of tarry dirt until it's all gone and burned. And it all goes into the atmosphere and it stays there for 2,000 years. We'll be knocking on 1 teraton of carbon emissions by the end of the current decade -- 1 teraton that will be with us for 2,000 years -- and then the human world will be right and truely totally fuxored.

2,000 fucking years, people. That long in the past, people were pulling their wooden-wheeled carts using oxen, and fighting wars with spears. We'll be living whatever nightmare is due us now, and living it for 2,000 fucking years.

bluskyes's picture

I've never understood how digging dead plants from the ground, and releasing their carbon into the air for living plants to breathe is harmful to the environment.
At one time, all of these deposits were living breathing plants, and animals on the surface of the earth. Why not bring them back to the surface, and let them participate in the carbon cycle again? They will eventually become parts of plants, and will be available to harvest energy from again.

 

James_Cole's picture

I've never understood how digging dead plants from the ground, and releasing their carbon into the air for living plants to breathe is harmful to the environment. At one time, all of these deposits were living breathing plants, and animals on the surface of the earth. Why not bring them back to the surface, and let them participate in the carbon cycle again?

Back to grade school science for you lol

akak's picture

I've never understood how digging salt from the ground, and releasing its sodium content onto the land, and into the oceans and biosphere for living organisms to bathe in, is harmful to the environment. At one time, all of these deposits were in the ocean and on the surface of the earth. Why not bring them back to the surface, and let them participate in the sodium cycle again?

James_Cole's picture

Shocking to find that the people who rant of global warming being a giant made-up conspiracy often have no understanding of basic science, could there be a correlation??

Flakmeister's picture

Nope, not a chance  :)

The church they typically attend likes it that their science ain't up to snuff either...

The Alarmist's picture

Ignoring for a moment the doctored science that is being foisted on the public as settled, despite 30,000+ scientists signing a petition that says it is anything but settled, what do you have against plant life?  Seriously, if we take CO2 out of the air, you are depriving some plants ... particularly the poor ones least able to fend for themselves ... of their right to live and thrive.  

Shame on you, you knuckle-dragging liberal retards ... have you no shame?

cougar_w's picture

Nothing in the above statement is true or correct. Not going to waste any time here.

slavador's picture

Since the folks at the University of East Anglia were caught cooking the basic data for their global warming research, it is reasonable to be very suspicious of proclaimations on this topic. The stuff that is most suspicious is that presented in simplified form to effect peoples political feelings. My take is that the global warming folks are every bit as sinister as the oil industry funded folks that say CO2 makes plants grow lusher which results in healthier food which leads to a sexier YOU!!

Flakmeister's picture

Really? could you describe in your own words what exactly they faked? And why an independent study wouldn't find and correct the fake data?

Edit: As I suspected he is merely trotting out old bullshit re: Climategate and in reality he doesn't have the foggiest notion about what ACTUALLY happened...

slavador's picture

Since the folks at the University of East Anglia were caught cooking the basic data for their global warming research, it is reasonable to be very suspicious of proclaimations on this topic. The stuff that is most suspicious is that presented in simplified form to effect peoples political feelings. My take is that the global warming folks are every bit as sinister as the oil industry funded folks that say CO2 makes plants grow lusher which results in healthier food which leads to a sexier YOU!!

gastrolith's picture

What's the science? That the IPCC predicted a significant increase in temperature and yet we have 16 years of no warming. That sea level rise was supposed to accelerate, but didn't.

You had models, not science. The models were so awful they couldn't replicate the past and, it's clear now, they can't predict the future.

But, hey, that's only a trillion dollars or so down the drain, thousands dead because of soaring energy bills and perhaps millions more due to rising food costs as we make bloody biofuel. No big deal when you have an ideology to push.

Flakmeister's picture

This is so full of shit it isn't even worth a rejoinder...

cougar_w's picture

Matter is neither created nor destroyed. If it's not in the ground, it's above the ground and we're dealing with it until nature gets around to putting it back under the ground for us. Putting it temporarily inside plants is ... temporary.

Most of the time, we'll want our carbon in the atmosphere as a waste product of energy harvesting.

Humans came into a world with a lot of carbon under the ground -- stripped from the atmosphere by plants and buried -- that had been there for 50 million years already before we even showed up. Carbon that hasn't been alive or felt the heat of the sun since dinosaurs roamed the earth. We are digging it all out though to harvest the stored energy. And the world is going to take us back to a hotter, wetter time as a result.

