Tar Sands
This final article on unconventional fossil fuels examines the mindless wanton destruction underpinning tar sands extraction.
A classic example of the insanity and folly that underpins our species is exploitation of the Tar Sands in northern Alberta in Canada, the most destructive form of fossil fuel extraction. It represents the epiphany of the neoliberal cult that pervades our culture. The area has been dubbed Mordor, the fictional land from Tolkein’s Lord of the Rings. The following video from 2009 offers a perspective:
Historical Background
The bitumen deposits that constitute the tar sands have been utilised since humans first lived in the area. The First Nation peoples used bitumen to waterproof their canoes. Then in the 18th century, Europeans first became aware of the resource. The first geological assessment of tar sands was conducted in 1848 by Sir John Richardson, a Scottish naval surgeon and naturalist who made extensive accurate surveys of the Canadian Arctic coast. He was heading north to search for John Franklin's lost expedition.
In 1884, the first conclusive analysis was conducted by Dr. Robert Bell, who served as director of the Geological and Natural History Survey of Canada at the time. He proposed a hot water extraction process to separate the bitumen from the sand. If done on an industrial scale, a pipeline would carry the extracted oil to Hudson bay for export.
The first well was sunk in 1894, which released a lot of natural gas. Further exploratory wells were sunk between 1906 to 1910, with aim of tapping into underground oil deposits. Shortly after this, notable oil explorer Sidney Ells, dubbed the ‘Father of the Oil Sands’, began conducting extensive tests and exploration of the region. In 1926, drilling began. This led to the first commercial tar sands hot-water separation plant in 1929, set up by the International Bitumen Company. Production began to expand through the 1930s and 1940s. However it wasn’t until 1967 that the full commercial exploitation of tar sands became feasible by the Great Canadian Oil Sands Ltd, a subsidiary of the Sun Oil Company of Pennsylvania that later became Suncor. During this period, Sycrude and Shell became involved in production also.
Geological background
National Geographic describes the geological process that formed the tar sands in an article from 2009. Initially the deposits were similar to the light crude already present in Canada. Then:
Tens of millions of years ago, geologists think, a large volume of that oil was pushed north-eastward, perhaps by the rise of the Rocky Mountains. In the process it also migrated upward, along sloping layers of sediment, until eventually it reached depths shallow and cool enough for bacteria to thrive. Those bacteria degraded the oil to bitumen.
In effect the tar sands were cooked over a period of millions of years at temperatures between 50 and 150°C.
Processing
There are two methods of extraction. The first uses strip mining. Huge hydraulic and electrically powered shovels dig up the tar sands and load them into enormous trucks that can carry up to 320 tons per load.
The second method of extraction is In Situ. Steam Assisted Gravity Drainage (SAGD) is the predominant process. This involves drilling two wells and pumping heated steam down one well to soften the bitumen down into liquid form. It is then forced up the second well, allowing a more conventional form of recovery.
In situ is used to extract deposits that are deeper underground and can’t be recovered by mining. The SAGD process is illustrated here.
The actual processing itself is expensive, due to the complexity of the operation, compared to conventional oil extraction. About two tons of tar sands are required to produce a barrel of oil. The process uses a great deal of energy and large quantities of water.
The first stage of extraction involves adding hot water to the tar sands substrate at around 55C to soften the bitumen. In order to extract the bitumen, chemical processing is necessary. Naphtha and Toluene are added. These act as a solvent and assist in separation of bitumen from the tar sand slurry. Once the extraction process is complete, the bitumen has to be upgraded (in some cases, unprocessed bitumen is piped to up-graders outwith the tar sands region). This normally involves adding hydrogen (from natural gas) and removing impurities (hydrocracking), which leaves a substance similar in composition to crude oil, known as synthetic crude. Another method of upgrading involves removing carbon from the bitumen to produce lighter hydrocarbons. The synthetic crude is then transported to an oil refinery, by pipeline.
Environmental Impacts
Canada has committed to reducing its GHG emissions by 40 to 45% below
2005 levels by 2030 and achieving net-zero GHG emissions by 2050. Reducing emissions to these levels will likely require more change than we model in the Evolving or Current Policies scenarios. Therefore, EF2021 introduces six new scenarios that explore a net-zero future. Specifically, these scenarios explore what Canada’s electricity system might look like in a net-zero world under different assumptions about future technologies, climate policies, and electricity use.
This is the position of the National Energy Board (NEB) of Canada, taken from their 2021 report Canada’s Energy Future. A previous report (2006), Canada’s Oil Sands Opportunities and Challenges to 2015: An Update, observes that (emphasis added):
the fast pace and large scale of its [tar sands] development has considerable environmental and social impacts. The concern around the management of environmental impacts related to developing the oil sands has reached new highs.
The key issues relating to tar sands production are:
Fresh water. It is estimated that 370 million m3 needs to be withdrawn from the Athabasca River rising to 529 million m3. The river won’t be able to sustain this level of use.
Groundwater depletion. Groundwater needs to be pumped out during mining operations otherwise flooding will occur. Reducing ground water levels will have consequences on the wider ecosystem, affecting wetlands and peatlands.
The water used is contaminated with toxic chemicals, which is disposed of in huge tailings ponds. This can affect wildlife and could contaminate groundwater supplies. In situ uses less water, about 13 million m3, but requires more energy.
CO2 emissions are up to 3 times greater during the tar sands production process compared to conventional oil production. In situ lifecycle analysis of tar sands oil from well to wheel emissions are about as high as coal. A great deal of faith is being put on carbon capture and storage (CCS).
