TransCanada Corp announced Monday it would go ahead with construction of part of its Keystone XL oil pipeline that does not require US presidential approval, a stretch from the state of Oklahoma to the US Gulf Coast.
The company also said it will resubmit its proposal for the entirety of the pipeline from Canada that was rejected last month by US President Barack Obama, a move that sparked an election-year row over energy policy and the environment.
The new presidential permit application would include “an alternative route in Nebraska as soon as that route is selected,” as well as an “already reviewed route” in Montana and South Dakota, TransCanada added.
Company president Russ Girling said he hoped the lengthy environmental review of the original project — much of it unchanged in the new proposal — will mean a shorter approval process once a new route in Nebraska is determined that avoids the ecologically sensitive Sandhills area, which lies above a vital agricultural aquifer.
The White House welcomed the re-application, saying “we support the company’s interest in proceeding with this project, which will help address the bottleneck of oil in Cushing that has resulted in large part from increased domestic oil production, currently at an eight-year high.”
Obama’s office said in a statement that “moving oil from the Midwest to the world-class, state-of-the-art refineries on the Gulf Coast will modernize our infrastructure, create jobs, and encourage American energy production.
“We look forward to working with TransCanada to ensure that it is built in a safe, responsible and timely manner, and we commit to take every step possible to expedite the necessary Federal permits,” the White House added.
Oil touches nearly every single aspect of the lives of those in the industrialised world. Most of our food, clothing, electronics, hygiene products and transportation simply would not exist without this resource.
There is a reason why oil giants such as ExxonMobile, BP, Total and Royal Dutch Shell, year in and year out, generate more profit than most other companies on the planet.
Our current global economy is based on continual growth, and that growth depends on cheap energy.
“Fossil fuels are roughly 84 per cent of what we use, and oil is 35 per cent of the world’s primary consumption energy,” says David Hughes, a geoscientist who studied Canada’s energy resources for nearly four decades.
Given that oil plays such a critical role in the world’s economy, one would deduce it would be important to know how much is left. Otherwise, the world’s stock markets would be exposed to fossil fuels, which would pose a grave risk to investors facing down a so-called carbon bubble, which could potentially dwarf the housing bubble and current debt crisis.
But acquiring accurate figures on the oil reserves of many of the member states of the Organisation of the Petroleum Exporting Countries (OPEC) is currently impossible, as this remains one of their most highly guarded state secrets.
OPEC, which currently has 12 member countries, established a quota system 25 years ago, so that the size of a country’s oil production quota was based on the size of its reserves.
This caused most Gulf countries to announce that their reserves were much larger than previously, and other OPEC members followed suit, according to Tom Whipple, an energy expert and former CIA analyst.
“Most outside observers believe that the ‘official’ reserves of OPEC members are way overstated,” Whipple, who is also a Post Carbon Institute fellow, told Al Jazeera. “Remember the last increase was in response to the OPEC quota agreement which allowed members to sell oil in proportion to their reserves – the bigger your reserves, the bigger your quota.”
“There have been many scandals over the years from people overstating reserves to make them look richer and more important than they are,” added Whipple.
“The biggest fuss I can recall was in Kuwait about five years ago, when somebody leaked a secret government study that said Kuwait’s reserves were less than half what they had been saying. After much fuss, the government made the whole issue even more secret and refused to answer further questions about the report.”
Oil giant BP produces an annual statistical review containing a spreadsheet that has reported world oil reserves back to 1980.
“I’ve tracked that review for the world and for specific OPEC countries,” geoscientist Hughes told Al Jazeera. “Six countries account for more than 80 per cent of OPEC oil; Saudi [Arabia], Kuwait, Iraq, Iran, United Arab Emirates, and Venezuela, and all six of them jacked up their reserves by nearly 100 per cent between 1984 and 1988.”
According to Hughes, this occurred at roughly the same time these countries changed how they set their production quotas.
“Since then, using Saudi [Arabia] as an example, their reported reserves have been flatlined since 1988, so they’ve not changed their reserves at all, but they produced 96 billion barrels of oil between 1980 and 2010.”
Both Hughes and Whipple, along with other energy experts, believe several OPEC countries are intentionally underreporting their reserves – a situation that will, sooner or later, lead to an economic crash.
State secrets
According to OPEC, “more than 80 per cent of the world’s proven oil reserves are located in OPEC member countries, with the bulk of OPEC oil reserves in the Middle East, amounting to 65 per cent of the OPEC total”.
