[R-G] CPUSA on the Tar Sands

[Macdonald Stainsby]

Mining black gold, and profits, from northern sands

Imagine for a moment that you’re an American oil executive. You’re 
pondering the prospects for the next big oil strike overseas — and 
dreaming of a place where the government is stable and compliant, the 
royalties are low and the environmental standards minimal.

You’re visualizing a place where you won’t have to drill thousands of 
feet into the earth’s crust, because the deposits are already known and 
readily accessible near the surface. Plus you count on at least half of 
the production going directly to the United States, sure to please the 
folks back home.

Is it just a dream? Not at all. Just look north to the tar sands of 
central Alberta, Canada.

Ancient fields of black gold

Used by the indigenous people of this densely forested region to 
waterproof their canoes, these tar-like outcroppings of bitumen-rich 
sands turned out to be just the tip of the iceberg. Beneath them lay 
many millions of cubic yards of oil-soaked sand.

Fur traders were the first Europeans to see these deposits, most of 
which lay underground in layers hundreds of feet thick, covered by an 
equal amount of sand, clay and peat bogs.

Although the Canadian government and the big oil companies have known 
about these deposits for hundreds of years, the extraction of oil from 
them was always regarded as too costly and impractical. The tar sands 
were basically forgotten and not even counted as part of the world’s 
known energy reserves.

Impractical becomes practical

As long as oil prices remained below $50 a barrel and the cost of 
producing crude from the tar sands was estimated to be $35 to $40 a 
barrel, very little was done. Interest in the exploitation of these 
deposits waxed and waned in sync with the world price of oil, but the 
prospects of tapping this energy resource remained dim.

That indifference suddenly changed, however, once the price of oil shot 
up. The rising price of oil made commercial exploitation feasible.

As the world price of oil broke the $50 mark, two Canadian oil companies 
started mining the tar sands to produce what’s known as light, sweet 
synthetic crude. As the price soared above $70, with little chance of 
falling below $60, and with conventional oil production leveling off, 
the handwriting was on the wall.

Global oil prices have doubled over the past three years alone. And 
cheaper ways of extracting the oil, now estimated to cost about $20 a 
barrel, have prompted oil companies from several nations to rush in, 
aiming to grab their share of the soil and the profits.

Vast reserves, vast profits

The Alberta tar sands deposits are huge, containing hundreds of billions 
of barrels of bitumen mixed with clay, sand and water. Experts estimate 
the potential yield from the Florida-sized fields to be about 180 
billion barrels of oil, making it second in the world only to Saudi 
Arabia’s 262 billion barrels.

The sands are regarded as an “unconventional” source of oil because of 
the form in which it is found. Think of roof cement mixed with sand and 
water and you get an idea of what the oil companies are working with.

Although only 10 percent of these deposits are economically recoverable 
with today’s technology, the financial prospects of selling 180 billion 
barrels of oil were not to be ignored.

So, in addition to the Canadian companies, in marched Conoco Phillips, 
Royal Dutch/Shell, Exxon Mobil, BP, Chevron and Devon Energy, among 
others. All are now big players. Where else are they likely to find a 
more stable region with so much potential for windfall profits?

Today, oil-sands production from the area stands at more than 1 million 
barrels a day. It’s projected that by 2015, that figure will rise to 3.5 
million barrels a day.

Canada is now the top supplier of oil to the United States, with over 2 
million barrels flowing to its southern neighbor every day. It supplies 
about 10 percent of total U.S. oil and gas consumption. Half of that 
comes from the oil sands of Alberta.

Bonanza or boondoggle?

Is it an energy bonanza or an ecological boondoggle? It all depends upon 
whom you ask, and who most benefits from the development.

The Canadian government gets royalties amounting to only 1 percent of 
the price of each barrel. So that should tell you where the bulk of the 
money is not going.

While it’s true that the mining of the tar sands and extraction of the 
oil creates some jobs — including for workers who come from some of the 
most economically depressed regions of Canada — the environmental costs 
are high.

