In Support of Canadian Oil Sands

by Steve Brick and Rachel Bronson

In early August, Secretary of State Hillary Clinton met with Canadian Foreign Minister John Baird. The topic: TransCanada’s $7 billion Keystone XL project, a proposed pipeline from the Northern Alberta oil sands – the third-largest proven reserves of oil in the world – to Texas, with stops at two Illinois-based refineries. 

On July 15, seven U.S. Senators submitted a letter to Secretary Clinton, asking the State Department to delay the pipeline’s review period. In her August meeting with Baird, Clinton assured Baird that the United States would decide on TransCanada’s bid by the end of the year -- though she gave no hint which way the decision would go.

At issue are several concerns about the pipeline and about oil sands generally raised by environmentalists. A huge billboard posted near O’Hare asks drivers to help stop the pipeline as a means to limit development of the oil sands. In late August, environmentalists risked being arrested to protest the oil sands in front of the White House. Canada’s Parliament Hill saw some similar dissent in September. With the deadline drawing near for the State Department to decide on the Keystone XL project, debate is heating up and protesters are again gearing up to make a stand this weekend in Washington, DC.

Environmentalist opposition is not surprising. Canada’s oil sands are their whipping boy. Environmentalists accurately note that greenhouse gas (GHG) emission rates for production and use of oil sands are higher than for most other sources of oil, and that mining them stresses the ecosystems and landscape in Northern Alberta. Also, environmentalists fear the pipeline’s proposed route near the Ogallala aquifer might contaminate this crucial Midwestern water supply.

There are grains of truth here. But there are at least two important reasons to support the Keystone pipeline project, and shift the policy debate from one of fear to one of seriousness.  

First, jobs. The Canadian Energy Research Institute estimates that existing and new oil sands projects related to the Alberta oil sands could create more than 600,000 additional American jobs and up to $775 billion in incremental American GDP by 2035. Much of this U.S. economic activity in the U.S. will be in the Midwest and Plains states, both along the pipeline’s route, and in manufacturing the specialized industrial and high-tech equipment needed to recover and process the oil sands.

Second, national security. The U.S. imports nine to twelve million barrels of oil a day. We can reduce these oil requirements, but we still will import large quantities of oil for decades to come.  The top seven sources, in descending order, are Canada, Mexico, Saudi Arabia, Venezuela, Nigeria, Angola, and Iraq. Limiting purchases from Canada will only compel us to buy more oil from the other countries – with the corresponding geopolitical implications.

Now, the environmental concerns. Canada works hard to mitigate the impact of oil sands development. In August we took a trip to visit a national laboratory devoted to this pursuit entirely. Canada’s practices are equal or better than anything required in the U.S. Yes, oil sands mining operations are not pretty, but then again, neither is coal mining or heavy industry –in the U.S. or elsewhere. The focus should be on whether the activities are carried out with appropriate environmental protections and attention to reclamation.  Moreover, most future growth in oil sands development will use so-called in situ technologies that extract oil without surface mining, resulting in less environmental impact and a lower greenhouse gas footprint. 

We must take seriously the possibility of pipeline spills, but the concerns seem overblown.The history of the U.S. pipeline industry shows that risks exist, but are small – and new pipelines are safer than existing ones.  State and federal authorities must ensure that the pipeline construction uses best environmental practices, and is properly operated and maintained. Our country is criss-crossed with pipelines:  we know how to build and operate them safely.

If the U.S. blocks the pipeline, here’s the reality: Alberta will produce its oil anyway. The Alberta oil sands resource is abundant and highly competitive in world markets at oil prices anywhere above $40 per barrel. China has been trying to buy as many Canadian resources as it can. It would like to see Canada ship the Alberta oil west to the Pacific Ocean, not south to the United States – with probably greater environmental risks during transshipment of the oil across the Rockies and over the ocean.   
So, let’s not kid ourselves that stopping the pipeline will stop any environmental damage. Instead, let’s acknowledge the risks and challenges, and then spend the money and efforts to make sure we do things right, rather than opposing an unstoppable force.

It is smart to bet on Canada, a country with similar values, concerns and laws, rather than block the pipeline and continuing the status quo – which is undesirable. Far from opposing the pipeline, Midwesterners should embrace the Keystone XL pipeline and other Canadian efforts in responsible energy development.

Energy and environmental matters are serious issues and require serious attention. Simplistic analysis and dogmatic jingoism won’t help. At a moment of Mideast unrest involving some of our most important energy partners and grinding economic problems here at home, we do not have the luxury of approaching energy and environmental topics any other way.

Steve Brick is a Senior Fellow on Energy and Climate at The Chicago Council on Global Affairs. Rachel Bronson is the Vice President Studies at The Chicago Council on Global Affairs.

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