8 things President Obama should know about Canada and the Alberta oil sands
It feels like a long time ago but a majority of Canadians actually rooted for Obama in both his 2004 and 2008 presidential elections. Turns out, he hasn’t been as great a neighbour as we had hoped. Somehow, we got on his “naughty list” a long time ago and haven’t been able to get off.
Keystone XL probably has a lot to do with it. The project started out as a piece of infrastructure piping that would have connected Alberta to the world's largest oil consumer, in a continent that already contains millions of kilometres of pipelines. Should have been no big deal, right? Somehow the US president managed to turn a simple pipeline into an existential debate on the fate of humanity, antagonizing many on both sides of the border, and continues to paint a distorted picture of our oil sector.
So Mr. President, if you're listening, here are a few things you should know about Canada and the Alberta oil sands:
1. Yes, most of the oil produced in Alberta is heavy crude. So what?
You are correct in stating that oil produced from the oil sands is heavy. In fact, there are hundreds of grades of crude oil produced around the world with varying API densities.
Alberta’s oil is heavier than Middle-Eastern crude or oil produced in Texas, but it’s not any heavier than the oil you buy from Venezuela or Mayan crude imported from Mexico. And it’s actually lighter than the heavy oil produced in California.
So yes, you are correct - our oil is heavy. But that doesn't make us planet-hating heathens.
2. Keystone isn’t just for Canadian heavy oil.
It's hard for us to tell if you have a limited understanding of the US oil industry, or are just pretending to be ignorant for the sake of your voters. In either case, here’s a short refresher for you:
Refineries in the Gulf Coast are designed for heavy oil feedstock from Venezuela and Mexico. Since both countries have declining production rates, these refineries are now facing a decreased supply of heavy crude and growing volumes of light crude produced in the US, which is a poor fit for their process equipment.
Keystone would have taken Alberta’s heavy crude and mixed it with lighter crude produced in North Dakota, making a perfect blend for the Gulf Coast. As a side-benefit, the volume of crude transported by rail from these land-locked areas would be reduced significantly, which translates to fewer oil spills and fires from tanker de-railings.
So by rejecting Keystone, you actually threw North Dakota under the bus with us and put many more people at risk from exploding rail cars, on both side of the border. Canada has already suffered a catastrophic loss of 47 lives, which has surprisingly not affected your anti-pipeline stance one bit.
So if you truly want to be best known for hope and change, we suggest you consider doing what’s right instead of doing what’s popular. That would actually be a refreshing change for a politician.
3. Canada actually has much tighter environmental regulations than the US.
Quiz question for you: What do Russia, Nigeria, Iraq, Iran and the US have in common? They’re actually the top 5 gas-flaring countries in the world.
I know what you’re thinking - flaring doesn’t count when calculating the world’s dirtiest fuels. Well, actually it does. Globally, 140 billion cubic meters of natural gas are burned every year, spewing an estimated 16,000 tonnes of airborne pollutants into the atmosphere and emitting 10 times more carbon that the entire oil sands industry which you seem to despise so much. That’s the equivalent of putting 55 million cars on the road, so definitely no small peanuts.
Latest figures estimate that the US flares over 7 billion cubic meters of gas each year. Most of it burned in North Dakota, which has very little infrastructure to collect the natural gas. That would be enough gas to power 3 million homes.
We understand your administration has recently developed a plan to to reduce flaring in the US by 40% by 2025. As always, your government is looking down your nose at us Canadians, asking us to follow your lead and do something good for the planet for a change. Here’s a news flash for you - Canada already has much tighter environmental regulation than the US, particularly in the air emissions department. North Dakota flares an estimated 30% of its natural gas, as compared to Alberta which captures over 95%. In fact, we already tackled emissions from flaring a long time, reducing it by 80% in 2010 and aiming for near zero by the end of next year.
Here’s an idea for you - maybe you should build infrastructure to collect all that gas and consider exporting it. Failing that, you could build a power plant, re-inject it into the ground, or even convert it to fertilizer. That would take 10 million tonnes of CO2 out of the atmosphere every year. Any of the above would be far better than just burning it.
We understand that building energy infrastructure doesn’t score any brownie points with your legions of fans and all the anti-fossil fuel fanatics that voted for you. They probably don’t know what a flare stack is and most likely don’t care. But it would be good for the planet and a step in the right direction for your country.
4. Alberta's crude oil is no threat to renewables.
Believe it or not, we Canadians are not as dumb as we look. We get that you promised your voters millions of new green jobs as part of your effort to revive the American economy. As a result, many American billionaires invested heavily in your political campaigns, hoping you’d eventually send some tax dollars their way to build solar farms and windmills, and maybe put a little extra green in their pockets along the way.
Our problem is many of those same American billionaires have also spent serious money funding anti-oil sands campaigns here in Canada, directing most of their energy to stopping pipeline development. In fact, some might say your administration is responsible for the pro-renewables/anti-pipeline movement we’ve been seeing everywhere in this country.
But there’s a fundamental flaw in that logic.
