Alberta, Open Sewers and the Keystone Pipeline

keystone-pipelineAl Gore raised the hackles of the Canadian government this week when he criticized the country’s large scale extraction of oil from the Alberta tar sands.  The tar sand oil reserves are among the world’s largest but are particularly energy intensive to extract.  That means that extracting oil that will then be burned will emit significantly more greenhouse gases than oil extracted through more conventional means.  Gore said that the extraction  has led to

damage to some extremely beautiful landscapes, not to mention the core issue of adding to the reckless spewing of pollution into the Earth’s atmosphere as if it’s an open sewer.

The Canadian government is having none of it.  Canada’s natural resource minister called Gore’s remarks “wildly inaccurate and misleading.”

So why the hooplah now over the oil sands extraction?  Most likely because the U.S. State Department faces an upcoming decision about whether to approve the construction of the Keystone Pipline, which would transport oil extracted from the tar sands across the United States to the Gulf of Mexico. More specifically, the State Department must determine whether to issue a Presidential Permit for the construction of the pipeline by deciding whether the pipeline would “serve the national interest.”  On March 1,  the State Department released a Draft Supplemental Environmental Impact Statement (DSEIS) as required under the National Environmental Policy Act assessing the environmental effects of the proposed pipeline.  The DSEIS is necessary because the applicant for the pipeline, TransCanada Corp., has proposed a new route for the pipeline in response to significant criticism over the first proposed route. Thus the original Environmental Impact Statement (EIS) must be supplemented.

The DSEIS has raised significant controversy  because it concluded that greenhouse gases emitted as a result of extracting and then burning the tar sands oil would not increase dramatically whether or not the pipeline is approved.  The reasoning, in the words of the DSEIS?

approval or denial of the proposed Project is unlikely to have a substantial impact on the rate of development in the oil sands, or on the amount of heavy crude oil refined in the Gulf Coast area.

That’s because the analysis assumes that the oil below the tar sands — which the State Department acknowledges is particulary energy intensive to extract — will be extracted regardless of whether the pipeline is built or not. The DSEIS relies on “market analysis” that suggests that without the pipeline, the oil will be extracted and exported via rail rather than via the pipeline. So no matter what the U.S. does, the oil will be burned and greenhouse gases will be released into the atmopshere in any event (treating the atmosphere, in Gore’s words, as an “open sewer.”)  The DSEIS, if finalized with the same conclusions, appears to give the State Department cover on perhaps the most controversial aspect of the pipeline construction, its relationship to climate change.

But the State Department analysis is by no means the last word on this topic and in fact, the Obama Environmental Protection Agency has now significantly undercut the State Department conclusion.  In a letter released on April 22, EPA questioned the DSEIS conclusion that denial of the pipeline would result in the oil being extracted in any event.  The State Department analysis, in EPA’s view, is based on insufficient information and should be updated.  Here’s what the EPA letter has to say:

The market analysis and the conclusion that oil sands crude will find a way to market with or without the Project is the central finding that supports the DSEIS’s conclusions regarding the Project’s potential GHG emissions impacts. Because the market analysis is so central to this key conclusion, we think it is important that it be as complete and accurate as possible. We note that the discussion in the DSEIS regarding energy markets, while informative, is not based on an updated energy-economic modeling effort. The DSEIS includes a discussion of rail logistics and the potential growth of rail as a transport option, however we recommend that the Final EIS provide a more careful review of the market analysis and rail transport options. This analysis should include further investigation of rail capacity and costs, recognizing the potential for much higher per barrel rail shipment costs than presented in the DSEIS. This analysis should consider how the level and pace of oil sands crude production might be affected by higher transportation costs and the potential for congestion impacts to slow rail transport of crude.

The new EPA analysis has, in my view, now made the State Department decision about whether to approve the permit significantly more difficult. At a minimum, EPA has raised significant questions about whether the DSEIS is legally inadequate and State will need to address the concerns in the final EIS.  But more crucially, EPA appears to be casting doubt on the most controversial conclusion of the DSEIS, suggesting that if the pipeline isn’t built, the tar sands oil may remain in the ground.  If so, the climate change impacts from approving the pipeline are substantial.

So where does this leave the Obama Administration?  In a deep bind.   I discussed this issue at length recently on Public Radio International’s Living on Earth:  http://www.loe.org/shows/segments.html?programID=13-P13-00017&segmentID=1  I can’t predict whether the Obama Administration will approve the Keystone permit or not but its own EPA just made the task a whole lot tougher.

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Reader Comments

8 Replies to “Alberta, Open Sewers and the Keystone Pipeline”

  1. Reblogged this on the anthropo.scene and commented:
    I have been interested lately in how the Canadian government has completely lost control of the discourse over its oil resources. It started with a very tightly scripted campaign for “ethical oil” a few years back, but today both the script and the actors involved (i.e. Canadian ministers at the provincial and federal levels) appear as so many industry touts. So it is a double loss. On the one side it is a loss because any long-term viability for developing oil resources is now in jeopardy as all sides converge to wage war against “dirty oil”. On the other, the development that is proceeding is under less and less scrutiny internally, and so the government (and by extension the public) are in a much weaker position than they were just a few short years ago.

