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Friday, November 23, 2012

Speaking of Tar Sands…

The Canadian premiers are in the news today, thanks to their “economic summit” in Halifax this week. One of the main stories that has emerged highlights the importance of energy policy between the provinces and across the nation.  The leaders expressed a general sense of optimism about sharing the pie that is “Alberta’s oil.” The news media appear willing to jump on that bandwagon as well. The summit’s newsworthiness, such as it may be, pales in contrast to the story that is not being told. As regular readers may have guessed already, the real story I’m referring to is that dual fossil-fuel story about climate change and peak oil.
Indeed the optimism may be a thin veneer: if the leaders of Canada’s provinces and the head of the bank of Canada know anything, they should know about this real story as well. For one thing they should know better than to pretend that it’s “oil” they’re talking about. Same goes for the journalists asking the questions. Everybody knows that when talking of future energy exports coming out of Alberta, it’s the tar sands that are the source. And as Andrew Nikifouruk – among others – rightfully points out, the stuff ain’t oil.
There are at least three major areas of concern surrounding the tar sands that cannot be ignored. One is that the only reason we are talking about the resource’s viability is because of the repercussions of global peak oil and the $80 + price of a barrel of crude. In turn, investors are vulnerable to a price collapse, which would throw a wet blanket on the whole show. The second is that as the Kyoto Protocol limps away to hide in a crawl-space of history, the tar sands represents everything that industrial society should be working to avoid, in order to avert climate disaster. Lastly, returning to the point that “it ain’t oil,” the tar sands development puts an enormous strain on the biosphere, particularly with respect to water, both upstream and downstream of production: competing with other users for processing, and contaminating the Athabasca watershed on a monumental scale. A fourth point could be added as well, which is that the tar sands puts an incredible strain on the industry itself, which must consume astounding amounts of energy to unlock this resource (more on this below).
Under our present leadership here in Canada, we will apparently ignore this information, and strive for progress the one way we know how: that vaunted intangible economic growth. In our case this growth is being conjured out of sand: that dubious natural endowment that I will always refer to as the tar sands. The industrial development surrounding the tar sands is in the realm of stupendous in scale – a force to be reckoned with. If you catch the propaganda about it, you’ll hear that this is good old fashioned economic development and job creation (a topic I’ll have to save for another post). With energy trade deals and pipelines pending, this resource is being pedalled as our ticket to freedom and prosperity. The thing is, like a lot of “growth” nowadays, the tar sands just ain’t what it’s stacked up to be – one way or another somebody really has to pay for it – through the nose.
You might say, wait a minute, it’s us Canadians who are reaping the benefits as exporters here: other countries will be paying. But that’s only part of the picture. In a predictable manner, following the script of classical economics, the downside of the development as a whole is externalised in at least two significant ways. As mentioned above, one is with respect to carbon emissions, the other pertains to water use and freshwater contamination. These “externalities” represent costs paid by people outside of the development, like first nations people downstream from production, as well as by future generations who will live through the consequences of unregulated carbon emissions and the depletion of underground aquifers.
For anyone familiar with the criticism of the tar sands this is not ground-breaking news, earth-shattering as it may be. For others it seems this kind of information has no effect. Perhaps they are truly dazzled by the big numbers attached to the tar sands deposit: “so many hundreds of billions of barrels of oil, and blah blah blah…”
One thing I have learned about this resource having read a fair bit, is that although you can talk in terms of hundreds of billions of barrels, when it comes down to it, the rate of extraction will only ever be a tiny fraction of the total. Tar sands doesn’t flow like crude oil, for obvious reasons, so even the most ambitious forecasts talk of maybe 5 million barrels of synthetic crude a day – a rate that is still many years away, by the way – is probably about where it will max out. How sustainable that output will be in the long run is yet another question.
Now I admit, 5 million barrels of oil is nothing to sneeze at. If we Canadians wanted to become energy independent we could try to distribute the resource from coast to coast and achieve this goal (albeit at considerable expense). This seems to be what many of the premiers have in mind. Please note however this is not what I consider a desirable alternative worth pursuing (again, this will have to wait for a future post).
Perhaps the most significant thing I have learned about the tar sands, which consistently passes under the radar of the news media, is that while development is justified economically now, on the grounds that $80/barrel prices allow developers and investors to turn a profit, the resource is fundamentally expensive in energy terms – beyond the question of money, which is just an abstract set of values. When measured in terms of net energy,  (or Energy return on energy invested – EROEI) since you must necessarily burn fuel in order to extract it, tar sands will never really be the same as crude oil, despite the propaganda and fanfare. Net energy is an important way of assessing all energy sources: How much energy do you have to exert to reap the surpluses you are seeking from a given resource? For the tar sands, the energy returned on energy invested is a pitiful ratio optimistically somewhere around 7:1 for extraction and drops to 3:1 after it has been upgraded and refined into something useful such as gasoline. How does this compare to other sources? Consider that at one time light sweet crude offered up an energy pay-off of about 100 to one. These numbers, if you choose not to ignore them, underscore just how different our current energy situation is in relation to the good ol’ days. This is the unfolding story of peak oil: the narrative of our times…
The obvious question about the promised future of Canadian tar sands development (remember that 5 million barrel/ day target?) is what is the net worth of that 5 million barrels when you’ve exhausted something like the equivalent of 3 million barrels just to process the stuff?
Current tar sands policy represents a fantasy that the poor choices we made in the past can be corrected by making even poorer ones today. Those poor choices involved buying in to the individually owned car/ consumer model for business as usual, including suburbanisation of cities and rampant disregard for the limits of an inherently finite resource (oil), and even more finite biosphere (which may not be able to absorb all the carbon contained in the remaining crude oil deposit). It all probably seemed like a very good idea at the time, I’m sure, but we should know by now that this business model is unsustainable. Tar sands development (itself environmentally risky) is an attempt at sustaining the unsustainable. Personally I’d like to vote for a different plan, sooner than later.
If these views strike you as extreme, please convince me that I am mistaken. Certainly critics of peak oil commentators have done an unconvincing job so far. Take Tim Worstall’s argument as one example of many. (The man appears to be utterly incapable of piecing together a rational argument). If I am not mistaken, and if these points I bring up remain marginalised as they are now, and we continue to ignore the major crises that science have already identified, we will one day fail as a society. Eventually, perhaps without ever noticing when the failure occurred, the cause for failure will become more and more apparent in retrospect.  Maybe we’ll finally get past the phony debates on climate change, peak oil and the economic downturn, roll up our sleeves and deal with our shit. Hopefully by then we won’t find ourselves too far past the crossroads of change, having rolled deep into the mud of the new era that began while we weren’t looking.
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