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A deeper dive: State's environmental review of Keystone XL tar sands pipeline shows it is not in the nation's interest

Anthony Swift

Posted February 3, 2014 in Moving Beyond Oil, Solving Global Warming, U.S. Law and Policy

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White House KXL Protest.jpg

The State Department’s release of the final environmental review for the Keystone XL tar sands pipeline marks a new stage in the evaluation of that controversial project. Moving forward, the National Interest Determination process will allow other federal departments and members of the public to bring their expertise to bear on the project’s environmental impacts. However, a deep delve into the assumptions and analysis provided State’s review of Keystone XL paint a picture of a tar sands pipeline with significant environmental impacts – in many cases greater than State suggests - and little public benefit. State now recognizes there are conditions in which Keystone XL would enable substantial climate emissions.  With respect to water, the State Department acknowledges that large leaks on Keystone XL could go undetected and that tar sands spills constitute unique risks to water resources.  And the environmental reviews shows that most of the tar sands flowing through Keystone XL will be exported and very few jobs will be create. Indeed, President Obama and Secretary Kerry have more than enough information to reject the proposed tar sands pipeline.

Let’s take a closer look at the environmental review.

Keystone XL’s carbon impact

State’s environmental review found that tar sands are significantly more carbon intensive than conventional crude. In particular, State concluded that tar sands crudes are more carbon intensive than other heavy crudes and are 17 percent more carbon intensive on a lifecycle basis than the average barrel of crude oil refined in the United States in 2005. According to State, the tar sands in Keystone XL would have total emissions of up to 168 million metric tons CO2e - equivalent to the tailpipe emissions of 35 million passenger vehicles. Even when you consider the increased emissions from tar sands flowing  (over and above the emissions that would occur if the pipeline carried conventional oil), Keystone XL would add 27.4 million metric tons CO2e, equivalent to the tail pipe emissions of 5.7 million passenger vehicles. 

Over Keystone XL’s projected 50 year lifetime, State estimates that Keystone XL’s increased greenhouse gas emissions could be as high as 1.4 billion metric tons of CO2e. Under the Administration’s Social Cost of Carbon guidance, these increased emissions from Keystone XL (over and above what would happen if the pipeline carried conventional oil)  would generate up to $100 billion in costs.[1]

Keystone XL as a linchpin for expanded tar sands production

In a departure from all of its previous environmental reviews, State recognized there are conditions under which Keystone XL would enable substantial tar sands expansion and associated climate emissions.  According to State, if proposed tar sands pipelines continue to be blocked and oil prices remain relatively low (both real possibilities), the approval of Keystone XL would enable more than 830,000 bpd of tar sands expansion which would bring a major climate impact. According to the State Department, at prices below $75 a barrel, the cheapest tar sands expansion projects will be vulnerable to cancelation without Keystone XL. While the State Department seems to conclude this scenario is unlikely, the facts suggest otherwise:

Lower oil prices are likely

While State believes that the low oil price scenario is unlikely (projecting WTI prices to exceed $105 by 2020), the markets are placing big bets that State is wrong. 

The traders at the Chicago Mercantile Exchange (CME), where futures contracts for WTI are bought and sold, believe State’s “low oil price” scenario in likely. The cost of a barrel of WTI shows a consistent decline from its current price of $97.00 a barrel to reach $73.00 by December 2019. The International Energy Agency concurs with future traders, estimating that oil prices will decline by about $20 a barrel over the next five years. These oil forecasts, which assume business as usual climate policies, would still put the cheapest tar sands expansion projects in jeopardy if forced to use more expensive transportation alternatives such as rail.

Even at higher oil prices, rejecting Keystone XL would reduce tar sands expansion. 

In its "low price scenario", State identified what level oil prices would have to be to affected the profitability of the lowest cost tar sands expansion projects. However, it is the higher cost tar sands expansion projects that are most likely to be affected by the rejection of Keystone XL. While State recognized that tar sands mines and some high cost in situ projects have high breakeven costs - ranging from $70 to over $100 a barrel - State essentially excluded these projects from its consideration when making its conclusion that Keystone XL's rejection would have limited impact on tar sands expansion. This is why State's conclusions on Keystone XL's climate impact were at odds with its analysis - these high cost tar sands projects are the ones that are most likely to be cancelled if Keystone XL is rejected.  

