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And the plot sickes!

U.S. law puts chill on oil sands

Experts warn of hornet's nest of trade disputes, legal challenges, darkening cloud over investment


BARRIE MCKENNA AND DAVID PARKINSON
From Tuesday's Globe and Mail
June 24, 2008 at 7:21 AM EDT

Quote:WASHINGTON AND TORONTO — It's just one sentence buried in an 800-page U.S. energy bill that passed into law last December.

Yet it has morphed into a potential threat to Canada's oil sands boom, a contentious political football in Washington, and an early warning sign of an epic environmental battle over bitumen.

Stripped to its bare essentials, Section 526 of the U.S. Energy Independence and Security Act of 2007 bans federal agencies from buying alternative fuels that produce more greenhouse gases than conventional oil. This would include purchases by the military and the postal service - far and away the two biggest consumers of fuel in the United States.

Producers are concerned that Section 526 could represent just the tip of the iceberg, heralding even tougher environmental demands from U.S. lawmakers that will push the issue beyond just government supply contracts and jeopardize the oil sands industry's massive growth plans into the U.S. market.

But support is growing in Washington to change the language of the section so that it doesn't exclude oil sands crude. Key lawmakers, including Senate energy and natural resources committee chairman Jeff Bingaman, are backing compromise wording for Section 526 that would stipulate it does not apply to "generally available" petroleum products that are "predominantly" made from conventional sources.

"With the additional clarification, I do not believe that Section 526 would be a barrier to oil imports from Canada," Mr. Bingaman told a recent conference on the oil sands organized by the Canadian-American Business Council.

But that language would still leave too much open to interpretation, some say.

Canadian and industry experts warn of a hornet's nest of trade disputes, legal challenges and a darkening cloud over oil sands investment unless the section is repealed in its entirety.

"All it would take is legal action by the [Natural Resources Defense Council] or some other group," warned Gary Mar, the former Alberta cabinet minister who is now the province's representative in Washington.

"What Mr. Bingaman says won't be relevant."

There's a lot at stake: Just in the next few years, industry experts see about $80-billion of investment in the oil sands. South of the border, companies are rolling out plans to spend $53-billion (U.S.) to expand or modify refineries to handle the unusual brand of heavy oil that comes out of the oil sands.

Another $16-billion (Canadian) of pipelines are proposed to ship the oil directly from Alberta to the multitude of heavy-oil-friendly refineries along the U.S. Gulf Coast, which are banking on Canadian oil as the long-term replacement for dwindling and/or unreliable supplies from Venezuela and Mexico.

"We're moving forward, because these are long-term projects. But we are keeping an eye on it," said Bill Day, spokesman for Houston-based refining giant Valero Energy Corp., which has already committed $3.8-billion (U.S.) to expand its bitumen-upgrading capacity and is mulling participation in an oil sands pipeline project.

"It's very confusing, and unworkable."

If Section 526 is not altered, "it could bring development to a screeching halt," said Matt Fox, senior vice-president of oil sands at ConocoPhillips Co., which last year formed an $11-billion partnership with Calgary's EnCana Corp. to use EnCana's oil sands supplies to feed Conoco's U.S. upgraders and refineries.

"You'd have to think twice about oil sands development if your intention was to deliver oil to the Lower 48," Mr. Fox said.

Congress insists its primary intent was to keep U.S. taxpayers from subsidizing the environmentally dubious business of turning coal into diesel fuel. The author of the section, Democratic congressman Henry Waxman of California, has said it was meant to block government agencies from forming contracts "specifically to promote or expand the use of fuel from tar sands," but not to block purchases of "generally available fuels" that might contain "incidental amounts" of oil sands product.

Despite quiet lobbying from the oil industry, Ottawa and the Alberta government, the measure is proving tough to kill.

"There have been almost weekly attempts to repeal it, and they've all failed," said Susan Casey-Lefkowitz, director of the Canada Project at the Washington-based Natural Resources Defense Council, an environmental action group with more than 1.2 million members.

At the heart of the issue are concerns in the U.S. environmental community that the U.S. government, by touting the oil sands as a key cog in the country's long-term energy security, is betting the country's future on a dirty energy source. Alberta's heavy oil requires large amounts of natural gas to extract and refine, giving it a significantly larger footprint of greenhouse gas emissions than conventional oil.

Environmentalists have estimated that the overall carbon footprint for fuels from oil sands is triple that of conventional petroleum sources, though recent independent research puts the oil sands emissions at more like 25 per cent higher than conventionally sourced fuels. They say the law would put tough restrictions on several Midwest refineries now undergoing upgrades to accommodate Alberta's heavy oil.

