Daily Archives: October 23, 2011

There’s trouble in the pipeline for Obama

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Fuelling controversy: trucks carry tar sands from the Fort McMurray mine, Alberta

Rupert Cornwell

At first glance, it’s what the Americans call a no-brainer, a decision so obvious it doesn’t require an instant’s thought. You are the world’s biggest importer of oil, spending hundreds of billions of dollars a year to prop up unstable or downright hostile countries that happen to produce the precious stuff. Then your next-door neighbour, a proven friend and your biggest trading partner, offers to build a pipeline to provide you more of its own oil. The deal means greater energy security, not to mention thousands of new jobs, a year before you face a tricky re-election campaign in which high unemployment is likely to be the make-or-break issue. Truly, a no-brainer.

Except it hasn’t worked out that way. By the end of the year, the Obama administration is supposed to give final approval for the 1,700-mile Keystone XL pipeline, that would carry up to a million barrels a day of oil, some 10 per cent of US import needs, from Canada to refineries on the Gulf of Mexico. The decision not only seems certain to split the Democratic Party, but it will also say a great deal about the core beliefs of a president who stands for so much – but, it often seems, for nothing very passionately.

For the oil that would flow through Keystone XL is not just any oil. It comes from the Alberta tar sands, which contain economically recoverable reserves equal at least to those of Saudi Arabia. Unfortunately, production from this super-heavy bitumen generates three times as much greenhouse gas as conventional oil.

For the Republican candidates jostling to oppose Mr Obama next November, the latter consideration, of course, hardly applies. Climate change, they believe, has nothing to do with humans, while the venture is just the sort of bold private-sector investment that creates jobs and revitalises the economy: government should get out of the way and give business its head. Indeed, listen to Rick Perry, the governor of Texas and one of the frontrunners for the nomination, and you would imagine that America’s every woe could be solved by an oil derrick in everyone’s back garden.

For Democrats, however, Keystone XL is the wedge issue from hell. It pits two of Mr Obama’s key constituencies against each other. On one side are the unions, a major source of Democratic funding and a key grassroots organising force for the party, who naturally are unequivocally in favour of the pipeline because of the estimated 20,000 jobs it will generate.

On the other, however, stand environmentalists from the liberal wing of the party that most fervently backed Mr Obama in 2008, and whose enthusiasm will be sorely needed if he is to secure a second term. But environmentalists’ faith was heavily dented by the President’s decision in September to halt plans to impose more stringent clean-air standards – announced on 2 September, the very same day the government reported that no new jobs were created by the economy in the month of August.

A go-ahead for the pipeline would be portrayed by liberals as more evidence that, when push comes to shove, Barack Obama will yield to corporate clout. In recent days, the divisions have only deepened. More than 20 Democratic congressmen have written to the President urging him to support the scheme, but Harry Reid, the Senate majority leader and the most powerful Democrat on Capitol Hill, warned that anything was preferable to increasing dependence on “unsustainable supplies of dirty and polluting oil”.

Not so long ago, everything seemed plain sailing for Keystone XL. Because the pipeline crossed an international border, it fell to the State Department to judge its environmental impact. The Canadian government lobbied heavily for the project, and in November 2010, with memories of BP’s Deepwater Horizon spill fresh, Hillary Clinton, the Secretary of State indicated that she was “inclined” to grant a permit. It was, she said, “a choice between “dirty oil from the Gulf or dirty oil from Canada”.

Then came the counter-attack, spurred in part by the verdict of the federal government’s own Environmental Protection Agency that the State Department’s review process was “inadequate”. Scientists and environmental groups, even farmers in South Dakota, Nebraska and Kansas, made common cause – the former warning that increased production from the tar sands would render futile all efforts to hold back climate change, the latter fearful that a pipeline leak could contaminate the shallow Ogallala aquifer on which the Great Plains depend for irrigation and drinking water.

By August, demonstrations were taking place outside the White House, and Hollywood was getting into the act. The crude from Alberta was ” the dirtiest oil on the planet”, Robert Redford declared, as he urged Mr Obama to “stand up for the future you know we deserve … and say ‘no’ to the Keystone XL”. Some noted that in 2007, none other than George W Bush had signed a law banning the government from buying fuel with a higher carbon footprint than ordinary oil. If tar-sand oil was too much even for the “Toxic Texan”, surely it was too much for Barack Obama?

There, for now, matters stand. The White House urges liberals not to lose faith, pleading with them to consider what evils might be visited upon the environment if a Republican won in 2012. The official mantra remains that the US must somehow end its addiction to oil, by switching to renewables and other “green” sources of energy.

But the much-publicised bankruptcy this summer of Solyndra, a solar panel company that had received $535m in federal loans, tells another story. The affair is not the political graft scandal some Republicans suggest, rather a well-meaning investment that failed. But the story of Solyndra only underlines how hard it will be to find a speedy alternative to oil.

In the short term, however, politicians must create an economy that generates jobs and wins them elections. And the two goals may well be irreconcilable. “To govern is to choose among disadvantages,” Charles de Gaulle once said. Barack Obama knows exactly what he meant.