Land disturbance. It’s been estimated that an area of land the size of Florida could be decimated. The policy is to reclaim this land when mining is completed, but considerable uncertainties exist.
Socio-economic. The impacts on First Nations people have been considerable. Apparently ‘Industry, government and local organizations are working to improve the social well-being of Aboriginal and non-Aboriginal communities in the region.’
There is a firm belief that technological improvements will reduce environmental impacts:
Environmental groups contend that there is currently inadequate scientific information to understand how the ecosystem will react to the impacts of development and that stricter environmental performance targets are needed. Industry continues to look at technological innovation that could be used to reduce environmental impacts.
Respected independent think tank, the Pembina Institute had already outlined the environmental impacts of tar sands with their land mark report Oil Sands Fever: The Environmental Implications of Canada’s Oils Sands Rush. The report:
fills a critical gap by providing a comprehensive overview of the impacts and making recommendations regarding their management.
It explodes the myth that tar sands can be a substitute for conventional oil. Given that conventional production will drop, tar sands will not replace conventional oil because of production limitations:
Shortage of skilled labour. This is likely to be a problem for some time to come.
Availability of water supplies, which will impose restrictions.
The inherent complexity of the operation itself.
It points out how inefficient fuel use is in North America:
As we struggle with the concept that the era of abundant oil may be drawing to a close, a dangerous mythology is emerging about the role of oil sands in perpetuating highly inefficient transportation fuel consumption.
Even at projected peak production, tar sands will only constitute about 5% of global demand.
A particular bone of contention is the use of a ‘clean’ fossil fuel to produce a dirty one. In short, there was a proposal by the Canadian Government to use natural gas to extract the tar sands! The statistics speak volumes:
to produce two million barrels per day will require approximately two billion cubic feet of natural gas per day… This daily requirement is roughly equivalent to the amount of natural gas needed to heat all of the homes in Canada for a day.
The figures are reproduced in the following table.
A Greenpeace Canada report Dirty Oil: How the tar sands are fuelling the global climate crisis (2009) points out that under business as usual, ‘by 2030 the tar sands could consume 60% of Canada’s natural gas supply’. So what’s the solution? Remarkably credulity was strained even further with a proposal to build a nuclear power station as an option. As Greenpeace put it ‘Canada could well become the first country in the world to use nuclear power to accelerate the exploitation of fossil fuels’. Put simply, any notion of GHG reductions in Canada will be scuppered by tar sands expansion. The following table shows projected GHG increases, based on scenarios of varying energy intensity.
There is of course our old friend CCS that will, no doubt, be the great panacea to solve all emissions problems.
But a report complied by the Co-operative group in collaboration with WWF, Unconventional Oil Scraping the bottom of the barrel? takes a different tact:
Nobuo Tanaka, the Executive Director of the International Energy Agency [IEA] gave an indication of the timescales required for CCS when he said: “In carbon capture and storage, we would need to build at least 20 demonstration plants by 2020, at a cost of US$1.5bn each. Such a construction program should be viewed as a litmus test of our seriousness towards combating climate change.” This indicates CCS is still far from being a viable commercial scale solution and realistically will not be viable for decades to come.
The report sums it up with this statement:
It is not acceptable to use a promise of CCS as a licence to significantly expand the exploitation of unconventional fossil fuels when its availability on a sufficient scale is decades from being achieved, and so many contingencies leave its viability hanging in the balance.
Already a substantial area of the Athabasca valley has been strip mined, causing widespread destruction of the Boreal Forest and associated ecosystems. The impacts of in-situ operations are considered less damaging. But as the Oil Sands report points out:
the network of seismic lines, roads, power line corridors, pipelines and other infrastructure create a patchwork of fragmented habitat. Fragmentation occurs when extensive, continuous areas of habitat are reduced to isolated and usually smaller patches of habitat. This can reduce the amount of habitat available and the movement patterns of wildlife and birds.
This issue is also picked up in Greenpeace’s Dirty Oil:
The majority of steam actually ends up heating rock, as opposed to bitumen, or escaping into other formations. Due to steam leaks, low productivity and poor-quality bitumen formations, CO2 emissions from the steam plants can range from 20 to 400 kg per barrel. Emissions from Opti-Nexen’s Long Lake project, for example, are conservatively estimated to range from 174 to 374 kg per barrel. In contrast, Statoil Hydro says CO2 emissions from North Sea oil production range from 8 to 19 kg.
A Greenpeace report, Deep Trouble, the reality of In Situ tar sands operations, takes a deep dive, effectively debunking the claims that In Situ has less impacts. With SAGD methods of extraction well established, ‘enhanced oil projects’ is a nice euphemism. The following table from the report accounts for air pollution from In Situ operations.
Underground aquifers will become depleted and there will be a build up of toxic pockets and contamination. The report concludes with a comment from former NASA climate scientist James Hanson:
It is still feasible to stabilize the climate, but only if we leave the tar sands in the ground. The massive greenhouse gas amounts from the tar sands surely would cause the climate system to pass tipping points, while also trampling on the human rights of Canada’s First Nation communities and greatly damaging the Canadian boreal forest.
Already the ‘footprint’ of tar sands developments covers an area of 32,000 square kilometres. It is estimated that developments ‘will directly impact more than 2000 square kilometres of boreal forest’. Dirty Oil points out the immense carbon store represented by the forest and associated peatlands, which:
perform many important ecological services, including water filtration and carbon capture. These mossy lands contain seven times more carbon than normal Boreal forest soils. Even though Boreal and subarctic peatlands cover only three per cent of the world’s landmass, they store anywhere from 15 to 30 per cent of the world’s soil-based carbon. That makes peatlands the most effective carbon saver of any ecosystem on the planet.