Boiling the sand to get the oil

There are two methods of extracting the bitumen from the sands.

The first method involves removing the “overburden” — the layer on top 
that in some cases is more than 200 feet thick, mining the tar sands, 
hauling it out in two-story trucks and then processing it at special 
refineries. The bitumen is extracted by using huge amounts of clean 
water and by applying intense heat from natural gas — washing and 
boiling the oil out of the sand.

The second method extracts the bitumen in situ, or in place, and is used 
for deposits too deep for surface mining. It involves drilling two holes 
deep into the deposits and inserting pipes. One pipe forces down steam 
to liquefy the bitumen; the other pipe is used to pump the liquid to the 
surface. It then goes through a similar refining process, again using 
large quantities of water (up to six barrels of water for each barrel of 
oil produced) and heat produced by natural gas.

The expenditure of energy in the mining and extraction of the oil leaves 
a much greater than average “carbon footprint,” generating large carbon 
emissions in the process. According to the Pembina Institute, a 
Canada-based nonprofit that monitors environmental issues, producing a 
barrel of oil in the oil sands releases an average of 189 pounds of 
carbon dioxide equivalent, compared with the 63 pounds generated in 
convention production.

It’s processing dirty oil, using clean oil, to produce less dirty oil. 
As one environmentalist said, “It’s akin to using lobster to make 
imitation crabmeat.”

In addition to the pollution and global warming aspects, the mining has 
taken a heavy toll. Wildlife habitat has been destroyed. And Canadians 
are expressing concern about the reduced summer flow of Alberta’s 
northern rivers, and fears about a dropping water table, attributable in 
part, many suspect, to the huge demand for water involved in the 
refining process.

As more projects come online, it is estimated that 20 percent of 
Canada’s natural gas production will be diverted to make the tar flow.

‘Free trade’ means extra profits

 From the oil companies’ point of view, the exploitation of the sands is 
made easier by having a compliant Canadian government, headed by the 
Conservative Party, in place, along with the provisions of the North 
American Free Trade Agreement.

Written into the NAFTA rules is an energy-sharing clause that guarantees 
that half of Canada’s oil and gas production goes to the United States. 
It also prohibits the use of tools by governments to regulate energy 
exports, including the setting of export prices or export taxes, export 
bans or even export quotas.

A particularly onerous provision is Article 605, which limits the right 
of Canada to halt exports, even during times of national scarcity. 
Should such a situation arise, where will Canadians turn to make up for 
any shortfall? They will either have to import the difference or 
intensify their exploitation of their coal reserves.

As more and more of their clean air, clean water and natural gas is 
squandered on this environmentally destructive project, the citizens of 
Canada have to ask themselves: Are the short-term benefits worth the 
long-term costs?

Workers on both sides of the border have reason, once again, to call for 
the abolition of NAFTA.

Struggles in the U.S.

Given the requirement that half of production goes to the U.S., 
refineries here are upgrading their facilities to handle the stuff. As 
one observer said, “It sure ain’t your sweet crude of yore!”

The controversial decision by the state of Indiana to allow BP, which is 
expanding and upgrading its facilities in Whiting, Ind., to accept this 
new source of Canadian crude, has created a public outcry against 
allowing BP to increase its discharge of pollutants into Lake Michigan.

If anything, BP should be forced to decrease its polluted discharges 
into the lake, the source of drinking water for millions of people, 
since there are newer and better technologies available to remove 
pollutants from discharge water.

BP’s carefully crafted Madison Avenue image of a “green company” has 
been exposed. Neither it nor the other U.S. oil companies engaged in the 
plunder of Canada’s resources should be able to avoid public 
accountability, either here or there.

It’s time to create jobs by developing alternative sources of energy.

Bill Mackovich is a longtime labor activist in Chicago.

-- 
Macdonald Stainsby
Coordinator, http://oilsandstruth.org
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In the contradiction lies the hope.
    --Bertholt Brecht.