“According to current estimates, OPEC member countries have made significant additions to their oil reserves in recent years … As a result, OPEC’s proven oil reserves currently stand at well above 1,190 billion barrels.”
According to OPEC, its member countries have added 347.2 billion barrels to their total proven crude oil reserves.
OPEC claims to maintain the ability to meet forecasted demand growth “for decades to come” and estimates their “ultimately recoverable reserves (URR)” have increased over time due to technological advances, enhanced recovery methods and new reservoir development.
But according to Hughes, key OPEC oil producers such as Iraq, Kuwait, UAE, and Iran have all likely hit their production peaks, and have been producing at the same levels ever since.
“Iraq[‘s production] is nearly flatline since 1988, and its peak production year was 1979. Kuwait has largely flatlined since 1988 and its peak production was 1972,” he said.
Hughes said that UAE had largely maintained the same level of production since 1988, while having a recent peak in 2006. Iran had a flat production level from 1988 to 2000, with just a slight increase in their reserves, albeit having reached peak production in 1974.
Venezuela, in contrast, nearly doubled its reserves in 2008, and increased them further in 2009, but, like the aforementioned, reached a production peak in 1970 that has not been attained since.
Hence, the leading OPEC countries, which account for two-thirds of the world’s oil reserves, have all passed their peak production points.
“Even Saudi [Arabia] peaked in 2005,” added Hughes, “What that tells you is their rate of production is a lot more important than what they report as their reserves. How can you produce nearly 100bn barrels, like Saudi, and your reserves don’t change at all?”
Hughes then added what he feels is the bottom-line.
“It’s likely those reserves are far lower than they are reporting.”
Dr Ali Samsam Bahktiari, a former official at the National Iranian Oil Company, said in 2006 – just a year before his death – that all the countries in the Middle East vastly overestimated or overstated their reserves.
Complicating matters, demand for oil is forecast to increase dramatically in coming decades.
Dr Fatih Birol, Chief Economist of the International Energy Agency, told The Independent on August 3, 2009:
“Even if demand remained steady, the world would have to find the equivalent of four Saudi Arabias to maintain production, and six Saudi Arabias if it is to keep up with the expected increase in demand between now and 2030. It’s a big challenge in terms of the geology, in terms of the investment and in terms of the geopolitics “
Furthermore, Whipple believes OPEC quotas are no longer relevant.
“Everybody just produces as much oil as they can or [that] is prudent to extract without damaging their oil fields,” he said. “The Saudi and Iranian fields are getting really old and should start to decline in the next decade. The Saudis just announced that they will not be increasing their capacity, except for natural gas. A lot of people are starting to lump in their natural gas production along with their conventional oil. It is called ‘barrels of oil equivalent’. Exxon has been doing this for years, as they pretend their output is increasing.”
Like Whipple, Hughes believes the true oil reserve totals for many OPEC members “are state secrets”.
The mirage of unconventional oil
OPEC also claims: “Technology continues to blur the distinction between conventional and non-conventional oil, of which there is also abundance, as well as with other fossil fuels. We expect the world’s URR [ultimately recoverable resources] to continue to increase in the future. Therefore, the real issue is not reserve availability, but timely deliverability.”
BP refers to URR as “an estimate of the total amount of oil that will ever be recovered and produced”, hence the Canadian tar sands are included.
The tar sands have become infamous due to how dirty the oil is and how energy-intensive it is to extract, along with the massive environmental devastation required in the process of extraction.
Scientific and environmental critics of tar sand extraction also argue that oil companies’ glowing forecasts of how much oil is there, along with how long it will take to extract are fantastic, in a literal sense of the term.
Hughes, whose expertise includes 32 years with the Geological Survey of Canada as both a scientist and research manager, calls the forecasts “exuberant”.
“They were at 1.5 million barrels per day (bpd) in 2010. Industry has tripled the forecasts in 25 years, which would put them at about 4.5mbpd. It’s taken 40 years to get the tar sands to 1.5 million bpd and the surface scar is incredible. I can’t imagine what that would look like if you tripled it.”
Hughes explained the government of Alberta reports 143bn barrels of oil, but “90 per cent of those are too deep to be surface minable. Huge energy inputs are required to get to that. So energy return on investment is going to go down a lot as the tar sands progress. I’ll believe they triple it when I see it … frankly I don’t think it’s possible. This is industry hype they are talking to their shareholders.”
The oil in the tar sands also requires time-consuming construction of more infrastructure to support its extraction and delivery, which, along with the aforementioned factors, lead Hughes to believe the tar sands “can’t be ramped up enough to offset declines of conventional oil”.