The full development of Canada’s tar sands will eventually fragment and erode peatlands and forest over an area the size of England. Scientists estimate that even small changes to the health of peatlands in the region will convert these northern organic soils to a net carbon source to the atmosphere. Global Forest Watch estimates that the capacity of Alberta’s forests and wetlands to absorb industrial GHG emissions was exceeded in 2003. In other words, the region now exports vast amount of CO2 to other parts of Canada and the rest of the planet.
It also highlights the poor quality of the bitumen deposits and the deleterious effects on refining:
Unlike light oil, bitumen contains a host of contaminants, including sulfur, salts, nitrogen, clays, asphaltenes, resins and heavy metals (Western Canadian Select, a blend of bitumen and synthetic crude, has eight times more sulfur than West Texas crude).
North American refineries, which were built to handle light oils, have raised numerous concerns about their ability “to clean and process diluted bitumen.” The federal government adds that “the qualities of bitumen sometimes lead to fouling and corrosion of equipment [including pipelines], causing energy inefficiencies” and refinery shutdowns. Lower-quality oil from the tar sands has increased energy consumption at US refineries by 47 per cent between 2003 and 2007, resulting in larger GHG emissions’.
It also appears that official information relating to overall GHG emissions are either not available or misleading:
Alberta [Government] reports didn’t use real industry data, omitted critical information and failed to supply sufficient documentation of assumptions, methods and treatment of uncertainty.
The Centre for the Study of Living Standards has also concluded that, “publicly-available scientific estimates of future GHG emissions from the oil sands are limited.” A 2009 University of Toronto review of more than 13 life-cycle tar sands studies found huge gaps in emissions data, limited company information, and startling inconsistencies. By 2020, project emissions could range anywhere between 127 MT and 140 MT if production reaches 3.4 million barrels a day. At that point, the project will exceed the 2009 emissions of many European countries, including Austria (88 MT), Portugal (81), Ireland (69). In fact, the project’s CO2 output could rival or even exceed that of Belgium (131 MT), a nation of 10 million people.
A 2009 report on the viability of non-conventional fuels warned investors that the emissions and impacts from the tar sands projects “are so large that they will in and of themselves have massive global impacts.” As a consequence, tar sand companies by definition are likely to lose their licence to operate and this will mean they would be stopped from realizing these projects by regulators and stakeholders as the impacts of the externalities costs are calculated and more widely understood’.
Fugitive GHG emissions aren’t included in tar sands operations. As such, cumulative GHG emissions could be much higher. Another bone of contention is life cycle emissions. Some observers state that the only correct indication of total GHG emissions is well to wheel i.e. complete emissions from production to combustion. But environmental groups tend to highlight emissions at the production stage. Well to wheel emissions gives a valid picture of overall emissions, but this can over simplify the issue.
Understanding the full context of emissions is greatly enhanced by examining each stage. The reason for this is that anomalies can be camouflaged. For example, if production intensity of tar sands increase because of a shift to in situ and vehicle efficiency happens to improve, these elements would be masked, so emissions would be seen as being steady. Interpretation can be influenced by cherry picking. The ability to reclaim disturbed land is noted in the report:
After decades of activity, only 104 hectares have been certified as reclaimed by the Alberta government. …No company has mastered the challenge of reclaiming a tailings pond. Most companies admit it is impossible to artificially return the land to the same condition as they found it; instead boreal land will have much lower levels of carbon density and biodiversity than previously existed.
Water issues
The Pembina Institute expands the perspective on water issues. A major problem is the tailings ponds. These huge structures, covering an area greater than 50 square kilometers, can be seen from space. Some of the stored water can be re-used. But:
Because of the bitumen that remains in the tailings, mainly the highly toxic naphthenic acids present in bitumen, the ponds pose a number of environmental risks including the migration of pollutants into the groundwater system and leakage into the surrounding soil and surface water.
The Co-op/WWF report picks up the toxic waste issue:
The proximity of these huge toxic storage lakes to the Athabasca river — some are only metres from the bank — is particularly worrying. Any breach of these dams would lead to a catastrophic impact on the river — a major environmental risk for operators.
A Pembina paper (2017) focuses on the problems tailings ponds represent. After processing, the waste fluids within the ponds would take hundreds of years for the suspended solids to settle out. As such, they are difficult to reclaim. As a result, they’ve been left to expand:
In 2015 there were 1.18 trillion litres of tailings on Alberta’s landscape, and the volume of the ponds continues to grow.
In addition to increasing salt concentrations through evaporation, the ponds contain bitumen, naphthenic acids, cyanide, phenols, arsenic, cadmium, chromium, copper, lead and zinc. These highly toxic materials also become more concentrated over time. The ponds have been found to be prone to leakage:
In 2008, Environmental Defence used industry information to arrive at a conservative estimate of overall leakage from oilsands tailings ponds in Alberta. This study estimated the ponds to be leaking at least 11 million litres a day of contaminated water into the environment, equivalent to over 4 billion litres a year.
Because the ponds don’t fully freeze during winter time, they can become a magnet for wildlife:
Mine operators typically use deterrents like air cannons and decoys to scare off birds and other wildlife, but these measures are not always successful. If animals are exposed to the ponds, they can become covered in residual bitumen, a potentially deadly fate. Notorious examples of the risk tailings pose to wildlife occurred in 2008 when 1,600 migrating ducks died after landing in a Syncrude operated pond, and again in 2010, when despite heightened attempts to dissuade wildlife from approaching the toxic water bodies another 230 ducks died in a Syncrude ponds.