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Birthplace of pipeline controversy

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By Paul Hammel

FORT MCMURRAY, Alberta — Even those in the Canadian oil industry will tell you that mining oil sands isn’t pretty.

At the Syncrude strip mine north of town, huge scoop shovels gnaw garage-size bites of the dark sands from the terraced walls of the largest open-pit mine of its kind — a 1.5-mile-wide, 300-foot-deep hole scraped out of the boggy forest.

Dozens of dump trucks as big as barns rumble and groan up and down dusty roads, hauling away 400 tons at a time to processing buildings the size of grain elevators.

After a trip through a steam-belching “upgrader” plant — a maze of metal pipes, centrifuges and towers — that 400-ton load of sand eventually becomes 20 barrels of synthetic crude oil.

The mining area stretches as far as the eye can see.

Bright yellow dried sulfur, a waste product removed from the oil sands, is stacked in piles as big as shopping centers.

Nearby is a muddy mile-wide pond that holds the wastewater from the upgrader plant. It’s dotted with floating scarecrows and ringed with radar-activated, propane-powered cannons to scare off any waterfowl pondering a deadly landing in the oily water.

Roughly 7,000 workers a day labor for Syncrude.

They arrive in a 24/7 conveyor belt of buses from Fort McMurray, a boomtown known as “Fort McMoney” for its high wages, huge bonuses and expensive cost of living.

Wages average nearly $180,000 per household, which helps pay the bills for housing: A typical two-story house costs $740,000 here, more than double the price for a home in Edmonton, a four-hour drive to the south.

Depending on your point of view, Syncrude’s massive North Mine at Mildred Lake, amid the jack pines, yellowing birch and boggy muskeg of Canada’s vast northern forests, is either America’s best answer to its energy future or its worst nightmare.

It’s the birthplace of a controversy burning red-hot in Nebraska and the United States.

A visit to the oil fields offers a window into what is at the heart of the high-stakes, big-money fight over the Canadian oil industry’s need to process and transport its product. The clash pits environmental interests in both countries against those pressing for jobs and a U.S. ally’s alternative to Middle Eastern and South American oil.

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Canada’s oil sand deposits cover an area the size of Florida. They are estimated to hold the world’s third-largest reserves of oil, behind Saudi Arabia and Venezuela.

The deposits are called “tar sands” by most locals because of their thick, tarry appearance and “oil sands” by the more publicity-conscious. Canada plans to double production of such oil by 2020 and needs somewhere to send it.

The best bet is the United States — still the world’s largest consumer of oil and the recipient of 99 percent of the oil mined out of the oil sands.

Canada is eyeing increased pipeline capacity to its west coast so it can sell more oil to China, which owns 9 percent of Syncrude. But those projects face stiff opposition from western Canada’s First Nations, or native tribes, and aren’t expected to happen for at least five or 10 years.

That puts a lot of chips on a pipeline furthest along in the planning and permitting process: the Keystone XL.

The 36-inch pipe would connect this remote corner of northeast Alberta to the world’s largest concentration of oil refineries, along the Gulf Coast of Texas and Louisiana. The Keystone XL would double Canada’s pipeline capacity to the United States.

Those U.S. refineries are operating under capacity and face declines in the heavy crude oil they get from Venezuela and Mexico.

So they’re looking to Canada, which is already the largest U.S. oil supplier, providing more than one in five barrels of oil.

Alberta, the prairie province, has staked its future on continued demand for fossil fuels and is glad to oblige.

Officials in Canada maintain that while they support the development of renewable energy sources such as wind and solar, those sources aren’t well developed enough to meet future world energy needs, which they project to grow by 51 percent by 2035.

Canada and its oil sands are the answer, they say.

“At the end of the day, oil and gas will be a big part of our energy future. At least in our lifetimes,” said Travis Davies of the Canadian Association of Petroleum Producers.

Davies, Alberta officials and others in the oil sands industry are in a public relations battle royal to prove they are mining the oil sands responsibly and addressing concerns about environmental and health impacts.

Companies such as Syncrude, Shell and Suncor that operate open-pit mines are stepping up efforts to reclaim the pits and to turn “tailings” lakes into budding forests and ponds that support ducks and local wood bison.

Newer technologies are being developed to mine deep oil-sand deposits in a way that doesn’t require pit mining and the wholesale stripping away of forests.

Such in situ, or “in place,” mining disturbs only a few acres of land per mine and can reach 80 percent of the remaining oil, which is too deep for pit mining.

While it takes a lot of energy for such mining, officials say they’re reducing greenhouse gas emissions and working to further reduce them and operate more efficiently.

Critics say the environmental costs of stripping away the fragile forestlands and the extensive processing needed to turn oil sands into bitumen — the thick, tarlike oil recovered here — are too high.

The breakneck speed of development, they say, is outpacing environmental monitoring and research into increased levels of contamination in local rivers and slightly increased levels of cancer downstream from the mines.

Even some Albertans say a moratorium is needed on new development so regulators and scientists can catch up with a mining process that they say has left behind 223 billion gallons of toxic waters and requires 3.5 to 4 times more greenhouse gas emissions than extracting conventional oil.