  2. Reblogged this on the anthropo.scene and commented:
    I have been interested lately in how the Canadian government has completely lost control of the discourse over its oil resources. It started with a very tightly scripted campaign for “ethical oil” a few years back, but today both the script and the actors involved (i.e. Canadian ministers at the provincial and federal levels) appear as so many industry touts. So it is a double loss. On the one side it is a loss because any long-term viability for developing oil resources is now in jeopardy as all sides converge to wage war against “dirty oil”. On the other, the development that is proceeding is under less and less scrutiny internally, and so the government (and by extension the public) are in a much weaker position than they were just a few short years ago.

  3. The US State Department is acting out the script described years ago (by the ecologist, Garret Hardin) as the tragedy of the commons. That prompted some of the best minds in social science, notably Elinor Ostrom (2009 Nobel laureate in Economics) to explore how societies can overcome that default tendency, articulated by the State Department, of trying to capture short-term benefits before someone else does, even while knowing that the larger ecosystem will collapse from the aggregate behavior. Ostrom saw hope in well-designed institutions that would set rules to regulate the animalistic behavior that both the Canadian and US governments seem to consider sacrosanct. While Ostrom-esque institutions work very well at the scale of watershed associations or groundwater districts, the international scale is more challenging, partly because the issues take on bigger drama as so-called leaders fan the flames of politics and invoke “ethics”, usually implicitly, but in the Tar Sands case refreshingly explicitly with the Orwellian labeling of “ethical oil”. My belief, which I am investing my career in at the moment, is that we need to embrace the field of ethics and engage the “enemy” on that playing field. Let’s have a public discussion of what ethics are being expressed in the Tar Sands extraction process, and see whether and how those operative ethics are the ones we (civil society) wish to endorse. If we were to do this, we would confront the issue of lush water ecosystem that the Tar Sands exploitation is destroying, and the First Nations whose UN-recognized rights to their cultural lifeways are being patently ignored (see the UN Declaration on the Rights of Indigenous Peoples). And the ethics of ignoring climate change impacts, of course, and not only the direct links to all that extra carbon “bootprint” but the indirect opportunity costs (a concept that my daughter learned in 2nd grade but seems to escape the notice of elected leaders!) of the green/renewable energy industry that would be stimulated if we changed our course on fossil fuels. My point is that much of “the problem” — not just of Tar Sands extraction but of the way that activity is framed by the US State Department, is ethically ignorant, i.e., we are ignoring the ethical issues. The oil industry’s term “ethical oil” was a referent to Islamic terrorism, with the claim that Canadian oil is better because Canadians aren’t terrorists. A thorough ethical analysis of the values being expressed through Tar Sands development would lead, I think, to quite the opposite conclusions. For more about the application of ethics to water (which is how I got interested in the Tar Sands), see the Water Ethics Network (http://www.waterculture.org/Water_Ethics_Network.html) and our monthly e-newsletters (http://waterethics.org/wen-enewsletter/).

  4. The US State Department is acting out the script described years ago (by the ecologist, Garret Hardin) as the tragedy of the commons. That prompted some of the best minds in social science, notably Elinor Ostrom (2009 Nobel laureate in Economics) to explore how societies can overcome that default tendency, articulated by the State Department, of trying to capture short-term benefits before someone else does, even while knowing that the larger ecosystem will collapse from the aggregate behavior. Ostrom saw hope in well-designed institutions that would set rules to regulate the animalistic behavior that both the Canadian and US governments seem to consider sacrosanct. While Ostrom-esque institutions work very well at the scale of watershed associations or groundwater districts, the international scale is more challenging, partly because the issues take on bigger drama as so-called leaders fan the flames of politics and invoke “ethics”, usually implicitly, but in the Tar Sands case refreshingly explicitly with the Orwellian labeling of “ethical oil”. My belief, which I am investing my career in at the moment, is that we need to embrace the field of ethics and engage the “enemy” on that playing field. Let’s have a public discussion of what ethics are being expressed in the Tar Sands extraction process, and see whether and how those operative ethics are the ones we (civil society) wish to endorse. If we were to do this, we would confront the issue of lush water ecosystem that the Tar Sands exploitation is destroying, and the First Nations whose UN-recognized rights to their cultural lifeways are being patently ignored (see the UN Declaration on the Rights of Indigenous Peoples). And the ethics of ignoring climate change impacts, of course, and not only the direct links to all that extra carbon “bootprint” but the indirect opportunity costs (a concept that my daughter learned in 2nd grade but seems to escape the notice of elected leaders!) of the green/renewable energy industry that would be stimulated if we changed our course on fossil fuels. My point is that much of “the problem” — not just of Tar Sands extraction but of the way that activity is framed by the US State Department, is ethically ignorant, i.e., we are ignoring the ethical issues. The oil industry’s term “ethical oil” was a referent to Islamic terrorism, with the claim that Canadian oil is better because Canadians aren’t terrorists. A thorough ethical analysis of the values being expressed through Tar Sands development would lead, I think, to quite the opposite conclusions. For more about the application of ethics to water (which is how I got interested in the Tar Sands), see the Water Ethics Network (http://www.waterculture.org/Water_Ethics_Network.html) and our monthly e-newsletters (http://waterethics.org/wen-enewsletter/).