What does environmental devastation actually look like? At TEDxVictoria, photographer Garth Lenz shares shocking photos of the Alberta Tar Sands mining project — and the beautiful (and vital) ecosystems under threat.
For almost twenty years, Garth’s photography of threatened wilderness regions, devastation, and the impacts on indigenous peoples, has appeared in the world’s leading publications. His recent images from the boreal region of Canada have helped lead to significant victories and large new protected areas in the Northwest Territories, Quebec, and Ontario. Garth’s major touring exhibit on the Tar Sands premiered on Los Angeles in 2011 and recently appeared in New York. Garth is a Fellow of the International League Of Conservation Photographers.
The prime minister is talking about being “held hostage” by U.S. interests. Radio ads blare, “Stand up to this foreign bully.” A Twitter account tells of a “secret plan to target Canada: exposed!”
Could this be Canada? The cheerful northern neighbor: supplier of troops to unpleasant U.S.-led foreign conflicts, reliable trade partner, ally in holding terrorism back from North America’s shores, not to mention the No. 1 supplier of America’s oil?
Canada’s recent push for the proposed Northern Gateway pipeline to carry oil from the tar sands of Alberta to the nation’s West Coast, where it would be sent to China, has been marked by uncharacteristic defiance. And it first flared in the brouhaha over the bananas.
Responding to urgings from U.S. environmentalists, Ohio-based Chiquita Brands International Inc. announced in November that it would join a growing number of companies trying to avoid fuel derived from Canada’s tar sands, whose production is blamed for accelerating climate change and leveling boreal forests.
Then in January, President Obama abruptly vetoed a permit for the Keystone XL pipeline, Canada’s $7-billion project to deliver oil across the U.S. Midwest to the Texas Gulf Coast , which environmentalists have long opposed.
Mix in a touch of nationalism, and Prime Minister Stephen Harper’s view that Canada needs to hedge its oil bets by diversifying its export markets, and the fight was on — not only with the neighbor to the south, but also among Canadians.
“Canada is not what it used to be,” said Todd Paglia, executive director ForestEthics, an environmental group that has been calling for the international boycotts on tar sands oil. “It’s hard to believe, but it’s tilting toward becoming more of an authoritarian petro state, positioning itself as a resource colony for China.”
On the other side, a lobbying group pushing Canada as an alternative to unstable and sometimes unsavory oil producers in the Middle East ramped up a boycott of its own, this one targeting Chiquita bananas.
“Stand up to this foreign bully. Don’t buy Chiquita bananas,” said a radio spot by the group, which calls itself EthicalOil.org, complaining about what it called Chiquita’s record of supporting terrorist groups in South America. A Twitter profile was set up for @bloodbananas to expose the allegedly hypocritical campaign against Canada.
Over the last few weeks, a two-agency review panel has convened the first in a long round of hearings on Northern Gateway, pointedly described as a pipeline that won’t deliver much oil to the U.S. Instead, it will allow Canada to end its sole dependence on American buyers for its most important export by opening up markets in Asia, and allow it to attract the badly needed foreign investment to develop the sands.
“I think what’s happened around the Keystone is a wake-up call, the degree to which we are dependent or possibly held hostage to decisions in the United States, and especially decisions that may be made for very bad political reasons,” Harper, whose government has labeled pipeline opponents as foreign-funded “radicals,” told CBC television in January.
The $5.5-billionNorthern Gateway project, which would carry 525,000 barrels a day of crude 731 miles from a town near Edmonton through the Rocky Mountains to a new port on the British Columbia coast, has long been in the works as a companion to Keystone XL.
But with Keystone’s recent turmoil in the U.S., Northern Gateway has risen to new prominence as a defiant Plan B for a nation increasingly aggressive in combating international hurdles, whether it’s greenhouse gas treaties, low-carbon fuel standards or U.S. presidential politics.
“There has always been very strong support by the Harper government, by the province of Alberta and by the oil industry for the Northern Gateway pipeline. But there’s no question that for all three of those entities, that urgency increased dramatically with the apparent defeat of Keystone XL,” said George Hoberg, a political scientist and professor of forestry at the University of British Columbia.
“The Harper government’s view is that, especially in the Obama years, the U.S. is becoming a less reliable partner for the oil sands.”