These projects include over 900,000 bpd of tar sands mining projects have been approved and are waiting for company go aheads to move toward production. In addition to those, nearly 600,000 bpd of tar sands mining projects are waiting on government approvals. Whether these projects move forward depend on a large part on whether Keystone XL moves forward.  That’s why Cenvovus’s CEO recently told reporters that “if there were no more pipeline expansions, I would have to slow down” his company’s tar sands expansion plans.

In fact, the environmental review recognized that some tar sands projects are already being affected by market dynamics and transportation bottlenecks right now. The State Department restates CIBC’s conclusions that a variety of factors, including lower prices due to transportation bottlenecks, are already keeping higher cost tar sands production projects – such as tar sands mines with upgraders - from moving forward.

Simply Stated, there is significant space between State’s low oil price scenario (below $75 a barrel) and its reference scenario (around $110 a barrel). State's environmental impact statement shows there are still many proposed tar sands expansion projects which will not be profitable if a) pipelines are constrained, b) oil prices stay under $100 a barrel and c) Keystone XL is rejected.

 

Pipelines constraints are likely to continue

Public opposition to tar sands pipelines and the expansion of tar sands production they enable has increased over the years and is likely to continue to do so. The level of opposition to tar sands pipelines is evident in State’s environmental review. For the first time State acknowledged that the public opposition to Northern Gateway, the proposed tar sands pipeline across British Columbia, renders that project so speculative that it eliminated it from consideration. This is a notable shift from State, which in previous environmental review considered Northern Gateway as the tar sands industry’s alternative for Keystone XL. The reality is that cross border tar sands pipeline proposals are all becoming increasingly speculative as the public learns more about them and opposition grows.

Rail is no substitute for pipelines for tar sands

State finally recognize that  transporting tar sands by rail is likely to be more expensive than transporting tar sands by pipeline. The environmental review included are a wide variety of cost estimates for tar sands by rail, with rail shipments to the Gulf Coast costing $15 to $20 a barrel, relative to Keystone XL’s cost of $8 a barrel. On average, State projects that rail will costs about $8 a barrel more to transport than pipelines. These higher costs are significant for an industry that recently told Canadian officials that a regulation increasing costs by $0.80 per barrel would constrain investment and production growth.

While State continues to suggest that tar sands by rail can replace pipelines – a conclusion at odds with tar sands producers and rail companies themselves, State  took a step away from its earlier rail projections. In its March Draft SEIS, State forecast that Canadian tar sands crude by rail to the U.S. Gulf Coast alone would reach 200,000 bpd or more in 2013. But the State Department had to concede these optimistic forecasts have not born out recognizing that total Canadian crude by rail shipments to all locations only reached 180,000 bpd. Meanwhile, U.S. Energy Information Administration data shows only a small fraction of that figure was tar sands by rail destined for the Gulf Coast averaged less than 30,000 bpd in 2013 – a small fraction of the amount forecast by State.

And finally, State declined to incorporate the higher costs associated with recent rail regulations advocated by the National Transportation Safety Board (NTSB), the Canadian Transportation Safety Board (TSB) and the rail industry. These regulations are part of an effort to address some of the safety issues associated with the Bakken crude by rail boom. Some of these measures – including rerouting around high population and otherwise sensitive areas, modifications of tank cars, and requiring non-crude spacer tank cars and reduced speed for crude unit trains – all address legitimate safety risks associated with a crude by rail boom that is much bigger and broader in scope than Keystone XL. These measures will likely increase the per barrel costs of rail relative to pipelines for tar sands producers, further increasing the impact of the Keystone XL pipeline decision on tar sands expansion.