Emissions from ponds are high. Volatile organic compounds (VOCs), hydrogen sulphide and nitrous oxides are released. CO2 and methane are emitted from microbial biodegradation and fermentation and oxidation of heavy minerals in residual bitumen. The paper notes that:
Industry estimates that tailings ponds account for as much as 10% of total GHG emissions from oilsands mining.
Management and regulation of the ponds have been poor and unsuccessful, initially due to lack of understanding of the seriousness of the issues. But subsequent regulatory oversight was inadequate. In 2016, Directive 085: Fluid Tailings Management for Oil Sands Mining Projects, was introduced by the Regulator to enforce the Tailings Management Framework for the Mineable Athabasca Oil Sands (TMF), brought in by the Alberta Government the previous year. Will this regulation be successful? Pembina has found concerns, outlined briefly here:
Cumulative tailings volumes: The extent of predicted reduction in tailings volumes in the TMF are too optimistic.
Compliance and enforcement: Despite the intention to overcome the drawbacks of previous regulations, Directive 085 simply lacks sufficient enforcement protocols.
Water-capped tailings: Water capping isn’t a proven technology (this is where ‘tailings are placed in mined-out pits and covered in water to “treat” them in perpetuity.’)
Determination of RTR criteria: ‘Ready-to-reclaim (RTR) criteria are currently being assessed on a case-by-case basis by the AER
as it reviews each application.’ This then is work in progress that currently isn’t subject to public scrutiny.
Progressive reclamation: There are wide inconsistencies in the plans to reclaim tailings that need to be resolved.
Public liability and the Mine Financial Security Program: This is effectively a public liability insurance policy, which represents a high risk for the tax payer in a post climate transition world.
Directive 082 and resource optimization: This revolves around the resource quality of tar sands deposits, where higher quality deposits should be mined, which could reduce tailings disposal.
Global warming is having a major impact. The glacial valleys of the Rocky Mountains are receding. The Athabasca Glacier that feeds the river has been vulnerable to this effect, as this article outlines:
Since 1992, the snout of the glacier has retreated about 200 metres, requiring tourists anxious to set foot on the glacier to walk a little further. The glacier has lost about 2 km of its length since 1844.
As the tar sands industry relies heavily on the Athabasca river, the water extracted from the river:
is superheated by natural gas and injected into the bituminous sandstones to melt the bitumen so that it can flow into well bores and be pumped to the surface. The bitumen is refined to gasoline with the help of more natural gas and is then used, in part, to fuel vehicles that ferry visitors to the Athabasca Glacier. The emissions from these vehicles contribute to the greenhouse gases that are melting the glacier.
WWF Canada investigated these issues in the report Rivers at Risk: The Status of Environmental Flows in Canada, which takes a broad brush perspective on the ecological and cultural health of Canada’s waterways. With regards to the Athabasca River system, it highlights the potential impacts of tar sands:
Water withdrawals for the expanding and water-consumptive oil sands industry pose a significant threat to environmental flows in the Athabasca River.
The ecological importance of the river system is emphasised:
The delta of the Athabasca River joins those of the Peace and Birch rivers to form the Peace-Athabasca Delta — a 6000 km2 wetland complex that forms one of the world’s largest freshwater deltas and its largest boreal delta.
The Peace-Athabasca Delta is internationally recognized as a Ramsar wetland site and part of Wood Buffalo National Park, a UNESCO world heritage site. It is one of the most important waterfowl nesting and staging areas in North America, crossed by all four major North American flyways; up to 400,000 birds are known to use the Delta in the spring, and more than one million in the autumn. As with all delta ecosystems, the ecological integrity of the Peace-Athabasca Delta is highly sensitive to water level and flows.
It notes:
over the long term, the Athabasca River may not be able to meet the needs of all planned mining operations and maintain adequate environmental flows.
With respect to climate change impacts, the report concludes:
Ironically, oil sands operations are among the largest sources of greenhouse gas emissions in Canada, …and as such are contributing significantly to the climate warming that is predicted to reduce flows in the Athabasca River — exacerbating the problem of water insecurity not only for ecosystems but for industry itself. With annual and winter low flows decreasing in recent years, a trend expected to persist into the future, the potential exists for oil sands water withdrawals to threaten environmental flows in the Athabasca River to a much greater degree than has occurred to date. If they decline as predicted, flows in the Athabasca River will be insufficient to satisfy both the needs of rapidly expanding oil sands production and sustain the natural environment.
And that’s as unequivocal as it gets.
Air Pollution
The prominent pollutants are nitrogen oxides (N0x), sulphur dioxide (S02), VOCs and particulate matter (PM), causing health issues associated with these compounds, such as respiratory ailments like asthma. Acid rain is another problem that can arise, causing acid deposition in soils. Water bodies are also sensitive to acidification. The Oil Sands Fever report shows how air pollution could increase along with more intensive tar sands production.
PM2.5 (refers to microscopic airborne solid and liquid particles less than 2.5 microns in size) would show a similar pattern, rising from a current output of 16 tonnes per day to almost 35 tonnes per day.
The following video shows the dispersion of SO2 across the region.
And here’s an image representing NO2 concentrations. It’s all explained here:
Transportation
There’s a network of pipelines linking in Northern Alberta with the wider North American network.
Further routes have been proposed, generating a great deal of controversy. Because some of these routes pass through sensitive areas, there is concern of environmental contamination through leaks. Several cases have been reported over the past decade as Greenpeace USA outlines in this briefing.