There won't be dinosaurs though of course. They didn't make it.

I don't know who in fact will be left to inherit the earth when we're done reworking the atmosphere to where it was 50 million years ago.

Cathartes Aura's picture

that was truly poetic, thank you.

Kayman's picture

Plants are always carbon-neutral; any carbon (as CO2) they remove from the biosphere (atmosphere in this case) is eventually returned when the plants die and decay or are eaten by some animal. For cover crops this turn around usually happens the same year. For trees maybe a few years to a few decades.

Assuming time is static ??? 

Carbon breathing trees build a carbon inventory over their lifetime. Conifers live 50 to 130 years and beyond. So they are a carbon sink. Period.

cougar_w's picture

Two.

Thousand.

Years.

You'd need to discover another continent and cover it with plants to come anywhere close to what we are digging out of the ground. Oh wait, Antarctic will melt, and it's got dirt under there, so yeah we're good.

/s

prains's picture

correct and voila uranium city is a hop skip and jump to the east and guess what they have in the ground...... but canadian govts spend all their time fumbling with the zipper and never manage to pull it out to get it on. This is NOT to say nuclear is some type of great alternative but fuck me if you totally understood the current extraction process, nuclear, is a bubble bath compared to the contaminants being pumped into the groundwater. Ask the local native populations, they know all too well but have been stifled

malikai's picture

Do you know what gets classified as low level waste?

Hint: Your basement is more dangerous.

bluskyes's picture

I will confess that I do not know. i would imagine that you are referring to radon, or smoke detectors.
I am damnantquodnonintelligunt with regard to this subject, but I would rather see it built somewhere way up north - buried in the canadian shield.

Solon the Destroyer's picture

 

They shouldn't be using natgas to extract/upgrade it in the first place.

They should be using nukes to power the upgraders and heat the tar in-situ.

But that's just my thoughts in terms of EROEI.

There's not enough water there to use nuclear.  Water levels are already down significantly using the present processes.

Nor does this address the issue of nuclear waste or accidents, which is likely a far greater issue than the carbon burn of nat gas.

malikai's picture

I think what you're trying to say is that there isn't enough water for conventional nuclear + conventional extraction + conventional upgrading. You're probably right.

But there are very efficient nukes which do not require excessive amounts of freshwater (LFR and friends). And the waste steam (post rankine or even C/C) is perfect for for heating tar sands. Put one (or three) of those things in Ft McMurray and be done with it.

The problem is that the only proposals I've seen discussing nukes involves CANDUs, which are generally terrible (just like PWR/BWR models) when it comes to water consumption. Which I guess makes sense because Canada is just as bought and paid for as the US/Japan when it comes to nuke licensing.

The beauty of using something like an LFR is that given a bit of technical investment, you can get outlet temperatures >800c, meaning you can use the SI process to produce hydrogen, which opens up big doors in regards to upgrading, as one of the main reasons (after process heat) for using gas is in the hydrotreating process.

duo's picture

let's agree to call them "tar sands" because that's what they are.

Lore's picture

http://en.wikipedia.org/wiki/Oil_sands

"The word "tar" to describe these natural bitumen deposits is a misnomer, since, chemically speaking, tar is a human-made substance produced by the destructive distillation of organic material, usually coal."

duo's picture

 semantics aside, the stuff is a lot different than liquid oil that comes out of the ground through a well.  How much of it can be refined into gasoline versus mixing it with gravel and filling potholes?

James_Cole's picture

Yeah it's tar, semantics included. Oil Sands is a PR term - tell an engineer involved in Athabasca that they're working on the tar sands project and they'll get very mad and correct you that it's the 'oil sands.'

Certainly the Oil Sands wiki entry was edited by a PR lackey. 

Tar refers to the substance obtained from a variety of organic materials through destructive distillation.[1] [2] [3] Tar can be produced from coal,woodpetroleum, or peat.

Bitumen is a term used for natural deposits of oil "tar" – such as at the La Brea Tar Pits.

Lore's picture

Frankly, if you call it tar, locals will assume you're just some hick or propagandist. The stuff that gets washed out of the sand is called bitumen. If you don't like it, too bad. Just don't try to force your terms or narrative on others. There's far too much of that going around.