Keystone XL’s leak detection system would miss spills smaller than half a million gallons a day

Landowners will not be pleased to know that they are on the front lines when it comes to detecting leaks that pass notice of Keystone XL's real time leak detection system, which State acknowledged can't detected leaks smaller than 500,000 to 750,000 gallons per day. Keystone XL’s real time leak detection system has a minimum threshold of 1.5 to 2 percent. Translated for a 830,000 bpd pipeline, this means the KXL can only detect leaks larger than 500,000 to 750,000 gallons per day in real time. This is consistent with recent revelations of industry-wide gaps in leak detection – leak detection systems missing 19 out of 20 spills. State’s review of Keystone XL recognizes the front line role that landowners play in detecting pipeline spills, noting the leaks smaller than 500,000 gallons a day may be identified by direct observations by the public. That’s small comfort for the farmers and ranchers along the proposed route for the Keystone XL tar sands pipeline.

The State Department acknowledges tar sands spills pose greater risks to water resources

The State Department has acknowledged that the diluted bitumen tar sands that would be transported by Keystone XL presents additional spill risks to water bodies. Following the Kalamazoo tar sands spill, which became the most expensive pipeline spill in U.S. history with a price tag of over one billion dollars, and the tar sands spill in Mayflower, Arkansas, it has became clear that tar sands spills posed unique risks to water bodies.

“The release of dilbit to a river or other aquatic environment introduces the potential for additional impacts and additional recovery challenges for responders of such an event to the environment.” 

Following a diluted bitumen spill, the light petrochemicals used to dilute the tar sands gas off, leaving the heavier than water bitumen to sink below the water’s surface. Conventional spill response measures rely on containing and removing oil from the surface of a water body. When tar sands crude sinks, it circumvents most spill response countermeasures. This dynamic played a large part in the significant impacts from the Kalamazoo tar sands spill, which cost over a billion dollars and left nearly 40 miles of the Kalamazoo river contaminated with tar sands over three years after the spill.

There is widespread public concern about a tar sands spill contaminating the Ogallala Aquifer.   Additionally, the pipeline route still traverses the sensitive groundwater resources of the Sandhills.  According to Jane Kleeb at Bold Nebraska, “The State Department acknowledges the current route still crosses the Sandhills, the Aquifer and that chemicals could reach surface water with a spill.”

Keystone XL would cross more than 1000 water bodies, including 50 perennial rivers or streams, and several aquifers, including the Ogallala. It also comes within a mile of approximately 2500 water wells.  Approving a tar sands pipeline that would cross America’s heartland would pose major and unacceptable risks to water resources.

Keystone XL is not a national jobs plan

The State Department's analysis again confirms the pipeline is not a major job creator – far from it. According to the FSEIS, the project will require a total of 50 long term employees – a figure that includes 15 temporary contractors. During construction, the proposed Project would only generate 1,950 construction jobs per year. President Obama himself said:

And my hope would be that any reporter who is looking at the facts would take the time to confirm that the most realistic estimates are this might create maybe 2,000 jobs during the construction of the pipeline -- which might take a year or two -- and then after that we’re talking about somewhere between 50 and 100 [chuckles] jobs in a economy of 150 million working people. — President Obama, July 24, 2013

The majority of the tar sands oil piped through Keystone XL is for export

The environmental review has also confirmed Keystone XL is mostly for export. The review acknowledges a trend of increased exports from the Gulf Coast where the Keystone XL tar sands oil will eventually flow. In the draft environmental review, State found that over half of the crude from Keystone XL would be exported after it is refined in the Gulf. State forecast that international exports of refined product are likely to increase in the future. Moreover, State concluded that Keystone XL President Obama has said it himself:

“So what we also know is, is that that oil is going to be piped down to the Gulf to be sold on the world oil markets, so it does not bring down gas prices here in the United States. In fact, it might actually cause some gas prices in the Midwest to go up where currently they can’t ship some of that oil to world markets.” --President Obama, in an Interview with the New York Times, July 24, 2013

The process is far from over

As the case against Keystone XL continues to build, the information in State’s environmental review will form part of the evidence that policy makers will consider as they evaluate the pipeline’s national interest implications. In addition to Final SEIS, policy makers from the other eight federal Departments evaluating Keystone XL will consider comments received during a 30 day public comment period. As Administration officials will consider the State Department’s environmental review, along with other information from industry indicating that Keystone XL is a linchpin for tar sands expansion and the climate emissions associated with it, as they undergo the 90 National Interest Determination process. However, the President and Secretary Kerry have more than enough information to reject the Keystone XL pipeline as a risky project that is incompatible with the nation’s climate goals.

