Obama's Green Dream Team and what it means for Alberta's oil

Obama is a pragmatist, and the political reality that Canada’s oilsands are a sustainable, “domestic” source of oil to the US will trump any environmental considerations.

The oilsands are sustainable because they will be a constant and reliable source of oil for >200 years, even at 10x the current rate of production. Given the vast reserves of bitumen in AB and SK, how could they be considered anything but sustainable?

In 2009, Harper will probably strike a deal with Obama that establishes a North American carbon “cap and trade” regime, as well as a mixture of public/private investments in carbon sequestration that will allow oilsands oil to be considered “clean” for purposes of US environmental legislation.

Don’t underestimate the strategic importance of the oilsands to the US long term energy strategy, which is focused on eliminating American reliance on “foreign” energy sources (again, Canada is considered a domestic source).

Critical Reasoning,

What if the natural gas and water run out before the bitumen does?

And then there’s this:

Shell and BP have been warned by investors that their involvement in unconventional energy production such as Canada’s oil sands could turn out to be the industry’s equivalent of the sub-prime lending that poisoned the banking sector and triggered the current financial crisis.”

From a piece by Terry Macalister in the Guardian UK, September 2008

“Sustainable” only if there’s enough water, only if you don’t need that water for something else (like, I dunno, food production) and only if you believe greenhouse gases don’t matter. Oh yeah, and you need to keep burning metric assloads of natural gas.

So I guess it’s kind of sustainable in the way that there’s an unlimited supply of iron at the earth’s core. If you overlook a couple of problems, it’s a totally ideal resource.

Critical Reasoning: “Note that the total size of the resource is 1.7 TRILLION barrels…”

And to recover that, you’ll have to purchase Saskatchewan and turn it into a tailings pond. You have a pretty narrow definition of “sustainable”.

Uh…hello?

Crude at $40?

What tar-sands industry are you all talking about…?

Austin

Most analysts agree that the oilsands will be economically viable in the medium and long term. The low prices we are experiencing right now are a temporary blip.

Water availability is a real issue, but only in the short term. Cheap, local supplies of fresh water are a finite resource; water itself is not. There is enough water from local supplies to meet the requirements of current development, but there may not be enough ten years from now.

Still, it’s a question of economics. As long as the oilsands are profitable it will be economically feasible for companies to invest billions of dollars to invest in pumping stations, pipelines and canal systems to import water from the NWT and other parts of Canada. (Canada and Russia have the world’s largest supplies of fresh water, and much of it flows uselessly into the ocean). Water-poor countries like Egypt and Australia have already done this, on a massive scale. Egypt diverts billions of tons of water from the Nile each year, and pumps it over hundreds of miles to turn desert into farmland.

The same goes for natural gas, which is used as a hydrogen source for the refining process. If the natural gas supply dires up in 20 or 30 years I imagine that the bitumen refiners will simply switch to another hydrogen source, like the prototype “water-splitting” nuclear reactors that have been successfully tested in France.

Bottom line: there are trillions of dollars worth of oil sitting in the oilsands. It’s Canada’s single largest economic asset. The world will still need oil for many years to come. If we don’t supply it, someone else will.