Tar Sands Development Seems Increasingly Impractical

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Photo by Fotolia/Calin Tatu
Opponents of the Keystone Pipeline claim that, without Keystone, development of tar sands will be very difficult and much of the dirty crude will stay in the ground.

Press release from NRDCandFriends of the Earth.

Reports from industry analysts this week made it clear that limited pipeline capacity and a fluctuating market are likely to impede expansion of the tar sands industry. According to the Financial Post, “the high cost of doing business in Alberta’s oil sands” is making many investors wary of investing in tar sands. Many companies are being forced to assess whether or not it’s worth making investments in tar sands that may not be profitable due to the increased costs associated with mining and processing the oil.

This increase in costs is a strong indicator that without the ability to cheaply transport their tar sands to market through the Keystone pipeline, it will be much more difficult for energy companies to further develop tar sands oil. In fact, The Globe and Mail reports, “a ‘no’ from Mr. Obama on Keystone would reduce expected capital spending in the oil sands by estimated $8-billion to $10-billion.”

Pipeline supporters frequently argue that development of tar sands is inevitable whether the Keystone pipeline is built or not, a claim that was also adopted by the State Department in its deeply flawed analysis of the project. But these recent reports confirm what Canadian government and industry officials have been saying all along: Without the Keystone pipeline, vast amounts of tar sands will stay in the ground, preventing the release of the “carbon bomb” that would make devastating climate disruption unavoidable.

In light of the industry’s dwindling prospects, TransCanada is showing increasing desperation to gain approval for Keystone. The Financial Times reported this week that TransCanada and the province of Alberta have invested heavily in a staff of lobbyists and communications professionals with connections to the Obama administration and Secretary John Kerry, in hopes that these connections will help them push the administration to approve the pipeline. Watchdog organizations like the Sunlight Foundation, as well as many environmentalists, have cried foul play. Ross Hammond, of Friends of the Earth, was critical of the industry’s attempt to manipulate the Obama administration: “No one can deny that this kind of influence trading is not in the national interest when it could sway a decision that is bad for the planet and bad for the country.”

Quotes of the Week:

  • “The logistics are critical in the development of the oil sands. If Keystone is delayed this year, I believe the industry will not be able to keep up with the current pace of development.” – André Goffart, the head of E&P for Total in Canada, on the importance of the Keystone pipeline in developing tar sands.
  •  “President Obama said that if Congress won’t act on climate change, he will. But we’re still waiting for him to back up his words with real action. It’s a very big deal that some of Obama’s strongest supporters in his hometown are coming out to protest their president—he needs to break out of his DC bubble, take notice and reject Keystone XL.” – Becky Bond, political director of CREDO, on this week’s rally of over 200 Keystone opponents outside a Chicago fundraiser with President Obama, part of an ongoing campaign to meet the President at almost all of his public appearances to remind him of their opposition to the project.

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