 

 


[1] Interagency Working Group on Social Cost of Carbon, U.S. Government, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 (May, 2013) (online at www.whitehouse .gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria_2013_update.pdf)  (all dollar amounts in 2007$).

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Comments

Enviro Equipment, Inc.Feb 4 2014 05:22 PM

Now it appears that the environmental health risks tar sands oil may have been lower than first believed as the environmental impact statement was improperly done, at least according to this report in the Toronto Globe and Mail newspaper (http://www.theglobeandmail.com/news/national/environmental-health-risks-of-alberta-oilsands-probably-underestimated-study/article16667569/).

A Proud CanadianFeb 4 2014 10:34 PM

Well Anthony you should have titled the article ""A deeper dive into the shallow end of the pool: State's environmental review of Keystone XL pipeline shows it is no significant impact on climate change and is absolutely in the nation's interest".

Lets go through each one:
"Keystone XL’s carbon impact
State’s environmental review found that tar sands are significantly more carbon intensive than conventional crude. In particular, State concluded that tar sands crudes are more carbon intensive than other heavy crudes and are 17 percent more carbon intensive on a lifecycle basis than the average barrel of crude oil refined in the United States in 2005."
17 percent more intensive than the US average crude. Well..... by that definition 50% of all US crudes are higher than the U.S. average.
Quit this ridiculous comparison. The comparison is against the Venezuelan crude that it will displace. The US gulf coast refiners import 4 million barrels per day of oil (2.5Mbarrels per day that are OPEC). Keystone oil will remove 830 thousand barrels per day of that oil with a carbon intensity that is superior in comparison. The State Department said as much.

"Keystone XL as a linchpin for expanded tar sands production"
I don't think that you read the market analysis. Read it. Oilsand expansion will not be stopped by stopping this pipeline. Northern Gateway will be approved (and this is the most contentious one the large list of pipelines proposed). All other pipelines west and east are going to go despite foreign funded special interest.

"Lower oil prices are likely
While State believes that the low oil price scenario is unlikely (projecting WTI prices to exceed $105 by 2020), the markets are placing big bets that State is wrong."
Your interesting assessment of the meaning of oil strip price is amazing. Just watch what happens as Keystone South drains the Cushing terminals at 2-5Mbbls per week.
Price will stay strong. Also watch OPEC imports to the gulf drop.

"Even at higher oil prices, rejecting Keystone XL would reduce tar sands expansion."
Same comments. Canadian pipelines and rail will move oil to the coasts.

"Pipelines constraints are likely to continue"
Again ...... not a chance. Either you get it or it goes to tidewater and to the world

"Rail is no substitute for pipelines for tar sands"
Yes it is. Its happening as we speak. Oil loading terminals are popping up all over the place and if there are no pipelines rail cars will be built year after year to meet demand.

"Keystone XL’s leak detection system would miss spills smaller than half a million gallons a day"
Please read the report. Plain out wrong.

"The State Department acknowledges tar sands spills pose greater risks to water resources"
The key is to keep it in the pipeline (I have a concern about this as well). But consider that Kalamazoo and Mayflower were spills on old lines with old technology.

Keystone will be state of the art.

"Keystone XL is not a national jobs plan".
It never was. The jobs argument is a red herring. The big advantage is on reducing OPEC oil. But while we are on the subject...... to quote the presidents incorrect
statement doesn't make it right (even if he does a folksy chuckle). And consider this.... even your job, though you may think it permanent, may not be. And don't take

it personally, ever job that we consider permanent in fact is not.

"The majority of the tar sands oil piped through Keystone XL is for export"
One of my favourites. The oil won't be loaded on ships and exported. It will displace OPEC oil going into those refineries. The amount of refined products won't increase. The refineries are of fixed capacity. The products being exported are already being exported except that the oil feedstock currently comes from Venezuela.

Refined products are being exported because of the longer term trend of reduced demand for these products in the US (a good thing I might add).
You know this. How could you not?