Three companies operate pipeline systems across Canada and the US, transporting tar sands oil. These are; TC Energy (formally TransCanada), Kinder Morgan and Enbridge. Utilising data from the US Pipeline and Hazardous Materials Safety Administration (PHMSA), the report notes hazardous spills from the three companies from 2010:
TransCanada and its subsidiaries had 13 spills totaling 829 barrels of crude oil (mostly from two significant 400 barrel spills in 2011 and 2016). TransCanada operates 1,869 miles of crude oil pipelines in the U.S.
Kinder Morgan and its subsidiaries and joint ventures had 213 spills totaling 21,598 barrels of hazardous liquids. …Kinder Morgan and its subsidiaries currently operate 10,451 miles of crude, petroleum products or HVL pipelines in the U.S., of which 2,631 are used to transport crude oil.
Enbridge and its subsidiaries and joint ventures had 147 spills totaling 40,794 barrels of hazardous liquids. …Enbridge and its subsidiaries and joint ventures currently operate 10,472 miles of crude, petroleum products or HVL pipelines in the U.S., of which 8,631 miles are used to transport crude oil.
Spills of diluted bitumen (dilbit) carry a higher risk:
A 2015 study conducted by the National Academies of Science identified unique problems associated with a dilbit spill. The dilbit mixture
separates quickly after a spill, with the lighter volatile diluents evaporating and leaving behind the denser bitumen, which will sink in water. This
complicates most oil spill response techniques designed to handle oil floating on the surface.
One of the most controversial projects over the past decade has been the Keystone XL (KXL) pipeline, which was cancelled by President Biden on his first day of coming to office. The Natural Resources Defense Council (NRDC) outlines the background.
It first saw the light of day in 2008. Its estimated flow capacity was 830,000 barrels of oil per day, which would be mainly exported. A southern segment had already been built between Cushing, Oklahoma, and Port Arthur, Texas. But it was the proposed northern section from Hardisty, Alberta, running through Montana and South Dakota to Steele City, Nebraska that was highly contested.
Industry pundits claimed it would lower US gas prices at the pumps, but with a reversal in the ban on oil exports in 2015, the oil was slated for export. Tar sands oil was more prone to leaks as noted here:
Tar sands oil is thicker, more acidic, and more corrosive than lighter conventional crude, and this ups the likelihood that a pipeline carrying it will leak. Indeed, one study found that between 2007 and 2010, pipelines moving tar sands oil in Midwestern states spilled three times more per mile than the U.S. national average for pipelines carrying conventional crude. Since it first went into operation in 2010, TC Energy’s original Keystone Pipeline System has leaked more than a dozen times; one incident in North Dakota sent a 60-foot, 21,000-gallon geyser of tar sands oil spewing into the air. Less than two years before the project was finally pulled, the Keystone tar sands pipeline was temporarily shut down after a spill in North Dakota of reportedly more than 378,000 gallons in late October 2019.
Accidents therefore are costly with serious impacts on the environment and health implications to people coming into contact with the toxic brew.
There’s an ironic twist though to the cancellation of KXL. An investigation by Friends of the Earth Europe and Transport & Environment in 2015 revealed that around half of Europe’s oil refineries had been tweaked to process imported tar sands crude. There had been a proposal within the EU to implement the Fuel Quality Directive, with the tar sands sidelined. But this was rejected following an extensive lobbying campaign by Canada.
In another twist a link was established between the US state department and TransCanada, as noted by FoE. It involved Paul Elliott, who:
formerly worked as the national deputy director for Secretary Clinton’s presidential campaign. Elliott was then hired by TransCanada Pipelines, Ltd.
Elliott registered as a lobbyist only after news organizations reported on his lobbying activities on behalf of TransCanada in December 2010. TransCanada needs a permit from Secretary Clinton to build the Keystone XL pipeline.
FoE US sued the State Department for its failure to release information on Elliot’s activities following a Freedom of Information request. But the State Department dragged their feet in complying with the request. A subsequent investigation by DeSmog exposed the extent of the links. De Smog uncovered additional lobbyists with close ties to President Obama and Koch Industries. As DeSmog concluded:
Right now, the State Department’s capitulation to lobbyists – and secrecy about Secretary Clinton’s contacts with lobbyists – stinks to high heaven, as the recently released emails demonstrate. Hopefully this amended FOIA request will compel the State Department to reveal all the facts about lobbyist influence over Hillary Clinton’s position on Keystone XL.
In the wake of war in Ukraine, Biden came under fire for cancelling KXL. Apparently if it came on stream it could have helped reduce demand for Russian oil. But even mainstream outlets like the Washington Post has debunked that notion. The article outlines sound reasons and cites statistics, such as the fact that the substrate from the KXL was earmarked mainly for export and that it would comprise of heavy oil, an entirely different grade from Russian oil. Also very little oil is imported into the US from Russia.
Investments
Tar sands is very capital intensive. Generous financial incentives come from the provincial and Federal Governments, with the Alberta Government reducing royalties payable by the oil industry to 1% from a potential 25%, when capital costs from exploration and development are covered. Federal tax breaks are — as pointed out by Oil Sands Fever:
worth between $5 million and $40 million for every $1 billion invested. Between 1997 and 2004, capital investments in the oil sands totalled $27.5 billion. Using the range estimated by the Department of Finance, between 1997 and 2004 oil sands companies received a benefit of between $137.5 million and $1.1 billion for these generous capital write-offs.
Effectively an oil company:
only pays federal income tax on the income from the project once it has written off all eligible capital costs. These tax rules make oil sands projects much more attractive and profitable than they would be otherwise.
