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Saturday, 02 August 2014

Dirty green

Canada-U.S. oil pipe beats shipping options

The proposed Keystone XL pipeline to the United States looks the greenest option for exporting Canada’s oil-sands crude. But Washington is stalling on approvals, so Canada is exploring alternatives. Exporting the oil on tankers, as is now being proposed by oil-rich provinces, would be more polluting and riskier. American not-in-my-back-yard opposition to Keystone is bad for the planet as well as for the nation’s energy supplies.

The U.S. State Department, which has been mulling the project since 2008, may now not opine until early summer. Meanwhile, export bottlenecks have pushed the price of Canada’s oil down to something like 30 percent below American West Texas Intermediate, cutting revenue to producers and the government. Oil-producing provinces like Alberta and New Brunswick are not waiting around. One new plan is to pipe oil to the East Coast and ship it to the United States.

The message for U.S. opponents of TransCanada’s Keystone plan is that blocking it won’t stop Canada exploiting its reserves, which at 175 billion barrels are currently worth, net of production costs, around seven times the nation’s GDP. If the concern is the environment, the alternatives are worse. Shipping accounts for up to 4 percent of global greenhouse gas emissions, along with up to 30 percent of nitrogen oxide pollution, according to the International Maritime Organization. Tankers can spill a lot of oil, too.

Pipelines may not be pristine, but they are less energy-intensive and any leaks are usually easier to halt and clean up. In addition, if the United States turns up its nose at Canadian oil, more is likely to find its way to refineries in Asia, where emission standards are weaker.

The greenness or otherwise of Keystone aside, the prospect of importing more oil from a friendly neighbor should also give the United States a powerful incentive to approve it. Canada is a more stable trading partner than other sources of U.S. oil like Nigeria, Venezuela and Saudi Arabia. That may not be the priority for some of the Keystone objectors. But stopping the project could end up producing a worse outcome for the environment too.

Readers' comments (1)

  • In my opinion we ( Canada ) should push a head with all of our export options. If we don't we will be held price hostage to the US market. We all know they are developing their own resources with an eye to energy independence. I like the idea of having numerous options for exporting our resources.

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Context News

The premiers of Canadian oil-producing provinces Alberta and New Brunswick on Feb. 5 agreed to cooperate on promoting a cross-Canada pipeline to move heavy oil to the Atlantic seaboard.

The administration of President Barack Obama is set to decide in the coming months whether to approve TransCanada’s long-delayed Keystone XL pipeline to the U.S. Gulf Coast.

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