Canada Oil Sands Tricky for Obama

Kearl Oil Sands
(Click to Enlarge)


The good news for ExxonMobil is that the oil giant is still handily replacing the oil it produces with fresh reserves. The potentially bad news is where a lot of that new oil is found -- in Canada's oil sands.

Exxon said it replaced 103% of the oil it produced in 2008, marking the 15th straight year Exxon has replaced more than it has pumped. Exxon said it added 1.5 billion barrels of proved reserves, and 2.2 billion oil-equivalent barrels to its resource base last year. Half the company's new resources came from a single source: "Reserves additions from the Kearl Phase 1 oil sands project in Canada totaled 1.1 billion oil-equivalent barrels," Exxon said.

Canada's oil sands potential is huge, second only to Saudi Arabia's crude reserves. But tar sands have a nasty environmental reputation, since extracting the heavy bitumen requires a lot of water and energy. The environmental impact of oil sands has become a flashpoint for green groups and even religious leaders.

That puts the future of oil sands at the center of the Obama administration's relations with Canada. On the one hand, President Barack Obama wants to end reliance on Middle Eastern oil. Canada, already the biggest oil supplier to the U.S., could fit that bill.

But President Obama is also pushing an environmental agenda, pledging to clean up America's economy and aggressively reduce emissions of greenhouse gases. Greater reliance on oil sands would make that tougher, because crude made from oil sands produces more emissions than regular oil.

Environmentalists are trying to make sure President Obama doesn't sidestep the issue on his trip to Canada this week. Forest Ethics, a green group, took out a big ad today in USA Today featuring black oil dripping from Canada down into the U.S. and taglined "Canada's Tar Sands: the dirtiest oil on earth."

Copyright (c) 2009 Dow Jones & Company, Inc.




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Diegojames | Feb. 22, 2009
Ron et al

You are right about California and lack of oil development. Drilling and subsequent profits through royalties and sale of oil and LNG would cancel our debts. Switch Gov Sara Palin for the "terminator," and we would have a surplus and refunds to the citizens of California just like Alaska does.

Also the Channel Islands would make a great wind turbine farm. Since no one lives there the noise would not be a problem.

The Political Leaders of California are locked into out-of-date thinking of coastal protection. We could make oil platforms into art objects to be less offensive to the sensitive.

JDC | Feb. 20, 2009
I think we need to quit worrying about exploring for energy sources in Canada, and start worrying about finding our own solutions for America, like jobs for all the people out of work in energy and finding and using more of are own supplies. We have the means to explore and produce leases in the U.S.A. We just have to find cleaner & cheaper ways to produce them!

J.B. | Feb. 20, 2009
I am with you Ron; I agree on your statements.

Al | Feb. 20, 2009
Environmentalist are doing a better job to promote dirty oil than the companies that work in the Oil Sands. Companies are aware of the environment issues and are spending billions of dollars on research. Oils sands recovery technologies are still in the infantile stage.

Ron | Feb. 18, 2009
Please keep in mind what Jimmy Carter did to our industry. He started an oil shortage, we put 4500 rigs to work by the end of 1981. By 1984 - 85 we had 750 rigs and $9/bbl oil. Obama knows nothing about energy, and Ken Salazar is a joke in his job. Where the oil sands are in Canada, no one lives there. It's very isolated. The largest natural gas deposits in the US are off the west coast of Florida from Mobile Bay to Cuba. And, yes, the Chinese are drilling offshore Cuba to get these reserves directionally. California would not have its financial problems, if it had developed 25% of the offshore oil it has in the Santa Barbara Basin. We don't really know what's offshore the East Coast, as there is very limited seismic, if any. Let Sarah Palin lead to further development of Alaska's reserves. Let's cut off Chavez, the Russians & Chinese. We have all the technology.

Richard Rieman | Feb. 18, 2009
I would like to know how the emissions from tar sand productions compare with the emissions from Mt. Erebus and some other volcanoes in Hawaii and around the Pacific rim. It might also be worth investigating the greenhouse gas emissions from the Great Dismal Swamp.

Alan Paisley | Feb. 18, 2009
These oil sands require to be more "greener" by scrubbing of the wastes and generally the whole process should be cleaned up. I would only accept cleaner oil from Canada if I was Obama. Total reliance upon Mid-East oil sources is not a good thing to do.

Dave | Feb. 18, 2009
Maybe we could sell Arabian oil at the pumps for ~$5.00 or so, with a notice that some heads were regrettably cut off in production, in accord with Sharia law; then with the extra money we earn on Arabian oil, we could clean up the processing of the tar sands. With some spin, it could fit into the summer jobs program of the economic vitality act...

Gordon | Feb. 17, 2009
What the oil sands need is a couple nuclear reactors to supply the plants with the energy needed to produce this oil. The technology is there to have a lesser impact on the environment than the methods used in the Middle East. Also the USA would not be obligated to spend trillions of dollars trying to protect their energy interests overseas in countries that do not like the Western world.

Lyon Delcambre | Feb. 17, 2009
I think there are quality reserves of oil in the Eastern Gulf of Mexico, off of the Atlantic and Pacific coasts and in Alaska that can be produced at or around the same standard as Texas intermediate. The high gravity oil in Canada is hard to produce and hard to refine. There is plenty of oil on US soil and OCS to be produced.

Elaine | Feb. 17, 2009
Why do the green groups always resort to propaganda? Would they prefer that we start publishing our own propaganda campaigns against Middle Eastern oil? I can tell you that the images slamming the Middle East would be a ton harsher than those slamming Canada.

The question in the end is: Does the US want to end its reliance on Middle Eastern oil, or not? Sometimes solutions aren't black and white (or green). At least if the US committed to tapping Canadian oil sands, more financing could be invested into finding a way to process it in a cleaner way.

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