Revisiting the Keystone Debate

With the elections over with and Obama firmly in his seat, a group of senators both Democrat and Republican have reminded the President of his decision to delay an important energy project – the Keystone XL pipeline. On Friday, the senators urged the President to quickly issue a permit for the northern leg of the pipeline that would have economic benefits to both the U.S. and Canada and would go a long way in assuring energy security for one of the world’s largest consumers of oil.

Of course, environmentalists haven’t forgotten about the pipeline either and have vowed to keep fighting its approval. Having been partially successful previously in moving the President to delay the project’s approval, environmental groups will continue to voice their opinions in opposition. But at this stage, should this still even be a debate?

I am of the belief that if people were properly informed on Alberta’s vast energy resources in the oil sands, they wouldn’t so leisurely throw around the term ‘tar sands’ and cast down this source of energy as a villain. It is true that there are land disturbance issues and that there have been studies that have shown water contamination from mining and upgrading facilities so all is not perfect, but neither is it all bad.

Currently, approximately 50% of production from the oil sands comes from mining operations while the other 50% comes from in situ production, typically through processes called steam-assisted gravity drainage (“SAGD”) or cyclic steam stimulation (“CSS”). What the media likes to show are pictures of mining operations like this one from Suncor’s Aurora mine; however SAGD operations like Devon’s Jackfish facility actually don’t look too dissimilar from a traditional horizontal well setup. The current Canadian Association of Petroleum Producers forecast has in situ production totalling approximately 60% of oil sands production by 2030.

Additionally, environmentalists like to accuse the oil sands of contributing too much in terms of greenhouse gas emissions compared to other energy sources. The fact is, however, that greenhouse gas emissions from the oil sands are actually similar to a number of sources of heavy oil that is imported into the United States, or even produced within the country. In situ operations actually rank lower in terms of greenhouse gas emissions than California Heavy, Middle East Heavy, and some Venezuelan Heavy. See the greenhouse gas emissions chart on the second page of this document to see how oil sands emissions compare. Again, it is the mining operations that are the culprit in having the highest greenhouse gas emissions, so the media and environmentalists like to focus there.

Though the current EIA forecast has U.S. total oil production increasing to approximately 7 million barrels per day by 2035, with 2011’s U.S. consumption of approximately 19 million barrels per day there will still be a need to import oil for years to come. Given the vast resources and stable political and social environment, it only makes sense to approve a project that would benefit both countries.

What do you guys think?