Officials at Enbridge Inc., which is proposing the western pipeline, say it has been in the works for nearly a decade, though its need has become more apparent as the economy in Asia has boomed while the American one, which until now has consumed 99% of Canadian oil exports, has slowed. By some estimates, Canada has the third-largest proven oil reserves in the world, with 175 billion barrels.
“It’s an attempt to respond to the reality that the geographical location of the demand is changing,” company spokesman Paul Stanway said, though he said the U.S., which imports more than 2 million barrels a day of Canadian oil, will remain the country’s biggest export market. Chinese state companies have more than $16 billion invested in Canadian energy development and are helping fund Northern Gateway to ship their oil.
The Northern Gateway pipeline faces its toughest opposition in Canada. More than 4,000 people have registered to speak at hearings over the next several months — more than for any project in the nation’s history.
Debate is especially intense here in British Columbia. Although some residents are eager for the tax revenue and thousands of local jobs the pipeline could bring, many who live along the corridor and in many First Nations territories, homelands of Canada’s aboriginals, are mobilizing to fight it.
Crucial are the streams and tributaries of the Fraser and Skeena rivers that lie in the pipeline’s path — possibly the greatest salmon rivers on Earth.
Along the coast, there are fears that piloting more than 200 oil tankers a year through the fiords of Douglas Channel and then southward could jeopardize the spectacular coastline of the famed Great Bear rain forest, full of azure waters and rocky waterfalls.
“We truly live in one of the most beautiful places on Earth. We live right at the start of the Fraser River watershed, and if we have a spill, it will devastate everything from here straight to the Pacific Ocean in Vancouver,” said Bev Playfair, until recently a municipal councilor in Fort St. James, where a hearing on the pipeline this month was preceded by dozens of townspeople marching down the main street with signs such as “Say No to Enbridge.”
The most formidable opposition comes from the First Nations of British Columbia, most of which, unlike those in other provinces, have never signed treaties with the federal government and thus have never relinquished title to their historic lands.
“We have the ability to go to court in Canada and say, ‘What you are proposing violates the Constitution of Canada.’ And that’s the trump card in all of this,” said Art Sterritt, director of the Coastal First Nations’ Great Bear Initiative.
On the Saik’uz Reserve, near the town of Vanderhoof, schoolchildren spent part of the afternoon before the pipeline hearing making signs and sitting quietly as tribal leaders explained the project and why it must be stopped.
“You’ve got to understand that it’s a huge, multibillion-dollar project that they’re trying to put through our lands. And it’s going to be a tough fight, because they have so much money. They probably have 10 lawyers to our one,” Geraldine Thomas-Flurer, the Saik’uz First Nation’s liaison on the Northern Gateway issue, told the students.
Tribal Chief Jackie Thomas has held meetings and written letters pointing out Enbridge’s record on accidents, including the spill of 810,000 gallons of oil from a pipeline in Michigan in 2010, much of which flowed 30 miles downstream into the Kalamazoo River. Enbridge has spent $700 million so far and workers are still trying to clean it up.
“It’s going to be a war,” she predicted of the fight ahead. “The only question is, who’s going to draw the first blood?”
Environmental groups fearing that talks to pump “incredibly destructive” crude oil from Canada to Greater Portland are once again resurfacing, are opposing the project even before one is officially put in writing.
The Natural Resources Council of Maine is planning to join three other environmental groups in Portland this week to educate the public of the dangers of “tar sands” traveling from western Canada to South Portland, said Dylan Voorhees, the council’s clean energy director.
The coalition plan to gather at the Casco Bay Ferry Terminal Thursday to speak out against the Keystone XL Pipeline, but also to discuss a years-old proposal to reverse the flow of crude oil from Maine to Canada, officials said.
“It’s an incredibly destructive and energy intensive process (to extract the tar sands),” said Voorhees, referring to the increased production of Canadian oil fields in Alberta.
“Ultimately, the larger context is that there’s a large effort of getting tar sands crude oil out of Canada,” he said. “It doesn’t seem prudent on us to wait until there’s an application to start learning about this because it’s very clearly on the radar.”
Voorhees cited a proposal by a Canadian oil company, Enbridge, before Canada’s National Energy Board as evidence that plans are being made to export tar sands oil out of Canada.
The company’s application seeks to reverse the flow of crude oil from western Canada, in the oil fields of Alberta, to pipelines connected to eastern cities like Montreal. The expectation is that Portland Pipe Line will then reverse the flow of its South Portland-Montreal pipeline, Voorhees said.
“Literally, it’s called the phase one application,” he said, referring to Enbridge’s proposal.