Those statistics, and the gaping pit mines, are why environmental groups call this the world’s “dirtiest oil.”

“It’s clear to a lot of people that there are significant environmental impacts that haven’t been addressed,” said Nathan Lemphers of the Pembina Institute, a Calgary-based environmental think tank.

“The Keystone XL pipeline will provide a strong market signal for accelerated oil sand development,” Lemphers said. “While that will be good news for a small group of companies, it’s bad news for Albertans, bad news for the environment and potentially bad news for consumers in the state, because they’ll see higher prices at the pump.”

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The headquarters for the booming oil sand industry is Fort McMurray, a former fur-trading post along the wide and winding Athabasca River.

Some workers here say sarcastically that the best thing about Fort McMurray — where shifts are typically 10 to 12 hours long and temperatures can range from 80 above to 40 below — is seeing it in the rearview mirror.

But for tens of thousands of workers, from across Canada and as far away as Pakistan and the Philippines, it’s a “mini Dubai” of the north, where hard work can be rewarded with oil riches in a town where the northern lights dance in the night sky.

The big boom has come in the past 15 years, transforming Fort McMurray from a sleepy village into a city of 80,000. And that doesn’t include the 35,000 temporary construction workers living in remote camps carved out of the woods.

In town, you can whet your whistle at the Oil Can Tavern, cheer on the Oil Barons hockey team and then sleep it off at the Oil Sands Motel.

The faint smell of oil in the air reminds you where the money is coming from.

Luring workers to this formerly roadless wilderness has always been a huge problem. But they come, mostly younger people (the average age is 31.8 years) drawn by the $100,000-plus-a-year paychecks, bonuses and housing allowances, for agreeing to work for a period of years. There’s even a federal tax break for working in the remote north.

“The money’s here, and so are the jobs,” said 24-year-old Hillary Woodhead.

She hops aboard a company-chartered jet every month at the Pacific Coast town of Powell River, British Columbia, to come to work.

Woodhead works a three-week-on, one-week-off shift as a janitor/clerk at a remote work camp north of Fort McMurray.

Workers live in a maze of interconnected steel trailers that look like the shipping containers from oceangoing freighters. Inside, pool and foosball tables and big-screen TVs provide recreation. A well-stocked cafeteria provides dinners, cookies and gourmet coffee.

The food and lodging are part of Woodhead’s compensation. She figures her salary is double what she could earn in her old job as a licensed beautician back home.

“A lot of people my age are up here,” she said. “British Columbia is beautiful, but, unfortunately, there’s no money there.”

Americans, too, are drawn to the work created by the rapid mine expansion.

Mike Foster of Aurora, Colo., works for a Colorado-based contractor that does laser surveying and sells mine-planning software. Half of his work is now done on the road in Canada, and he expects to spend more and more time in the oil sands region.

Foster said the Syncrude pit mine is the largest he’s ever seen, and he’s worked with every kind of mining, from coal to uranium. People need to realize, he said, that such industries are heavily regulated and that they are required to reclaim mined lands.

“Sometimes I think we’re environmentalizing ourselves out of jobs,” he said as he boarded a plane to return to the States.

Half of the residents of Fort McMurray work in the oil sands business, and nearly 11,000 new residents arrived in the past year.

You can spot pit-mine workers by their pickup trucks. They are fitted with 10-foot-tall “buggy whips” that fly a fluorescent-orange plastic flag.

The flags provide an eye-level warning for drivers of the huge dump trucks in the pit mines so they know that far below, a tiny pickup is driving by.

Longtime regional Mayor Melissa Blake said Fort McMurray has moved past the days when workers slept in tents and campers because of the lack of housing.

Now there’s a Walmart Supercenter in town, along with a beautiful indoor recreation facility. There are enough Subways, Burger Kings and Tim Hortonses (a Canadian-based fast-food/doughnut chain) along major streets to make you feel like you’re in any major suburb instead of an isolated rural outpost at the edge of Alberta.

Now Fort McMurray is bracing for another influx. With the expected doubling of mining, an estimated 200,000 people will be living in the area by 2030.

Orange road-construction barrels are everywhere. The four-lane freeway is being expanded, a new bridge is going up across the Athabasca, and a new water-treatment plant is being built.

Housing is rising as fast as the Crown — the provincial government — releases new land for development, said Blake, who is something of a Canadian Sarah Palin, with her spunky personality, rapid-fire responses and vigorous promotion of her remote community.

Blake, whose region includes 10 villages that are home to Canada’s First Nations, readily admits that without the oil sand mines, there would be nothing here.

It was the mines that lured her father to Fort McMurray. She was a recruiter for Syncrude before she got involved in politics.

Everyone here, Blake said, wants “the cleanest, healthiest environment we can have.” Indeed, Fort McMurray has a progressive law that bans plastic bags at grocery stores.

She urges visitors to look past “the rhetoric” of those who oppose oil sand development.

“There are risks in just about any endeavor,” Blake said.

That goes, too, for a project that will help speed along the expansion of oil sand mining here, the proposed Keystone XL pipeline.

“Even if it doesn’t exist,” Blake said, “we’ll find a way to move forward.”

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