As well as Government sweeteners, the oil industry needs to tap into investment and resources from financial institutions and other companies. The top 10 companies with an interest in tar sands is listed (2009):
1 Superdrug; 2 Hitachi; 3 Barclays; 4 Nouvelle paper products; 5 ‘3’ mobile phone network; 6 Royal Bank of Scotland; 7 Caterpillar; 8 Liebherr fridges; 9 HSBC; 10 Lycra.
Superdrug and the mobile phone brand ‘3’ are owned by Hong Kong company Hutchison Whampoa, which also owns Husky Energy Ltd. In 2006 Husky had a total of 510,890 acres of oil sands leases and in 2007 signed an agreement with BP for a 50/50 partnership to develop the Sunrise oil sands project.
Caterpillar and Hitachi both make trucks used in the tar sands. The vehicles have been developed specifically for this purpose.
Along with fridges, Liebherr-International AG also manufactures trucks for use in the tar sands.
The notorious Koch Industries (see below) is deeply entrenched in the tar sands industry, primarily through its subsidiary Flint Hills Resources. Another subsidiary company has constructed, and yet another one operates, a pipeline which carries oil from Alberta to Minnesota. In 2000, “Koch was fined $35 million dollars for more than 310 spills into lakes, streams and waterways from its pipelines and oil facilities in six states in the USA”. Koch Industries is the largest privately-held company in the United States. Its subsidiaries produce a number of household products, brands and materials, including Nouvelle recycled toilet paper, Lotus disposable paper products, and LYCRA fibres.
These are the top banking groups providing tar sands finance as cited by Rainforest Action Network, in their report Funding Tar Sands: Private Banks vs. the Paris Agreement (2017):
One of the key warnings prevalent in the Co-op report is whether such investments represent security in a world that is more likely to head towards a future of carbon constraint:
At a time when investors want to know the carbon liabilities hidden in companies’ books, it is legitimate for even the most conservative investor to question why companies are pursuing a path that, while profitable in the short term, could soon become non-viable because of punitive carbon regulation and consumer concern. By this time, massive capital expenditure will have been injected into it, in a sector where costs elsewhere have been rising alarmingly.
A more detailed analysis of investments in tar sands can be found in the FoE & Platform et al report Cashing in on Tar Sands: RBS, UK banks and Canada’s “blood oil”. What the report reveals is the extent of public money pumped into tar sands and other fossil fuel investments following the banking crisis of 2008. RBS was the biggest beneficiary of the public bail-out, with UK tax payers owning an 83% share in the bank. But this didn’t deter RBS from financing loans to fossil fuel companies worth nearly £10bn — over a quarter the amount the bank received from the tax payers, as reported in the Guardian. It has been argued there should be greater accountability from institutions such as RBS, but the Government insisted on keeping this at ‘arms length’.
Since the bail out, RBS has been the target of campaigns by civil society groups. In August 2010 the Camp for Climate Action made the most direct protest at RBS HQ in Edinburgh, when activists stormed the building causing damage to the property.
When former World Bank chief economist Sir Nicholas Stern published his Stern Review back in October 2006, he concluded that ‘climate change is the greatest and widest-ranging market failure ever seen’. And the banks are directly funding this ‘market failure’. How much of our current GHG emissions are the banks responsible for? The cashing in report has this to say:
The grave threat of climate change to people’s lives and livelihoods across the globe remains unparalleled, yet investments in tar sands expansion ensure the energy model responsible for the crisis is further entrenched. We need to seize the opportunity to take steps towards considerable investment in renewables and energy efficiency whilst reducing consumption in order to prevent the worst impacts of climate change.
And in emphasising the increased risks associated with such investments:
we will see a sharp rise in instances of litigation resulting from climate change, a phenomenon that caused many companies in the asbestos industry to file for bankruptcy when faced with similar legal challenges. …climate change-related liability will develop more quickly than asbestos-related claims and believe the frequency and sustainability of climate change related litigation could become a significant issue within the next couple of years.
But since when has the financial sector bothered about risks (not to mention the oil industry). It’s possible to recover from recession to some extent. But from ecological collapse there is no way back.
The banks are governed by voluntary ‘best practice’ guidelines. These are the Equator Principles and the Climate Principles. The Equator Principles established in 2003 were adopted by the banks ‘in order to ensure that the projects we finance are developed in a manner that is socially responsible and reflect sound environmental management practices’. And ‘negative impacts on project-affected ecosystems and communities should be avoided where possible’. Given the limitations of the Principles ‘there is no disincentive to persuade or direct banks not to finance massive fossil fuel exploration and exploitation projects that will lead to billions of tons of greenhouse gases being released into the atmosphere’. In short, the Principles are just window dressing.
The Climate Principles announced in 2008 sought to broaden the remit. But these have also been largely ignored. It represents:
a refusal by many banks to accept responsibility for investment choices that harm communities and ecosystems and drive climate change, despite public statements to the contrary.
A report full disclosure by Pembina (2011), digs into tar sands investments. The report revealed that:
the economics of oil sands extraction, even at today’s relatively high prices, are fairly marginal, and a lack of disclosure by companies may be making the financial picture look better than it actually is. Major costs, including the multi-billion dollar costs for reclaiming the land disturbed by oil sands mining, are largely carried off the balance sheet.
The fragility of oil sands economics was clearly illustrated during the last recession; between July 2008 and June 2009, 85% of deferred or cancelled non-OPEC production capacity was located in the oil sands.
Given this economic tightrope, the financial viability of the oil sands industry is particularly vulnerable to external price shocks or adjustments with internal accounting.
The land reclamation picture also seems rather distorted:
Despite being required to submit accurate reclamation costs to the Alberta government, the oil sands industry actually discloses a far smaller magnitude of liability. …liability management regulations for the oil sands have not historically been an accurate proxy for the actual liabilities being accrued. Given the marginal economics for the oil sands industry, this discrepancy should be of significant concern for investors. It is clear that the liabilities associated with oil sands reclamation are significant, material, underestimated and largely undisclosed.