You see, in North America, 90% of our crude oil is used for transportation of people and goods. Renewables such as wind and solar are used for electricity generation. Therefore, crude oil and renewables are not competing industries, despite everyone's best efforts to connect the two. In fact, the biggest threat to renewables is cheap natural gas and abundant coal. Two things your country has an abundance of.
In short, our oil sands are no threat to your green energy sector.
5. Rejecting Keystone will not kill off the Alberta oil sands.
We know many of your supporters and all the Greenpeacers of the world were hoping your rejection of Keystone would effectively kill off the Alberta oil sands. We can understand why they would all think that. After all, the US is a significant customer for Canadian oil and consumes 25% of the world’s oil supply.
But that also means that 75% of all the oil produced in the world is consumed outside of the US.
There are plenty of other countries who would be more than happy to buy their oil from a stable, reliable place such as Canada. We admit your anti-Keystone rhetoric has done a lot of PR damage and made life more difficult for us, but it hasn’t dented oil production one bit. To put it bluntly, you’re not that important.
6. Killing off the Alberta oil sands would not benefit the US.
Your supporters have spent a lot of money convincing people we should shut down the Alberta oil sands. We know you don't want to disappoint them. After all, you'll need to find some way to earn a decent wage after you leave the White House. But we wonder if they have any clue what the consequences would be.
Envision a world where the Alberta oil sands did not exist. Perhaps you found a way to make our entire industry disappear with one executive order. Can you see it? World carbon emissions would drop by a whopping 0.15%. It’s not much but you could take credit for it.
More importantly, that would take 2.5 million barrels of oil per day off the market overnight, solving the current over-supply problem and put OPEC back in the driver's seat. The price of oil would push north of $100 a barrel. North Dakota and Texas would be doing fine. They would be eternally grateful and might even vote blue in the next election.
But lets dig a little deeper. Those 2.5 million barrels consumed by the US and Canada would have to come from somewhere else. No one country has that much spare capacity so it would have to come from a mix of places, like Venezuela, Libya, Saudi Arabia, Nigeria, Iran, Iraq, or maybe even Russia if you’re still short. Think of the trillions of dollars those countries would collect.
Sure, some of that money might go to funding brutal dictatorships and terrorist organizations. But it’s all good because their oil is conventional oil. It’s not mined from the ground, they don’t use steam to extract it. And remember, flaring doesn't count. And apparently, their complete disregard for basic human rights doesn't bother you either.
So if you think humanity as a whole would be better off if the Alberta oil sands didn't exist, we respectfully suggest you reconsider.
7. There’s no correlation between the Keystone pipeline and the price of gasoline.
We understand that your political donors envision a day when the price of oil gets so expensive, we’ll all have no choice but stop driving gasoline powered cars and switch to all electric vehicles. That was probably a much easier sell when crude oil was trading at $140 a barrel.
It’s common knowledge that those heavily invested in the electric automobile are also financing the war against fossil fuels across North America, much of that directed towards Canadian pipelines (US pipelines have largely been spared their wrath for some reason).
The problem is no one pipeline could ever significantly affect the supply/demand curve for gasoline. Crude oil and gasoline are global commodities who’s price is governed by free-market capitalism. In fact, Alberta’s infrastructure bottlenecks just makes our oil cheaper and drives up demand for our heavy crude.
Sadly, despite your best efforts, rejecting Keystone will not help your friends in California sell more electric cars. And with the price of gas falling, the future doesn’t look bright. If you want to discourage people from driving gas guzzlers, you could follow Canada’s lead and significantly raise taxes on gasoline. That would be far more effective in convincing people to drive more fuel-efficient vehicles.
By the way, since we’re on this topic, plugging your electric car into a coal-fired power plant doesn’t make it carbon neutral. You guys aren't fooling anyone.
8. The Alberta oil sands already employs plenty of Americans, with or without Keystone
TransCanada estimates that Keystone XL will cost $10 billion once fully installed, which you’ve calculated would create 300 American jobs.
To be clear, that $10 billion would be spent mostly in North American, with a majority of the pipeline installed on the US side of the border. And that doesn’t include spin-off effects for the thousands of small-businesses located along the Keystone route. Even though TransCanada is a Canadian company, many of the contracts for labour, good and services would have gone to US companies and workers.
We know you’re a lawyer, not a mathematician, but how exactly does one inject $10 billion into the economy and have it benefit only 300 people?
In fact, there are an estimated 100,000 American expats currently working in Calgary alone, accounting for almost 10% of city’s population. They all pay taxes to your government and many are employed in the oil sector. Regardless of what happens to Keystone, you shouldn't be so quick to blow-off the Alberta oil sands as being insignificant to American jobs.
So congratulations, Mr. President. You've run an excellent smear campaign against the Alberta oil sands. We know it's a lot easier to point the finger elsewhere than fix your own problems. Like most Americans, many of us Canadians have given up on your administration and are patiently waiting for you to move on.
So go ahead and blame Canada. Only 20 months to go, and counting . . .