I'm sure that you know that many Venezuelan oils are more carbon intensive than oilsand. How about shutting down the California heavy oil industry (e.g. Kern River) which is worse than oilsand (And conveniently not referenced in the State dept report by the way). Why not shut that down?
The American Gulf Coast imports 2.5Milliomn barrels per day of OPEC oil and you are effectively supporting that when you have an option to displace that oil with conflict free oil. Why are you not standing at the shore and trying to stop that oil?

Institutionalized environmentalism. Creating false and easy symbols that support the folks making livings off of that institution

Best Regards,
A PROUD Canadian.

Anthony SwiftFeb 5 2014 12:13 PM

PROUD CANADIAN: “The comparison is against the Venezuelan crude that it will displace. The US gulf coast refiners import 4 million barrels per day of oil (2.5Mbarrels per day that are OPEC). Keystone oil will remove 830 thousand barrels per day of that oil with a carbon intensity that is superior in comparison. The State Department said as much.”

RESPOSNE: It’s by no means clear that Canadian tar sands will displace Venezuelan crude rather than the lighter crudes that have inundated Gulf Coast refineries from light oil shale.

But let’s consider that scenario for the sake of argument. A couple of points:

1) State did not say that KXL would displace more carbon intensive crudes.
2) State points out that, for global GHG analysis the question isn’t what crude will be displaced at the Gulf Coast, but which crude will be displaced globally. State found that light crude would be displaced internationally if Keystone XL is approved. State found tar sands is up to 19% more carbon intensive than light crudes
3) Moreover, State found that tar sands are up to 13% more carbon intensive than heavy crudes refined at the Gulf. Of course, you can pick the highest carbon emitting Venezuelan project and compare it to an average of all tar sands production. But the highest carbon emitting tar sands projects are more carbon intensive than the highest carbon intensive VZ heavies, and tar sands are more carbon intensive on average than VZ crudes.

PROUD CANADIAN: “Oilsand expansion will not be stopped by stopping this pipeline. Northern Gateway will be approved (and this is the most contentious one the large list of pipelines proposed). All other pipelines west and east are going to go despite foreign funded special interest.”

RESPONSE: Take a look at the blog and click on the cites to the environmental review. State said at a lower oil price scenario, even the cheapest projects would become infeasible – and KXL’s rejection would significantly reduce tar sands expansion. Moreover, State recognized that there are many tar sands projects on the books with significantly higher costs (and would be impacted by a KXL rejection at higher oil prices). State also concluded that the opposition to Northern Gateway was so significant that they removed the project from consideration.

PROUD CANADIAN (In response to: ‘While State believes that the low oil price scenario is unlikely (projecting WTI prices to exceed $105 by 2020), the markets are placing big bets that State is wrong.’):

Your interesting assessment of the meaning of oil strip price is amazing. Just watch what happens as Keystone South drains the Cushing terminals at 2-5Mbbls per week. Price will stay strong. Also watch OPEC imports to the gulf drop.

RESONSE: State uses figures linking tar sands production costs to WTI prices – which if anything assume smaller spreads between WTI and tar sands (WCS) than we’ve seen recently (as WCS prices have been much lower than WTI prices due to transportation constraints). And the simple matter is the markets expects significantly lower WTI prices (and lower WCS prices) which means that higher cost rail transportation will render many tar sands expansion projects unprofitable.

PC (In response to “Rail is no substitute for pipelines for tar sands"): Yes it is. Its happening as we speak. Oil loading terminals are popping up all over the place and if there are no pipelines rail cars will be built year after year to meet demand.

RESPONSE: Tar sands producers and rail companies agree that rail isn’t a substitute for pipelines. Facilities are being built as an insurance plan as existing projects work to deal with a period in which they will face major pipeline constraints. But rail simply can’t deliver the volumes of takeaway capacity at the price that many new projects need – which is why Cenovus’s CEO, which has hundreds of thousands of bpd in approved projects in the wings, says his company won’t move them to construction unless pipelines are built.

PC (In response to: "Keystone XL?s leak detection system would miss spills smaller than half a million gallons a day"): Please read the report. Plain out wrong.