Another area that can impact the economy of the tar sands is Energy Return on Investment (EROI), which I covered here:
In short:
ultimately economic performance is directly linked the the EROI. Although there is plenty of oil and gas in the ground, it is becoming increasingly difficult [and] more expensive to extract.
Tar sands is estimated to be around 4:1, but the actual value will probably be lower. That means that it could take less than four barrels of oil equivalent to extract one barrel of tar sands oil. It doesn’t take a genius to figure out that this simply isn’t economically feasible or sustainable.
Environmental Responses
A report published by Pembuna, Solving the puzzle: Environmental responsibility in oil sands development (2011) opens with the statement:
Global criticism of oil sands development shows no sign of abating. Nor should it, so long as the scale and scope of oil sands impacts outstrip the governments’ willingness and ability to act as a responsible steward. Plans to double production within the decade will only intensify regional impacts, and further expose the gap between the rhetoric and reality of cumulative effects management in northeastern Alberta.
Greenpeace outlines a profile of Koch Industries:
Koch Industries, Inc. is the second-largest privately-held company in the United States, a conglomerate of more than twenty companies with $115 billion in annual sales. Koch operates in nearly 60 countries, and 100,000 employees globally, "about 60,000" of which are employed in the United States.
An investigation (2012) by Inside Climate News has exposed the Koch’ brothers involvement in tar sands. The two brothers, the late David Koch and Charles Koch, had their fingers in every aspect of the tar sands pie. The company is responsible for shipping, exporting, refining, importing and is ‘one of the largest holders of mineral leases in Alberta, where most of Canada’s tar sands deposits are located,’ overseeing ‘hundreds of well sites across Alberta tracked by Canadian regulators.’ In addition the company ran a network of pipelines and an ‘oil terminal in Hardisty, Alberta, a major tar sands export hub.’
As a private business, the company doesn’t readily reveal business practices and operations, including its financial affairs. Intriguingly any publications related to the business has avoided any reference to tar sands:
The phrase “oil sands” appears nowhere in Charles Koch’s 2007 book, The Science of Success. Koch corporate publications, facts sheets and websites are similarly silent. Although many smaller tentacles of the company’s sprawling interests are detailed in the employee newsletter Discovery, the issues available online (2007-2012) don’t contain a single overt mention of the company’s oil sands activities.
The names of the two subsidiaries currently at the heart of the company’s Canadian oil sands development activities—Koch Exploration Canada L.P. and Koch Oil Sands Operating G.P.—are also absent from Discovery‘s pages.
But in 2019, the tide shifted and the company sold off virtually all of its upstream stakes in the tar sands, the announcement coming just a matter of days before David Koch’s death. Predictions of reduced investment at the time appeared to have played a role in the decision.
The legal Challenge & the plight of First Nations
The Co-op was a major player in this arena. Back in February 2009, they offered financial support to the Beaver Lake Cree in their legal battle to protect their territory. The crux of the case is the First Nations Constitutional land rights. The relevant legislation here is the Constitution Act (1867) and the subsequently amended Act of 1982, and Treaty 8, which is part of a series of 11 Treaties each covering specific areas of land in Canada. The following map shows the extent of the Treaty system.
The Beaver lake Cree commenced a law suit against the Albertan Government — supported financially by the Co-op — under the jurisdiction of Treaty 6. Lawers Woodward & Company LLP has been the leading lawyer in the case. The case is still not settled a decade later. A trial is scheduled for January 2024. The RAVEN Trust, a charitable trust, was set up to support the Cree in order to raise funds from donations to finance the legal battle. It also provides information to interested parties on the progress of the lawsuit. There was a related lawsuit aiming to protect the woodland caribou, a threatened species, which could face extinction due to tar sands exploitation. There’s a dedicated campaign currently running.
An area of great concern to First Nations communities was the increase in reported health problems. As the Cashing in report points out:
Despite the fact that [the] treaties …guaranteed Indigenous Peoples the “right to pursue their usual vocations of hunting, trapping and fishing throughout the tract”, many First Nation citizens have felt obliged to stop or reduce such activities for fear of toxic contamination through tar sands extraction. There is increasing anecdotal evidence of fisher folk finding boils and lesions in fish, and hunters finding tumours in game.
Dr John O’Connor, a physician based in Fort Chipewyan at the time, raised the alarm after discovering higher rates of cancer than usual. A study by the local health authority had found high levels of arsenic, cadmium, polycyclic aromatic hydrocarbons (PAHs) and resin acids in the river sediment, as well as high levels of mercury in tested fish. These are highly toxic chemicals and their affects can be amplified in combination and could have carcinogenic effects.
Although Dr O’Connor’s evidence was initially rejected and criticised by the authorities, an investigation by the Canadian Medical Association vindicated him, showing that there was indeed higher rates of cancer than normal and that these were causing premature deaths.
First Nations rights are recognised by the United Nations as incorporated in the UN Declaration on the Rights of Indigenous Peoples, which Canada eventually ratified. But there is no record of any consultation between the oil industry and the first nations.
The European Dimension
FoE (Europe) focuses in on the legislative state-of-play with the report Tar sands: Fuelling the climate crisis, undermining EU energy security and damaging development objectives. It highlights the EU’s Europe 20 strategy, which:
charts a route towards a “smart, sustainable and inclusive economy” through tackling climate change and fossil fuel dependency. In concrete terms, this means implementation of Europe’s “20/20/20” targets on climate and energy: cutting GHG emissions, increasing renewables and improving energy efficiency by 20% by 2020 [compared to 1990 levels].
