Oil Sands and the Environment

Why Keystone Counts

By | Updated March 24, 2017 1:21 PM UTC

It’s thick and sticky like peanut butter and there’s lots of it. Please don’t call it “dirty oil” (crude is never clean), but fuels derived from Canada’s tar sands do produce more greenhouse gas than conventional forms of gasoline and heating oil. Called “oil sands” by petroleum executives and “bitumen” by geologists, it’s the stuff that TransCanada has been pushing to send through its proposed Keystone XL pipeline from Alberta to the U.S.’s Gulf Coast refineries. To the dismay of environmentalists, after eight years of political haggling it's getting its chance. U.S. President Donald Trump has approved a permit for Keystone, a project that his predecessor, Barack Obama, had rejected in 2015 after a long and angry debate.  But however potent Keystone XL has been as a symbol in the struggle over climate change, expanding use of trains and competing pipelines has made it less important to oil companies.

The Situation

Days after taking office in January, Trump announced actions to move the pipeline forward. He said he would require that the pipes needed for the project are built in the U.S., although the White House later said that buy-American rules wouldn't apply since the project had already begun. TransCanada has also reapplied for approval in Nebraska, a state that created legal hurdles for the company during the initial project review. Canada's prime minister, Justin Trudeau, a Liberal elected in 2015, favors construction of new pipelines — including Keystone XL — but has also taken steps to do more on climate issues, in the hope of winning over oil sands and pipeline opponents. Three Canadian pipeline proposals remain under consideration, two to the Pacific and one to the Atlantic. The biggest factor in the industry’s future, however, may be the price of oil, whose drop has led many international oil companies to write down their Canadian reserves or sell their holdings to Canadian firms. 

Source: Canadian Association of Petroleum Producers (as of October 2015)

 

The Background

Alberta’s copious bitumen deposits let Canada claim the world’s third-largest recoverable reserves of crude oil. More tar sands crude enters the world’s oil supply every year, but the proportion is still small, about 2.3 percent. Because there’s so much less of it than conventional oil, coal and natural gas, oil from Canadian tar sands accounts for 0.1 percent of the world’s greenhouse-gas emissions and has a smaller potential to warm the planet than other fossil fuels. But a gallon of fuel produced from tar sands bitumen leads to the release of more carbon than conventionally produced fuel, partly because more energy is needed to extract and refine it. A Canadian clean-energy group, the Pembina Institute, said the difference could be as much as 37 percent;  the industry and the Alberta government say it's more like 6 percent. Obama said Keystone XL wouldn’t make a meaningful contribution to the U.S. economy, lower gasoline prices or enhance the nation’s energy security. It also would have undercut U.S. global leadership on climate change, he said. 

Source: Canadian Association of Petroleum Producers

The Argument

During the long debate, environmental groups said that the Keystone pipeline, by paving the way for more bitumen production, would helped lock in dependency on oil for decades and delay a transition to renewable energy. They also quarreled with oil producers over the best way to compare emissions from tar-sands to those from other pollutants. Oil companies say coal plants pump much more carbon dioxide into the atmosphere; environmentalists say the appropriate comparison is to conventional oil because, unlike coal, both kinds of crude are primarily used to make transportation fuel. Environmental groups said that stopping Keystone XL would slow tar sands development, while pro-Keystone forces argued that the bitumen would still be produced and shipped either by other pipelines or rail, increasing the risk of spills and other accidents. Trump said his Keystone decision was a step toward making “the process much more simple for the oil companies and everybody else that wants to do business in the United States.” 

The Reference Shelf

  • The Pembina Institute provides insight into the debate around oil sands development.
  • The Canadian Association of Petroleum Producers provides its explanation of carbon emissions from the oil sands and an oil production outlook.
  • A 2009 academic review of oil-sands emissions studies.
  • The Congressional Research Service’s March 2013 report on the life-cycle assessment of Canadian oil sands greenhouse gas emissions.
  • Paul Chastko, a historian at the University of Calgary, explores the development of Alberta’s bitumen resources in his book “Developing Alberta’s Oil Sands.”

First published Oct. 30, 2013

To contact the editor responsible for this QuickTake:
John O'Neil at joneil18@bloomberg.net