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Texas Judge Asks If Bitumen is Crude Oil

Anthony Swift

Posted December 11, 2012 in Moving Beyond Oil, Solving Global Warming, U.S. Law and Policy

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News flash. A Texas judge just put a hold on construction of a portion of the southern section of the controversial Keystone XL tar sands pipeline in response to a landowner’s pushback against eminent domain claims on his land. Michael Bishop has been given a temporary restraining order to prevent pipeline work on his Nacogdoches County property. Interestingly, one of the cases hinges on a question NRDC has posed previously… Is bitumen, or tar sands oil, the same as crude oil. It seems like a silly question, but in fact, the industry has spoken out of both sides of its mouth on the issue.

Normally when asked about this, usually associated with safety issues, the industry is adamant that tar sands oil and especially diluted bitumen are no different from crude oil. This despite the fact that bitumen does not behave like what we normally think of as oil: it is mined or steamed out of the ground, is the consistency of peanut butter, has different chemical properties and won’t even move through a pipeline without a lot of pressure and chemicals to thin it out. If you want to go deep, we did a report on the issue. 

But, they told the IRS something very different. I covered this in a September Switchboard post:

…As NRDC and Oil Change International outlined in Irrational Exemption, while companies producing and transporting conventional crude oil pay an 8 cent per barrel tax into the OSLTF, tar sands has been granted an exemption by the Internal Revenue Service (IRS) on the grounds that it is not “crude oil.” Indeed, there are differences between conventional crude and tar sands bitumen; however, those differences tend to make tar sands spill more damaging and expensive to clean. Meanwhile, increasing volumes of tar sands appear on the U.S. pipeline system puts a heavy strain on an oil spill fund that they’re not paying into. Not only should tar sands not receive an exemption, but they should be assessed a tar sands specific rate that takes into account the heightened risks posed by tar sands pipeline spills.

As noted in the post, we did a white paper on the issue, if you want to learn more. And as AP reports:

Texas landowner Michael Bishop, who is defending himself in his legal battle against the oil giant, filed his lawsuit in the Nacogdoches County courthouse, arguing that TransCanada lied to Texans when it said it would be using the Keystone XL pipeline to transport crude oil.

Tar sands oil — or diluted bitumen — does not meet the definition as outlined in Texas and federal statutory codes, which define crude oil as "liquid hydrocarbons extracted from the earth at atmospheric temperatures," Bishop said. When tar sands are extracted in Alberta, Canada, the material is almost a solid and "has to be heated and diluted in order to even be transmitted," he told The Associated Press exclusively.

"They lied to the American people," Bishop said.

Photo: Texas landowner Michael Bishop

This is an awkward point for the industry this week. We will probably see a supplemental environmental impact study for the northern portion of the Keystone XL pipeline. Industry has said over and over that climate issues need not be a focus in that evaluation since the tar sands flowing through the line isn’t different from other forms of oil. And yet, diluted bitumen tar sands or semi-refined synthetic crude oil cannot be found in any natural occuring geologic reservior - the places you find "crude oil." And that's why Congress, the IRS and a Texas judge haven't bought the tar sands industry's line.

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Comments

Michael BerndtsonDec 11 2012 03:52 PM

This is really great news! I may become a NRDC fanboy. Probably not - I'm too paranoid and grumpy of a person for that to ever happen. My take: crude oil comes in light, heavy, extra heavy, and husky. Its all "crude oil" nonetheless - since its used as a feed stock for similar refined products- unlike, say coal which can't be fed into the crude distillation unit - even upon pre-treatment and conditioning.

For other's who may be interested - from our friends at Wikipedia:

Crude Oil

Crude oil varies greatly in appearance depending on its composition. It is usually black or dark brown (although it may be yellowish, reddish, or even greenish). In the reservoir it is usually found in association with natural gas, which being lighter forms a gas cap over the petroleum, and saline water which, being heavier than most forms of crude oil, generally sinks beneath it. Crude oil may also be found in semi-solid form mixed with sand and water, as in the Athabasca oil sands in Canada, where it is usually referred to as crude bitumen. In Canada, bitumen is considered a sticky, black, tar-like form of crude oil which is so thick and heavy that it must be heated or diluted before it will flow.[12] Venezuela also has large amounts of oil in the Orinoco oil sands, although the hydrocarbons trapped in them are more fluid than in Canada and are usually called extra heavy oil. These oil sands resources are called unconventional oil to distinguish them from oil which can be extracted using traditional oil well methods. Between them, Canada and Venezuela contain an estimated 3.6 trillion barrels (570×109 m3) of bitumen and extra-heavy oil, about twice the volume of the world's reserves of conventional oil.[13]

Heavy and Extra Heavy Crude Oil

Heavy crude oil or extra heavy crude oil is any type of crude oil which does not flow easily. It is referred to as "heavy" because its density or specific gravity is higher than that of light crude oil. Heavy crude oil has been defined as any liquid petroleum with an API gravity less than 20°.[1] Physical properties that differ between heavy crudes lighter grades include higher viscosity and specific gravity, as well as heavier molecular composition. Extra heavy oil is defined with a gravity of less than 10° API (i.e. with density greater than 1000 kg/m3 or, equivalently, a specific gravity greater than 1) and a reservoir viscosity of no more than 10,000 centipoises.[2][3] With a specific gravity of greater than 1, extra heavy crude is present as a dense non-aqueous phase liquid in ambient conditions

Heavy crude oil is closely related to natural bitumen from oil sands. Some petroleum geologists categorize bitumen from oil sands as extra heavy crude oil due to the density of less than 10 °API. Other classifications label this as bitumen differing it from extra-heavy oil. They differ in the degree by which they have been degraded from the original crude oil by bacteria and erosion. Often, bitumen is present as a solid and does not flow at ambient conditions.

Robert WhitesidesDec 14 2012 08:24 PM

Could someone take the time to publish the exact statutes cited by Mr. Bishop in his suit? I am affiliated to various degrees with actions concerning Enbridge pipelines in Michigan, Indiana and Missouri.

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