RESPONSE: The blog links to the report – click on the links. KXL’s leak detection system can’t detect leaks smaller than 1.5% of its capacity, or half a million gallons a day. State and TransCanada acknowledge this.

PC (In response to "The State Department acknowledges tar sands spills pose greater risks to water resources"): The key is to keep it in the pipeline (I have a concern about this as well). But consider that Kalamazoo and Mayflower were spills on old lines with old technology.

RESPONSE: Fair enough. Dealing with these issues proactively are in everyone’s interest. Of course, we’ve seen problems in new pipelines as well – including a 20,000 gallon spill on Keystone 1 and a recent 5,000 gallon spill on Alberta Clipper a week ago.

PC: Keystone will be state of the art.

RESPOSNE: So we’ve heard. But see this: http://switchboard.nrdc.org/blogs/aswift/transcanadas_record_presents_a.html

PC (In response to "Keystone XL is not a national jobs plan") It never was. The jobs argument is a red herring. The big advantage is on reducing OPEC oil. But while we are on the subject...... to quote the presidents incorrect statement doesn't make it right (even if he does a folksy chuckle). And consider this.... even your job, though you may think it permanent, may not be. And don't take it personally, ever job that we consider permanent in fact is not.

RESPONSE: The President was right – again, take a look at the cites (linking to relevant part of State’s environmental review). But it seems that we agree on the jobs issue in general. This is simply a recognition that some of the jobs arguments in the US surrounding this project have been overblown.

PC: (In response to "The majority of the tar sands oil piped through Keystone XL is for export"):
One of my favourites. The oil won't be loaded on ships and exported. It will displace OPEC oil going into those refineries. The amount of refined products won't increase. The refineries are of fixed capacity. The products being exported are already being exported except that the oil feedstock currently comes from Venezuela. Refined products are being exported because of the longer term trend of reduced demand for these products in the US (a good thing I might add).
You know this. How could you not?

RESPONSE: Some proponents of KXL in the US claim that the pipeline in necessary to bring crude to supply the US and lower prices at the pump. It won’t – in part because the majority of Texas Gulf Coast refined products are being exported internationally. It’s important to point out that – as you say – this is part of a global energy trends that are not directed at US energy consumers.

PC: I'm sure that you know that many Venezuelan oils are more carbon intensive than oilsand. How about shutting down the California heavy oil industry (e.g. Kern River) which is worse than oilsand (And conveniently not referenced in the State dept report by the way). Why not shut that down?

RESPONSE: As I mentioned – tar sands is more carbon intensive than VZ crude (unless one cherry picks the worst VZ project and compare it with the average tar sands project). Kern River production has been in decline for years and will continue to decline (it’s a fraction of current tar sands production). Keystone XL is not about shutting existing tar sands production down, it’s about whether we enable a tripling of tar sands production by 2030.

Kern River produced 80,000 bpd in 2012 after peaking at 140,000 bpd years ago. Tar sands production is at 2.2 million bpd and industry is shooting to expand to 6.6 million bpd by 2030. It’s that 4.4 million bpd expansion that folks around the world are really concerned about.

Carolyn Cummings Feb 6 2014 07:53 PM

So we as taxpayers pay the bills and get robbed too!GREAT!!!

