GAIA

 Sweet oil vs. Tar – which would you choose?

The Keystone XL Pipeline will, in all likelihood, not be built.  Pressure from US environmentalists is growing by the day as small leaks in existing pipelines hit the media and irrational panic sets in.

I too am against the XL line, but for different, nationalistic reasons.

I am Canadian and wish for Canada’s oil industry to continue – not die out with a whimper in 5 to 10 years!

 

Yes, the Alberta tar sands hold an estimated 169 billion barrels of recoverable oil – the second largest pool on earth at present, but our prime customer, the USA, will soon be self-sufficient without any need for outside oil, and it will become a net exporter.

When that happens – in the next 5 years or so --  an XL pipeline will no longer bring Albert’s heavy and still unprocessed crude to the southern USA refining hub, but the reverse will take place:  refined and MUCH CHEAPER US oil would flow northward on the XL and other, already existing lines.

The laws of economics would rule, and Canadian oil distributors would automatically choose the cheaper, already processed US product!

So any oil industry benefit to Alberta – even if the XL were built quickly within 2 years – would have a ‘lifetime’ of no more than 3 years or so.  Thereafter, the oil will flow upstream!

If you think I am exaggerating and just repeating what I said in an earlier blog, yesterday’s news clinches it.

According to the Globe and Mail, April 17, B1&B9 “The new heart of U.S. oil renaissance – and one more threat to the oil sands” Texas is awash in new oil.

West Texas, which has been pumping oil since the 1920s and is the industry’s  standard price setting benchmark --i.e., sweet/light crude which is readily – and cheaply – converted into gasoline, has just made public that it holds another 70 billion barrels of recoverable oil using new technology.  And according to the Globe source, that oil would be profitable at US$70.00!

That is well below what West Texas crude has been selling for in years!!!

 

So what should Canada and Alberta and the tar sands people do out of self-interest and long term survival?

1. Abandon the fight on the XL.  It would make money for its builders but not long for the above                     three parties who do not do pipe building for a living.

2. In partnership, the tar sands companies, Alberta government and Canadian government should build a complete refining hub in Alberta, so that our tar/oil is not dependent on US plants to make the material into something useful to sell.  If we still need to send the semi-processed tar half a continent away, oh how costly it would become. US refineries would easily be at full capacity with local US crude and we would have to make it ‘worth their while’ to bump us into the line.

3. Forget a pipeline to the British Columbia coast.  The newly elected BC government is made of tree huggers and many native tribes along any proposed route are similar luddites.

4. Hook Alberta into the pipelines of Eastern Canada and the refineries of Sarnia and further east -- at least in the short term. East of the Manitoba border we respect cars, trucks, commuting, asphalt (oil based) roads, synthetic plastics and material (made from crude oil) and manufacturing jobs; and are willing to make a reasonable (low risk) trade off to maintain our high standard of living and future.

5. If Global Warming is for real, then in 5 years time or so it will be viable to ship oil, natural gas, etc. from Canada’s north to willing  customers in East Asia such as Japan, China and India.  So, plan to upgrade our Arctic ports.

 

  NOTE: While it has become politically correct to call Alberta tar sands “oil sands”, I beg to differ and keep the original wording used for decades, the one that is chemically correct.  You need to do a lot of chemical processing to turn that black, sticky goo into ‘crude oil’.