Canada Oil Sands Tricky for Obama
NEW YORK (THE WALL STREET JOURNAL/ENVIRONMENTAL CAPITAL BLOG via Dow Jones Newswires), Feb. 17, 2009
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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