Kayman's picture

How much of it can be refined into gasoline ?

Bitumen generates more diesel than light oil. Diesel is in higher demand than gasoline. Have you watched relative pricing over the past 10 years ??

Demonoid's picture

It's not a demand effect. Diesel costs more now than 10 years ago due to Federal ultra-low sulfur diesel (ULSD) regulations that were phased in from 2006 to 2010. ULSD costs more to refine than the low-sulfur diesel (LSD) that it replaced.

CrashisOptimistic's picture

The tar sands are legit.  They have oil.  Actual, proper 5.6 million BTU/barrel crude.

Not like Bakken or Eagleford condensate at 60% of that.

cougar_w's picture

Tar sands have tar. Fact. Petroleum engineers can turn the tar/bitumen into mock crude oil by burning a like amount of some other kind of fuel in the process.

Net net, it's a very destructive way to convert electricity, clean water and natural gas into gasoline (and a lot of toxic wastes and ruined forests in the bargain) so people who lack critical thinking skills can continue to drive to work in their old-fashioned car.

Grinder74's picture

Meanwhile the rest of are importing plasma from Naboo and buying the latest queen's pin-up calendar.  Wait, Naboo is a fictional planet you say?  Well, back to the old-fashioned gasoline I guess.

Lore's picture

Cougar -- How do YOU drive to work?  Oh wait, you don't have a real job.  That's old-fashioned too, right?

Cathartes Aura's picture

careful, you might get him to post his awesome ride!  ^^

AnAnonymous's picture

The brotherhood of crime, 'american' style.

Not only 'americans' include in their fraternity people who do not drive to go to work.

Not only 'americans' include them in their fraternity but the also ascribe to those people the most cause to effect.

Aint 'american' love for humanity so caring?

TheFourthStooge-ing's picture

Condensed AnAnonymous propaganda; everybody is equal etc... Funny how when it comes to misdeeds, Chinese citizenism propagandists love to see people equal. They are equal in crimes.

Lore's picture

Colourless green ideas sleep furiously.

akak's picture

You have absorbed the most of that, also this.

Hangfire's picture

Just ship it to China already and put this thing to rest!   

prains's picture

can't get it to the coast. Take a trip through northern BC and you'll soon realize a pipeline thru there being next to impossible to maintain is a GONGshow just waiting to happen. Talk now is to ship to eastern canada where those provinces are importing oil anyway. And then look to ship to europe 

slavador's picture

Nephew is working on pumping stations for the Northern Gateway presently and it is progressing rapidly. All the talk of Natives and green people slowing this thing down is smoke and mirrors. For the sake of our southern friends, you need to get your act together fast or you will be stuck with Maduro's and Saudi heavy oil forever with China getting all the good stuff....

oddjob's picture

Yes, they are working on pump stations ,but not for the proposed Northern Gateway pipline.

http://thetyee.ca/Blogs/TheHook/2013/04/05/Enbridge-Pumping-Stations/

Enbridge cannot even be trusted to maintain their existing network. Upgrading Kinder Morgans existing pipeline is the logical choice. That way when the oil spills everybody will see it.

http://www.youtube.com/watch?v=d6xXAlsLFhs

slavador's picture

Odd job.

It is a done deal - a work in progress. Leagal stuff will be figured out when needed.  Relying on media for what happens on the ground puts you a year or two behind reality...

oddjob's picture

Maybe your nephew is on welfare and he's just shittin you. The extent of Enbridge's progress has been to open a local office in PG to spew propaganda. Hopefully you are not confusing Kitimat LNG with Gateway.

Lore's picture

It's clear that Prains (above) has no clue what he's talking about. Anybody who drives through northern BC will see existing oil traffic, NOT TO MENTION HUNDREDS OF MILES OF ALASKA PIPELINE RIGHT BESIDE THE HIGHWAY...!

This is a perfect illustration of why more than 90% of the stupid letters submitted to the Northern Gateway review panel can be chucked out the window. They're submitted by mindless receptacles saturated with "green" propaganda, with no sign of any effort to formulate an independent, balanced opinion.  The most pathetic are those hundreds of generic photocopied form letters apparently submitted by the enviro-lobby on behalf of people who are illiterate. What a bunch of manipulated sheep.