Energy / Environment / Politics

Righting the Wrong, Pipeline Edition: The Case Against the Tar Sands of Canada

Posted on by

The Keystone XL pipeline is in the spotlight once again after President Biden revoked the pipeline’s presidential permit by signing an executive order halting the construction of the pipeline that would carry 830,000 barrels of oil per day from Alberta, Canada to Steele City, Nebraska, where it would join an existing pipeline that would transport the oil to the Gulf of Mexico. The executive order showcases the commitment of the new administration to fight climate change and move forward with its plan to transition towards a cleaner economy. This paper delves into the possible reasoning underscoring the executive order, emphasizing why the pipeline and more importantly, the oil that it transports, is detrimental to the environment and the broader goals of the new administration. The paper analyzes the associated environmental risks along with the economic shortfalls of producing and transporting tar sands oil, suggesting that revoking the Keystone XL pipeline is in the best interest of the United States. 

Destructive extraction process – 

The tar sands of Canada’s Boreal forest are a sludgy deposit containing a mixture of sand, clay, water, and bitumen, a gooey type of petroleum that can be converted into fuel. To gain access to this resource, the boreal forest of Canada is being flattened, destroying a rich wildlife habitat as well as one of the world’s largest carbon sinks.[1] Due to its high viscosity, it cannot flow easily and cannot be pumped out of the ground like conventional oil. Hence, there are two methods utilized to extract this oil: 

  • Open-pit mining is similar to strip mining or open-pit mining used to extract coal. If tar sands are found near the surface, such as in many parts of Alberta, Canada, they can be mined through this method, and then transferred to an extraction plant where the bitumen can be separated from the sand, clay, and water. 
  • In-situ mining can be utilized if tar sands are deeper in the ground. The bitumen can be extracted by injecting steam or solvents to loosen it and allow it to flow easily through a well to the surface. However, this method is more expensive and carbon-intensive than open-pit mining. [i]

Production requires large quantities of water. For every gallon of gasoline produced by tar sands, about 5.9 gallons of fresh water are consumed during the extraction, upgrading, and refining process. This accounts for approximately three times more than what is required for conventional oil. Moreover, the extraction process has led to the creation of the world’s largest tailing[2] waste ponds, which are the size of 500,000 Olympic swimming pools. They are extremely toxic due to which birds are prevented from going near them. The water from the ponds can contaminate water bodies such as rivers, lakes as well as groundwater that support several communities in the region, causing the increased appearance of several severe diseases that were previously rare in the region.[ii]

Transport dilemma – 

The oil from tar sands is thicker, corrosive, and more acidic, and sulfuric than light crude oil, making it difficult to transport. The pipelines require higher operating temperatures and pressure to move the thick oil.  To transport, the oil must be diluted with light crude oil or a mix of natural gas liquids, often containing benzene, a human carcinogen.[iii]This mixture is referred to as diluted bitumen or dilbit. According to the Natural Resources Defense Council (NRDC), pipelines that routinely carried oil from tar sands in the Midwest have spilled 3.6 times more oil per pipeline mile than the national US average. Also, leaks in dilbit pipelines are difficult to detect because as they contain natural gas liquids, changes in pressure cause the liquids condensate component to move from liquid to gas form – termed as column separation, which can impede the flow of oil. As column separation displays the same signs as a leak, real leaks may be misdiagnosed, causing a disaster as the solution to the previous phenomenon would be pumping more oil through the pipeline.[iv] This is what happened during the Kalamazoo River spill where around one million gallons of dilbit spilled and the heavy sludge sank to the bottom of the river polluting the water while the volatile hydrocarbons evaporated and poisoned the air.[v] The oil leak is the biggest onshore oil spill in US history with a $1.2 billion clean-up cost for the operator, Enbridge. 

Environmental impacts – 

The Keystone XL will cross several environmentally fragile areas. A report by the Center for Biological Diversity considered the potential impact of the pipeline on endangered species.[vi] They found at least 12 threatened and endangered species in four states that could be harmed if Keystone XL was constructed. The pipeline could also lead to impairing the recovery of the said animals and/or contribute to their extinction. Moreover, Nebraska’s Ogallala Aquifer, one of the world’s largest underground sources of fresh water, provides water to farms in eight states will also be in the path of the pipeline. While in some areas the aquifer is buried 1200 feet underground, in several others the water is very close to the surface. TransCanada’s plan to bury the pipeline at least four feet underground could spell devastation in the wake of a leak, with oil quickly seeping through the sandy porous soil. [vii]

Energy returned on investment (EROI) –  

EROI is a tool used to help analyse the energy efficiency of extracting an energy source. Tar sands have proven to be a minor net energy producer when one includes internal energy as an energy cost. Conventional oil has an average EROI of 25:1, i.e., 25 units of oil-based energy recovered for every one unit of energy invested for extracting it. On the other hand, tar sands have an EROI of 5:1 according to a report by the Post Carbon Institute.[viii] Thus, it is said to be one of the high cost and low net energy oil resources. Furthermore, when in-situ oil sands are compared with conventional oil, the prior will have an even lower EROI. Another research showcased that while the EROI of mining Canadian oil sands fluctuated between 3.9 – 8, in-situ oil sands had an EROI range of 3.2 – 5.4. [ix]

