From 247wallst site.
Developing the vast resources of the Canadian oil sands is a dirty business. The deposits are either strip-mined, leaving huge piles of waste and scarring the landscape, or wells use steam to heat the tarry goo until it flows, which is easier on the environment and uses less water, but is more costly. Either way, large amounts of electricity are also needed to upgrade the mined bitumen into synthetic oil that can be shipped through a pipeline. And the pipeline is now the flashpoint between oil companies and environmentalists.
In 2007, TransCanada Corp. (NYSE: TRP) and ConocoPhillips Corp. (NYSE: COP) formed Keystone pipeline partnerships formed to expand an existing pipeline between the oil sands and Conoco’s refinery at Wood River near Chicago. The pipeline was also extended to deliver Canadian oil to the main US commercial storage location in Cushing, Oklahoma. No big problems with any of this.
Virtually every major oil company in the world has a stake of some kind in oil sands development. Suncor Energy Inc. (NYSE: SU) is the oldest and largest developer, and Total SA (NYSE: TOT), Royal Dutch Shell plc (NYSE: RDS-A), Exxon Mobil Corp. (NYSE: XOM), and BP plc (NYSE: BP) all have projects as well.
Keystone’s plan also included a second pipeline that would carry more than 500,000 barrels/day of oil from Canada to the Gulf of Mexico. The map above shows the new pipeline, usually called the Keystone XL pipeline, as a dotted line. The existing pipeline is the solid line.
Because the new line crosses an international border, the President of the US must issue a permit for the pipeline after verifying that it offers economic benefit, is no threat to national security, and meets the requirements of an environmental impact study. That last is where the problem lies.
The president has delegated authority for ruling on the permit to the US State Department, which is expected to issue its decision on the new pipeline early in 2011. Secretary of State Hilary Clinton has recently received one petition urging issuance of the permit signed by 36 members of Congress, and one urging denial signed by 28 members of Congress.
Those in favor of the new pipeline cite its economic benefits. Those opposed cite its high levels of greenhouse gas emissions and the potential for spills and leaks.
The Royal Society of Canada published a report in early December on the environmental and health impacts of oil sands development. The report notes that the oil sands development creates about 5% of Canada’s greenhouse gas emissions, and little has been done by the developers to improve waste handling.
The study did not find evidence of increased cancer rates in people who live near the operations. The study also conclude that the development does not threaten the Athabasca River, from which much of the water for the development is taken, nor is there significant impact on air quality.
Opponents in the US want a more extensive environmental review before a decision is made on the permit application. They say that the US EPA found the State Department’s environmental review to be substandard and have requested that a new study be done.
The chances that US environmentalists will win on this issue are slim and none. Canada’s oil sands provide a large portion of the oil the US receives from its largest supplier. The economic benefits of the Keystone XL pipeline in terms of construction jobs and taxes is too great to be overcome unless there is some devastating impact from oil sands development that has not yet been uncovered. And that does not appear to be likely.
The odds favor a permit issuance by the US State Department. The department may choose to kick the can down the road a bit by requesting a quick review of its environmental impact study, but a second study, which could require another two-three years, is very likely not in the cards.
US environmental groups have drawn a tough hand here. They are trying to get the US government to tell Canadians that their oil is simply too dirty for us. That just won’t happen.
Read more: Are Canada’s Oil Sands Too Dirty for the US? (TRP, COP, SU, TOT, RDS-A, XOM, BP) – 24/7 Wall St. http://247wallst.com/2010/12/24/are-canadas-oil-sands-too-dirty-for-the-us-trp-cop-su-tot-rds-a-xom-bp/#ixzz19Kb92yNh