(The Canadian Association of Petroleum Producers, the industry's main Canadian lobby group, has argued that once emissions from the shipping of fuel from the Middle East and elsewhere are taken into account, the emissions gap between oil sands and other U.S. oil imports is less than 8 per cent.) The biggest potential problem stems from the fact that in the heavily integrated North American petroleum market, it's all but impossible to separate products derived from oil sands crude and those originating with conventional oil sources. Different grades of crude get mixed together at various stages of transportation and processing.

For some, that suggests that Section 526 is meaningless, because no one would be able to say how much, if any, oil sands crude might have gone into a finished fuel product.

"It would be pretty hard to trace individual molecules," said Jack Crawford, president and chief executive officer of privately owned Altex Energy Ltd., one of several companies proposing building a heavy-oil pipeline from Alberta to the Gulf Coast.

But as oil sands shipments become a steadily larger contributor to the U.S. oil supply, others can conceive of a very different consequence: Oil sands crude would have to be kept out of vast portions of U.S. fuel processing, for fear of supplying fuels that would violate the letter of the law.

Unless there's more clarity, the law could create a climate of "disinvestment in the oil sands," said Jacob Dweck, an energy lawyer at the Sutherland legal firm in Washington.

Mr. Dweck also warned that the law may run afoul of both the North American free-trade agreement and World Trade Organization rules.

"It opens a Pandora's box," he said.

While key Senate leaders are scrambling to come up with a compromise, the looming U.S. elections could well stall efforts to resolve the issue.

"We don't expect anything to happen until after the election," said Greg Stringham, vice-president at the Canadian Association of Petroleum Producers (CAPP).

And even if the wording in Section 526 is cleared up, the furor over the legislation could be a precursor to future legislative measures aimed at combatting global warming.

Mr. Bingaman said Congress will almost certainly take up legislation to cap greenhouse gas emissions after the November elections, in spite of a recent narrow defeat of a climate bill in the Senate - a bill that had the support of both presidential candidates, John McCain and Barack Obama. The prospect of passage could be significantly enhanced if Mr. Obama is elected, as he has called for more aggressive action to reduce U.S. emissions than has Mr. McCain.

Meanwhile, several states, including California, have passed legislation to target the life cycle emissions of the fuel they use.

"In the longer term, things are going to be very different in the United States - because of the environmental tsunami we're facing," said Vincent Lauerman, a Calgary-based global energy expert who heads up the think tank website Geopolitics Central. "It's only a matter of time before the U.S. government has more severe laws in place that would, in one way or another, discriminate against the oil sands."

The changing environmental mood south of the border isn't lost on the industry, which is turning its attention to solutions such as carbon capture technology to address the oil sands' heavy greenhouse gas footprint.

"We know that in the longer term, climate change is going to be a bigger issue. We're hearing that loud and clear," CAPP's Mr. Stringham said.

"I think technology is the answer to that. But it's going to take time. It's not automatic."

Link
Meh. Not worried.

Necessity makes laws stick, morality is just the packaging they come in.

Speaking as one Albertan I'd just as soon let the oil sands sit there. Dont care. We got plenty more oil around here somewherez.

When you guys decide you wanna buy some oil from someone who's not going to throw a molitov cocktail at you y'all will be welcomed back with open arms. Till then I could just let it sit there. It's been there for like a billion years. Snot going anywhere.


<shrugs>
Ahk
It's called Law of Unintended Consequences, and the Jackasses are masters of stepping in their own feces. Like Rush has stated numerous times, you can place a bag, filled with crap, anywhere in that room, and the Jackasses will step in it EVERY TIME.

That's why they are Jackasses! :twisted:

One good outcome would be that ethanol would be abandoned, since it has worse polluting effects than regular gas. We should all applaude the Dims ability to stumble into something good, for once. S6
John L Wrote:It's called Law of Unintended Consequences, and the Jackasses are masters of stepping in their own feces. Like Rush has stated numerous times, you can place a bag, filled with crap, anywhere in that room, and the Jackasses will step in it EVERY TIME.

That's why they are Jackasses! :twisted:

One good outcome would be that ethanol would be abandoned, since it has worse polluting effects than regular gas. We should all applaude the Dims ability to stumble into something good, for once. S6
-----------------------------
Of course an alternative fuel (like ethanol) should not produce more GHG emissions than fossil fuels. Most alternative fuels are supported by subsidies.

But oil or gasoline from oil sands is not an alternative fuel. It is just like other fossil fuels. It should be treated the same as oil or gasoline from Middle East or elsewhere.

/track_snake
I am not so much worried about global warming at the moment, as I am the current political situation. I could care less about friggin' footprints. I am sure such things can be tackled at a later date. Right now would be a good time to get off Middle Eastern oil completely and focus on more domestic and secure sources.