Marginal Profits – 

Not all oil is created equal. The low EROI mentioned above can serve as an indicator regarding the profitability of the tar sands. The resource requires an extensive amount of energy as input, often in the form of natural gas, increasing the cost of extracting the tar sands. With the price of Western Canada Select being under $40 per barrel, Canadian oil firms are retrenching, with many oil companies unable to earn back the high start-up costs. These companies, which decided to extract expensive oil when prices soared to $100 from the mid-2000s until 2014, are unable to generate profits anymore. Large financial institutions also stopped investing in the Alberta tar sands. The Hartford, an insurance giant, said it would stop insuring or investing in oil production in the province just weeks after Sweden’s central bank said it would stop holding Alberta’s bonds. BlackRock, the world’s largest asset manager, said that one of its fast-growing green-oriented funds would stop investing in companies that earn revenue from the Alberta oil sands. With changing consumer preferences, banks, pension funds, and global investment houses have been pulling away from fossil fuel investments. Moreover, the disinvestment of AP7, Sweden’s largest venture fund from TransCanada shifted the balance in the world of finance in 2017, setting an example that was soon imitated by several international investors like BNP Paribas and Norway’s Sovereign Wealth Fund. Alberta’s debt was also downgraded by Moody’s in December 2019 to its lowest level in 20 years due to the province’s dependence on oil sands.[x]  Thus, the fall in oil prices, changing consumer preferences, and a shift in investment perspectives have deemed profits from the tar sands almost unattainable. 

Conclusion

While Canada has an abundance of oil, the intrinsic characteristics of its resource and the shift in global preferences make it one of the most expensive and least profitable fossil fuels on the globe. Moreover, with the new president of the United States pledging to curb climate change and preparing to direct the country’s economy towards greener alternatives, the future of the Keystone XL pipeline is bleak. However, environmentalists and climate activists cannot bask in this success for long. The United States is currently importing more than 50 percent of its crude oil from Canada and even without the construction of Keystone, existing US-Canada pipelines possess the capacity to handle an increased volume of crude imports in the coming years. Thus, we need to count the current victory as a first step towards propelling this capitalist and fossil fuel-driven economy towards a greener and more sustainable future. 

[1] Boreal forests capture twice as much carbon dioxide than tropical forests.

[2] Oil sands tailings ponds are engineered dam and dyke systems to capture oil sand tailing, that is a mixture of salts, suspended solids and other dissolvable chemical compounds such as acids, benzene, hydrocarbons residual bitumen, fine silts and water. 

[i] What Are the Tar Sands. American Geosciences Institute. http://www.americangeosciences.org/critical-issues/faq/what-are-tar-sands. 

[ii] The Tar Sands. Union of Concerned Scientists, 18 Dec. 2013, http://www.ucsusa.org/resources/what-are-tar-sands. 

[iii] What Is Diluted Bitumen and Is It More Dangerous than Conventional Oil?  Tsleil-Waututh Nation Sacred Trust Initiative, twnsacredtrust.ca. 

[iv] Swift, Anthony, et al. Natural Resources Defense Council, National Wildlife Federation, Pipeline Safety Trust, Sierra Club, 2011, Tar Sands Pipelines Safety Risks, aeic-iaac.gc.ca/050/documents_staticpost/cearref_21799/83858/Tar_Sands_Pipelines_Safety_Risks.pdf. 

[v] Biello, David. Does Tar Sand Oil Increase the Risk of Pipeline Spills? Scientific American, 4 Apr. 2013, http://www.scientificamerican.com/article/tar-sand-oil-and-pipeline-spill-risk/.

[vi] Burd, Lori Ann, et al. Centre for Biological Diversity, 2013, In Harm’s Way How the U.S. State Department and U.S. Fish and Wildlife Service Have Ignored the Dangers of the Keystone XL Pipeline to Endangered Species, http://www.biologicaldiversity.org/campaigns/no_keystone_xl/pdfs/In_Harms_Way.pdf. 

[vii] Mufson, Steven. Keystone XL Pipeline May Threaten Aquifer That Irrigates Much of the Central U.S. Washington Post, 6 Aug. 2012, http://www.washingtonpost.com/national/health-science/keystone-xl-pipeline-may-threaten-aquifer-that-irrigates-much-of-the-central-us/2012/08/06/7bf0215c-d4db-11e1-a9e3-c5249ea531ca_story.html. 

[viii] Huges, David. Post Carbon Institute, 2013, Drill, Baby, Drill: Can Unconventional Fuels Usher in a New Era of Energy Abundance?, http://www.postcarbon.org/publications/drill-baby-drill/. 

[ix]Wang, Ke, et al. Energies, 2017, Energy Return on Investment of Canadian Oil Sands Extraction from 2009 to 2015, http://www.researchgate.net/publication/316639756_Energy_Return_on_Investment_of_Canadian_Oil_Sands_Extraction_from_2009_to_2015. 

[x] Flavelle, Christopher. Global Financial Giants Swear Off Funding an Especially Dirty Fuel. The New York Times, 12 Feb. 2020, http://www.nytimes.com/2020/02/12/climate/blackrock-oil-sands-alberta-financing.html.