  5. Ann,

    I enjoyed your post and agree that the mere fact that another agency is raising concerns is a big issue for the SEIS (see the Sierra Club v USACOE re the Westway Project).

    The problem I have with EPAs comment is that it ignores the reality of what is going on in both the Bakken and the WCSB.

    In both places, there are severe pipeline constraints and in both places, there is extra rail capacity available because of coal to gas switching in the electricity sector. As a result, as shown in the Keystone SEIS market analysis, there is tremendous investment occurring in loading, unloading, and rolling stock capable of carrying both types of oil from where they are mined to where they are refined. My understanding is that the SEIS underestimates/is out of date as to the scale of what is going on. While all the fuss about Keystone plays out, the market is finding its own way to work around the regulatory obstacle. And to be clear, the buyers feel they need to do this because of declining Venezuelan and Mexican heavy oil production and the need to supply a constant mix of heavy and light crude to existing Gulf Coast refineries.

    The no-project alternative suggested in the SEIS is very quickly becoming a fact on the ground. The only wildcard in all of this might be a rapid increase in the natural gas price that would push the US electricity mix back towards coal. That in turn would increase demand for rail and so drive up the (now modest) price differential between oil shipped by pipeline versus oil shipped by rail. This is implicit in the EIA analyses that underly the SEIS because EIA assumes a return to $6 gas (and no further EPA regulation of GHG of which, sigh…) but I’m not sure how this plays in to rail prices in NEMS modeling – which is ultimately what would determine whether rail is an attractive option for the Bakken and WCSB (in the model if not reality).

    It’s all one big can of worms, ain’t it? Hope you are well.

    Best,
    Michael

  6. Ann,

    I enjoyed your post and agree that the mere fact that another agency is raising concerns is a big issue for the SEIS (see the Sierra Club v USACOE re the Westway Project).

    The problem I have with EPAs comment is that it ignores the reality of what is going on in both the Bakken and the WCSB.

    In both places, there are severe pipeline constraints and in both places, there is extra rail capacity available because of coal to gas switching in the electricity sector. As a result, as shown in the Keystone SEIS market analysis, there is tremendous investment occurring in loading, unloading, and rolling stock capable of carrying both types of oil from where they are mined to where they are refined. My understanding is that the SEIS underestimates/is out of date as to the scale of what is going on. While all the fuss about Keystone plays out, the market is finding its own way to work around the regulatory obstacle. And to be clear, the buyers feel they need to do this because of declining Venezuelan and Mexican heavy oil production and the need to supply a constant mix of heavy and light crude to existing Gulf Coast refineries.

    The no-project alternative suggested in the SEIS is very quickly becoming a fact on the ground. The only wildcard in all of this might be a rapid increase in the natural gas price that would push the US electricity mix back towards coal. That in turn would increase demand for rail and so drive up the (now modest) price differential between oil shipped by pipeline versus oil shipped by rail. This is implicit in the EIA analyses that underly the SEIS because EIA assumes a return to $6 gas (and no further EPA regulation of GHG of which, sigh…) but I’m not sure how this plays in to rail prices in NEMS modeling – which is ultimately what would determine whether rail is an attractive option for the Bakken and WCSB (in the model if not reality).

    It’s all one big can of worms, ain’t it? Hope you are well.

    Best,
    Michael

  7. Guess where the Keystone oil is headed (And, really, why would it be any other way?). If Canadian oil is more ‘ethical’ than Saudi oil, are Saudi profits from Canadian oil, direct and indirect ethical or unethical?

    http://www.nytimes.com/2013/04/05/business/texas-refinery-is-saudi-foothold-in-us-market.html?hp

    Also of interest:

    http://www.nytimes.com/2013/05/18/business/energy-environment/mountain-of-petroleum-coke-from-oil-sands-rises-in-detroit.html?hp&_r=0

  8. Guess where the Keystone oil is headed (And, really, why would it be any other way?). If Canadian oil is more ‘ethical’ than Saudi oil, are Saudi profits from Canadian oil, direct and indirect ethical or unethical?

    http://www.nytimes.com/2013/04/05/business/texas-refinery-is-saudi-foothold-in-us-market.html?hp

    Also of interest:

    http://www.nytimes.com/2013/05/18/business/energy-environment/mountain-of-petroleum-coke-from-oil-sands-rises-in-detroit.html?hp&_r=0

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About Ann

Ann Carlson

Ann Carlson is the Shirley Shapiro Professor of Environmental Law and the co-Faculty Director of the Emmett Institute on Climate Change and the Environment at UCLA School…

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