Once we have independance, we can then move on to whatever tugs at liberal and whoever's heart strings about Polar Bears and stuff.
Gunnen4u Wrote:Right now would be a good time to get off Middle Eastern oil completely and focus on more domestic and secure sources.

Can't do that. The government is putting a moratorium on solar. Harms the environment don't you know.
scpg02 Wrote:Can't do that. The government is putting a moratorium on solar. Harms the environment don't you know.

What if they use SPF50 or higher?
scpg02 Wrote:
Gunnen4u Wrote:Right now would be a good time to get off Middle Eastern oil completely and focus on more domestic and secure sources.

Can't do that. The government is putting a moratorium on solar. Harms the environment don't you know.
I'd be interested in this. We haven't heard anything, and we are going full out to produce more and more solar. And the investors are pushing us hard. They think we are going too slow as it is...
Biker Dude Wrote:
scpg02 Wrote:
Gunnen4u Wrote:Right now would be a good time to get off Middle Eastern oil completely and focus on more domestic and secure sources.

Can't do that. The government is putting a moratorium on solar. Harms the environment don't you know.
I'd be interested in this. We haven't heard anything, and we are going full out to produce more and more solar. And the investors are pushing us hard. They think we are going too slow as it is...

I'll get a thread up.
scpg02 Wrote:
Gunnen4u Wrote:Right now would be a good time to get off Middle Eastern oil completely and focus on more domestic and secure sources.

Can't do that. The government is putting a moratorium on solar. Harms the environment don't you know.
-------------------------------------------
Well...

We cannot neglect the fact that Middle East oil accounts for a large share of existing petroleum reserves.

US domestic production is down to less than 30% of US domestic consumption.

Even if Canada tar sands are fully exploited, as well as oil on the US continental shelf, and in Alaska, this will not make US 100% self-supporting. There will be some need for import. And probably from Saudi Arabia and Iraq, since Nigeria and Venezuela is not much to rely on.

And there will be a need for alternatives, being solar, wind and nuclear energy.

/track_snake
Yeah, the oil sands is one thing. How about the clean burning coal that was taken away by Clinton in the Escalante Staircase land steal to enrich the Riaddy's?

...And never, ever forget the odd Carter who outlawed Nuclear waste recycling.

(BTW: good story on Carter being very, very odd as President, in this month's Newsmax. He seems to have been just like Hillary in the White House. The staff were not allowed to look at him in the hallways, or wish him a "Good morning." When he went on vacation to Plains, Georgia - he felt his leisure time should not be sullied by unimportant things like controlling the Nuclear trigger - so he forced the guard with the "football" to stay 10 miles away.)
Biker Dude Wrote:
scpg02 Wrote:
Gunnen4u Wrote:Right now would be a good time to get off Middle Eastern oil completely and focus on more domestic and secure sources.

Can't do that. The government is putting a moratorium on solar. Harms the environment don't you know.
I'd be interested in this. We haven't heard anything, and we are going full out to produce more and more solar. And the investors are pushing us hard. They think we are going too slow as it is...

Sounds like maybe you have a little 'local' perspective going on here. I'm 'interested' too! With a little work (and the right marketing) I could score into this place and walk to work. I live a little to the right of the picture shown on the link. (Oh, the Greeness of it all!!) S2

FYI, this is the old STC property. Sun is moving across 36 to Interlocken. Got a buddy that's survivor ... sounds like a huge CF.
Akh has it down,necessity mandates this is meaningless long term,it will be changed.
Palladin Wrote:Akh has it down,necessity mandates this is meaningless long term,it will be changed.

Yeah, but there's going to be a sh*t load of cash thrown about before that happens. You have the "long term" thing right (depending on your horizon and definition of "long term" ... at the least it ain't gonna be over tomorrow). Conoco is building a huge alternative energy campus in my community ... and that's just a single "local" perspective example. Energy is the new dot com bubble. I'm still trying to figure out how to cash in ... and make absolutely sure my chips are out when the sh*t hit's the fan.
mr_yak Wrote:Sounds like maybe you have a little 'local' perspective going on here. I'm 'interested' too! With a little work (and the right marketing) I could score into this place and walk to work. I live a little to the right of the picture shown on the link. (Oh, the Greeness of it all!!) S2

FYI, this is the old STC property. Sun is moving across 36 to Interlocken. Got a buddy that's survivor ... sounds like a huge CF.
I know quite a few STC people myself. We do thin films, which STC did. Different end game, but they still know the biz. I can imagine you would like to work there. I don't know what they are going to hire, or if it's you bag. I wish you luck. Right now I have to go down to C-470 and Ken Caryl each day, about 30 miles one way. But this fall our new plant will be opening at I-25 and 120th, about 4 miles. I can't wait!