A Proud CanadianFeb 6 2014 10:21 PM

I commented by point and you replied by point. I don’t think that I’ll re-reply by point. Its to hard to read so I’ll try to summarize a bit.
Oilsand oil is indeed a direct replacement for Venezuelan heavy. Gulf Coast refineries are built for that material. If you are worried about a chain reaction of eventually displacing light (somehow…. You might need to explain how that works) somewhere else in the world then I suggest you ask the Venezuelans and Saudis keep their heavy oil in the ground to prevent that. I can’t stress this enough….. leave that “heavy, conflict ridden, terrorist aiding, lack of women’s rights, $2T war and multiple thousands of soldier and 100s of thousands civilian death” oil in the ground. And we all know that this is not rhetoric it is a fact that we see every day and have experienced for years.
Also, on jobs I mentioned that the jobs issue was a red herring but didn’t say that I agreed with your lowball estimate. A multi-year multi-billion dollar project like this one creates many many jobs. This one would be in the tens of thousands during construction.
You made some comments that if the price of oil is low then some oilsands projects won’t go ahead …. I can’t argue with that. And in fact who could. It’s the market at work. If in fact through any number of mechanisms the price of WTI is low or WCS differential is high then that would slow oilsands development. But there is a stark reality when it comes to oil production. The easy and cheap oil is going fast. This is why fracking and oilsands development is happening in the first place. Another reality is that there has never been a barrel produced on this planet that didn’t have a consumer waiting for it. If you want to drive your kids to soccer, go to work, fly on a plane, someone needed to produce and refine that oil for you.
So consider the restriction of oil supply in the face of demand (and growing demand). What if you restrict one form of supply? What happens? Well prices go up thus bringing on some more supply somewhere else, as well as reduce some demand. Look at both:
When prices go up you get ultra deep-water drilling, oilsands, fracking and then in your very near future …… arctic drilling, oil shale (kerogen), coal to liquids. When prices go up you get shifting of more of one’s personal budget to energy, less consumption in other areas of the economy (iPads and such), mortgage default, etc ….. (remember $148 oil and the big crash). Sounds daunting isn’t it? ….restricting supply can lower demand, but at the expense of jobs, the economy, and the unintended consequences of further and more expensive/CO2 intensive oil, and more CO2 intensive forms of transportation (and inherently unsafe) e.g. railcars, ships, and trucks.
So the ONLY reasonable way to stop the oilsands is to reduce oil demand. That’s it. It is to reduce demand to below the point where we need to dip into heavy oils in the first place. Daunting as well…… for example while doing this the U.S. must stop burning coal. move to natural gas, have multiple breakthroughs in nuclear or renewables (to get them into the ballpark of competing with oil without that competing point being $250/bbl), battle the fact that world population is growing and “conventional oils” are depleting.
So focus appropriately. Demand that the first oils that you stop using are from the Middle East. Invest your money, time, and energy in companies creating the energy you want. Get them to the point where they can compete with oil (both without subsidy and like I said …. at a price that low enough to keep food on the table for folks) and it will be a natural move.
If you want to stop the oilsands then do that! I’ll be in the front row cheering.
A PROUD Canadian

Kevin PFeb 11 2014 03:23 PM

Proud Canadian,

As someone who wants to see us get beyond the use of oil, you make a very compelling argument. I originally didn't want keystone to pass but now, seeing a much broader discussion here. I think that I'm in favor of it.

KP

Anthony SwiftFeb 11 2014 04:02 PM

I’ll follow your wise decision to summarize as well.

You argue that dealing with demand plays a critical role in dealing with our carbon emissions and oil dependence. I couldn’t agree more – and NRDC is actively engaged on the demand side. The Obama Administration is currently considering a proposal we’re advocating that would dramatically reduce the emissions from our power plant sector (http://www.nrdc.org/air/pollution-standards/ )
In part due to the implementation of oil saving technologies advocated by NRDC, the US HAS reduced its oil demand by over 2.5 million bpd – three times the capacity of Keystone XL. In the process, NRDC worked with the United AutoWorkers Union to create over 150,000 jobs in advanced vehicle manufacturing. Moreover, we have pushed for and got strong autoefficiency standards which will dramatically reduce US oil consumption moving forward – a program that will save over 12 billion barrels of oil. http://www.nytimes.com/2012/08/29/business/energy-environment/obama-unveils-tighter-fuel-efficiency-standards.html?_r=0 That’s as much oil as Keystone XL would move over the course of 40 years – and the standards save consumers money and reduce carbon emissions.

But in a world in which we have a limited carbon budget and more fossil fuels than we can afford to burn of varying carbon intensities, even as we deal with demand, we need to decide which resources we develop and which resources we don’t. And using that lens, tar sands simply don’t fit the bill – they are the most carbon intensive crudes around. In a world where we can’t burn it all, we have to leave some resources in the ground. Tar sands are at the head of that list – and that’s why it doesn’t make sense to build long term infrastructure that would expand their development. Now is the time to be moving in the other direction.

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