The strategy emphasises that:
Climate and resource challenges require drastic action. Strong dependence on fossil fuels such as oil and inefficient use of raw materials expose our consumers and businesses to harmful and costly price shocks, threatening our economic security and contributing to climate change.
According to Europe 20 predictions the EU could have saved around €60 billion from imports by 2020.
At the heart of the developing EU legislation is the FQD, which sets a 10% target for GHG emissions cuts from transport fuel. However a sticking point was the EU’s proposal to ‘assign a single default value for GHG emissions for all transport fuels extracted from oil’. This failed to account for the higher GHG intensities of tar sands production and proper life cycle analysis thus obscuring unconventional oil sources from conventional oil. Unless this anomaly is accounted for it will completely ‘undermine the EU’s claim to be the most “climate-friendly” region in the world’. It would also give carte blanch to oil producers to effectively suit themselves.
In a briefing compiled by the Co-op and other civil society groups, released in March 2011- Keep Tar Sands out of Europe. Fuel Quality Directive Article 7a: Implementing provisions. MEP briefing on Tar Sands and the role of the European Parliament, called on the EU to clarify its position on the issue and make recommendations based on the EU’s own research. It cited a study commissioned by the European Commission which shows that average lifecycle emissions of CO2 from tar sands is 23% worse than conventional oil. The information is summarised below:
This is a clear indication of the GHG intensity of tar sands and bears out the discussion above regarding life cycle analysis. The briefing is critical of Government and industry claims:
The Governments of Alberta and Canada and some oil companies claim that tar sands derived fuels are only 7% more GHG intensive than conventional oil. Independent peer reviewed studies, US Government, and European Commission studies show that the relative emissions of tar sands are much higher than claimed. Indeed the Commission’s own study does not recommend using CERA’s study due to the lack of transparency over its methodology.
No surprises here then. Indeed some voices have been accusing the Government of being involved in cover ups. In particular Environmental Defence has been outspoken as seen in this interview with CTV. Greenpeace highlighted what amounted to a green washing campaign by the Canadian Association of Petroleum Producers (CAPP). They introduced an ad competition in order to highlight what was going on. This was the winning entry:
Greenpeace also highlighted that the Federal Government was rather keen to hide the fact that GHG emissions from tar sands had risen by 21%. This was intentionally omitted from a report submitted to the UN. This coincides with figures released by the IEA, which shows that GHG emissions for 2010 were the highest ever. Greenpeace has subsequently noted that Canada’s representation at the UN climate talks was less than spectacular. Indeed if you follow the links to the newspaper reports from the Greenpeace post, you are left with the distinct impression that Canadian politics is a total sham. As noted above, the EU hasn’t set an example either as it rejected the FQD change.
Trade
Another major cover-up came to light. Highlighted by the UK Tar Sands Network, it involved setting up a trade agreement called the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). It would work along similar lines to the North American Free Trade Agreement (NAFTA). CETA talks took place behind closed doors, during which progress on FQD stalled.
Effectively what this means is that big oil could sue Governments if their profits were affected in any way by environmental regulation, for example. It could also impact First Nation challenges.
In 2021, TC Energy launched an investor-state dispute settlement (ISDS) claim for US$15 billion in compensation against the decision to cancel the KXL under the North American Free Trade Agreement (NAFTA). The Alberta Government is also prepared to launch its own challenge. However:
Although, like the pipeline, NAFTA is dead—it was replaced by the Canada–U.S.–Mexico Agreement (CUSMA) in July 2020—the old deal’s “investment protections” in Chapter 11 are not quite buried. So-called legacy disputes can be launched by investors like TC Energy until July 2023.
As for CETA, I previously noted, ‘CETA has only partially came into force as only 16 EU member States have ratified the agreement.’
Conclusion and Reflections
At some point in the future, will Canada will end up with a massive white elephant in the middle of a dust bowl? A perfect storm is brewing. Increasing oil prices, more demand, a general move towards renewables, declining reserves, investment risk and the greatest irony of all — the effects of climate change could shut down the tar sands.
With the crime of Ecocide open to debate, ‘corporate terrorism’ may be a legitimate characterisation of the lunatics running this show. Yet with great irony an actual designated terrorist had something to say about the state of the climate.
And just to wind up, what has the IPCC got to say about the tar sands. The short answer, very little. The Sixth Assessment Report, Climate Change 2022: Impacts, Adaptation and Vulnerability, the Working Group II, stated (P. 1975):
Water availability stress due to climate change is lower in Canada than in the USA and Mexico, and mines in Canada may be less exposed to this risk with some exceptions, that is, water-intensive oil sands mining in the Athabasca River basin in Canada.
In the Working group 3 report, there’s a brief reference to ‘Diesel, high’ emissions factors from two figures from the report (Figures 10.6 and 10.8, Pp. 1717, 1723). That’s it!
I’ll conclude this article with this quotation from the unconventional oil report from Professor Robert Skinner of the Oxford Energy Institute:
I hope that I don’t have the following conversation with my grand-daughter twenty years from now: “Grandpa, did you really do that?” “Do ‘what’, Masha?”
“Did you take natural gas from the Arctic down to Alberta to boil water to make steam to melt tar out of the oil sands, then use more natural gas to produce hydrogen to make the tar molecules into gasoline so North Americans could drive four tonne vehicles five kilometres to sports clubs to spend fifteen minutes riding stationary bikes; did you really do that, Grandpa?” “Ahhhh…, yes, Masha, I am afraid we did.”