Maggie opened a new thread on the solar aspect, and it doesn't matter to us. Our goal is building integrated PV, power generated at the site of use. So slowing down 'solar plant' builds won't matter to us.

While I am not enjoying the cost of gas, it IS a good time to be in a 'green' industry!
Biker Dude Wrote:I know quite a few STC people myself. We do thin films, which STC did. Different end game, but they still know the biz. I can imagine you would like to work there. I don't know what they are going to hire, or if it's you bag. I wish you luck. Right now I have to go down to C-470 and Ken Caryl each day, about 30 miles one way. But this fall our new plant will be opening at I-25 and 120th, about 4 miles. I can't wait!

Maggie opened a new thread on the solar aspect, and it doesn't matter to us. Our goal is building integrated PV, power generated at the site of use. So slowing down 'solar plant' builds won't matter to us.

While I am not enjoying the cost of gas, it IS a good time to be in a 'green' industry!

Dude!

You are not watching the news and/or you did not look at my link. There IS no more STC ... it's Sun ... and they are moving/outsourcing. And the STC land campus is being sold to Conoco for a brain trust development center for "alternative energy" ... presumably solar. Word on the street is that they will be leading the Conoco Phillips effort in PV. Lots of engineer, scientist and tech geek jobs. Good luck at your new location, but there will be about 2K jobs at Conoco's "energy campus" in Louisville. Do I think that this will end any better than the Denver energy boom of the early '80s? ... NO. But a boom it will be ... at least before the bust. My read on the thread is boom and bust in the energy market. I'm simply making an oblique comment on the way the cycle works.
I guess I should have said former STC people. My mistake. Oh yes, I did know who bought the former STC campus. I hadn't heard what they were planning on doing there, but I do know that if they are planning on manufacturing PV there, they are ten years away.

It is interesting how the 'energy cycle' seems to be working here. The state is offering quite a lot to get people to do it here, CSU is huge into PV research, and of course we have NREL. For me it is working good. good company, best job I've had in a while!
Biker Dude Wrote:I guess I should have said former STC people. My mistake. Oh yes, I did know who bought the former STC campus. I hadn't heard what they were planning on doing there, but I do know that if they are planning on manufacturing PV there, they are ten years away.

It is interesting how the 'energy cycle' seems to be working here. The state is offering quite a lot to get people to do it here, CSU is huge into PV research, and of course we have NREL. For me it is working good. good company, best job I've had in a while!

I believe it's going to be more of a research center. Big companies don't 'do' domestic manufacturing anymore. If they come up with something really important, they'll probably turn it over to PRC to actually make .... sad. The fact that NREL is only a few miles away doesn't strike me as a coincidence. Measuring solar irradiance is a good chunk of my bread and butter ... bring it! :lol:

... but I honestly believe that after a decade or so of throwing money at the problem, they're still going to find that demon carbon (and nuclear) is going to remain the most cost effective alternative for a good long time. Then again, they may find something earth shaking who knows? But I figure a decade is probably more than long enough to figure out that you're throwing money down a hole ... particularly if AGW flips around to a neo-Little Ice Age ... even the hard cores are going to be hard pressed to maintain the charade.
mr_yak Wrote:I believe it's going to be more of a research center. Big companies don't 'do' domestic manufacturing anymore. If they come up with something really important, they'll probably turn it over to PRC to actually make .... sad. The fact that NREL is only a few miles away doesn't strike me as a coincidence. Measuring solar irradiance is a good chunk of my bread and butter ... bring it! :lol:

... but I honestly believe that after a decade or so of throwing money at the problem, they're still going to find that demon carbon (and nuclear) is going to remain the most cost effective alternative for a good long time. Then again, they may find something earth shaking who knows? But I figure a decade is probably more than long enough to figure out that you're throwing money down a hole ... particularly if AGW flips around to a neo-Little Ice Age ... even the hard cores are going to be hard pressed to maintain the charade.
Oh no I don't believe NREL being close by is a coincidence either. After all, MOST manufacturers start off using NREL's approaches to PV, whether the are using CIGS or CdTe. I myself am having a blast in solar right now. Working on some cutting edge stuff, installing some big ass equipment, refining the processes!

And you are right, there is a plenty of money being thrown at it. We haven't scored any govt grants, the onely stuff we get is from normal contracts. But the investors see it as a money maker. We are betting our money on Building Integrated Photo Voltiacs, or as they call them BIPV. Also because we see power generated at the point of use as the way to go. Get you off the grid entirely if you want!

As to the whole Global Warming thing, I don't really know. Just not sure who to trust on that one!
Biker Dude Wrote:As to the whole Global Warming thing, I don't really know. Just not sure who to trust on that one!

You can trust me baby. S2
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