In Response: Rex Murphy and the Oilsands

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In a commentary in the National Post tonight Rex Murphy calls the Tar Sands “Canada’s great national project for the 21st century” and those who might deride those same Tar Sands and advocate for greener energies (like Dalton McGuinty) as, in as many words, naive hypocrites.

As much as I enjoy Mr. Murphys command of the English language, he is dead wrong in this respect.

First, no matter what you call them, the Tar Sands, or Oil Sands, are not oil resources. None of it is oil that can go to an actual refinery until it is either dug out of a mine and sent through a separator or literally melted out of the ground using copious amounts of Natural gas.

Shell Scothford Bitumen Upgrader


Then it must be sent to one of 5 bitumen upgraders where it is turned into “SynCrude” which only then is roughly equivalent to ‘heavy’ regular (with caveats) crude oil and can be sent to appropriate refineries and turned into gasoline for our cars.

He might not like the ‘dirty’ oil tag that Oil Sands has gotten, but the reality is, your standard Alberta Oil Derrick is spic-and-span compared to the Tar Sands both in terms of the CO2 intensity of the operation, and the devastation and population it wrecks on land, river, and air.

Second, there is nothng ’21st century’ about continue the practices of the 19th and 20th. There is nothing new and amazing about the Tar Sands. At best they are using technology (eg. SAGD, CCS) that was developed 40 years ago

Why Oil Prices are so High

This is not why gas prices are high

to create a fuel that we started burning in large quantities barely 100 years ago, and will likely begin reaching the limits of production of it within the next 10-15 years if not sooner.

It does not matter what you, or Rex Murphy, or Dalton McGuinty drives today. What matters is what we drive, and demand, and use, tomorrow and how little CO2 we can have it produce. That is the 21st century challenge.

Arctic sea ice volume anomaly from PIOMAS updated once a month.

Today, with an Arctic that is thinning at unprecedented rates and where Winnipeg is breaking high temperature records by a dozen degrees or more, the Tar Sands are a national scar and an international embarrassment.

I have ideas about what “Canada’s great national project for the 21st century” might be. (It might end up looking a lot like Canada’s great 19th century project) I hope that Mr. Murphy takes the time to investigate every single facet of what the Tar Sands means to Albertans, Canadians, and the World before he passes judgement again in the National Post.

#Oil Sand Crude Caveats: According to the Canadian Encyclopedia “Bitumen”:

The distillates obtained from the hydrocracker, the delayed coker and the fluid coker are good feedstock for a conventional refinery. However, such distillates are “live,” tending to polymerize and foul surfaces, and must be mildly hydrotreated before being pumped through pipelines to distant refineries. This mildly hydrotreated feedstock is called synthetic crude.

Note also that I did not mention “dilbit” in my post, which is, as the name implies, diluted Bitumen and is, I believe, a much more recent invention and is also far more corrosive and heavier than syncrude.

(Thank you to @andrew_leach for pointing out some inconsistencies)

To the Editor: On Rising Gas Prices

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Dear Editor,
RE: “We need to be refining oil flowing through B.C”

I’ve seen many of the same complaints rise with gas prices.

“It’s a Plot by the Oil Companies!”
“It’s Government Taxes!”
“We need more Refineries!”

In fact the rises are due to none of those things.

The first two don’t affect the day-to-day rise and fall of gas prices any more than they affect the cost of a loaf of bread.

No one complains when bread and milk are the same price when we go from grocery store to grocery store, why would we complain about oil companies rising their prices in tandem as well? Prices rise and fall slowly and in tandem… no collusion, it’s just the market.

Similarly, while government taxes certainly make up a big part of the price of ‘things’ it doesn’t move up and down like crazy, so that’s not what is causing the rising gas prices either.

The last point though, speaks to local supply and demand, which gets closer to the truth. A quick look at the stats shows (NEB Canada Excel Files) that refinery capacity in Western Canada is almost double what Western Canadians actually consume. The rest is exported. So that’s not it either.

—–
Refining Capacity in Western Canada: 109,000 cubic metres per day (m3/d)
Most recent (March 2011) maximum in refinery usage: 100,000 m3/d (90%)
Net Exports to US March 2011: 60,000 m3/d
Left over (ie. Domestic Western Canada consumption): 40,0000 m3/d (36% of refinery capacity)

The only reason left is global supply and demand. There we see that oil production has not risen significantly since 2005.

This post on World Energy Supply and demand here talks about all forms of energy. It includes the graph below that shows oil production leveling off (look at coal production! wow!)

Here is that graph zoomed in to the last 40 years which shows the plateau better:

And here is a graph from another post at The Oil Drum showing price over the past decade. Notice how crude supply has barely budged, but prices have been wild as the economy hits limits, crashes, then recovers… and presumably will crash again.

Prices were stable around $20 in 2001-2003 and then things started to change.

Prices rose through 2008 until the economy crashed. Now with possible recovery in the US, global production still hasn’t broken out of its 7 year funk and the price is rising even though billions are been invested in the tar sands and oil shale.

This is the reality of global peak oil. Unconventional oil has kept us on a plateau for 7 years, but eventually, declining great oil fields elsewhere will be too much to compensate and world production will decline. The economic and geo-political repercussions are predictably unpleasant.

The message is simple. We are part of the world and so are our gas prices. If the world is to insulate itself from gyrations in oil prices, then we must use far less of it, starting here at home.

Chris Alemany
Member – Alberni Valley Transition Town Society
Port Alberni, BC

Link-it-Up: True Heros

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Here is the start of a series I’ll call “Link-it-Up”.
It’s your standard blog entry of interesting posts and teasers. I hate when they get really long though. So I’ll try to limit it to no more than ten so that there is actually a chance you check out the stuff.

Todays is called:
“True Heroes”

War Heroes: Bloody Hell – From the New York Times: A Doctor, co-founder of Medecins Sans Frontier returns from Syria

At the age of 71, Dr. Jacques Bérès, a veteran of war zones, left his comfortable Paris life last month to smuggle himself into Homs, the center of the Syrian revolt, to tend to the wounded and the sick.

Code Heroes: Tom Clancy would be proud – From Wired.

O Murchu had never seen this technique in all his years of analyzing malware. “Even the complex threats that we see, the advanced threats we see, don’t do this,” he mused during a recent interview at Symantec’s office.

Climate Heroes: Science Marches on – From the Journal NATURE – CLIMATE CHANGE

we show that this criterion systematically overestimates the temperature threshold and that the Greenland ice sheet is more sensitive to long-term climate change than previously thought. We estimate that the warming threshold leading to a monostable, essentially ice-free state is in the range of 0.8–3.2 °C, with a best estimate of 1.6 °C.

Lost Heroes: Anniversary of the Japanese Tsunami. When will we start moving our cities to higher ground?

Work. Rights. Responsibilities

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I was listening to CKNW today. The host was talking about some plans in some districts for teachers to remove services for coaching, extra-curricular activities and the like.

He then went on the required rant about “if this were about the kids, then why are they punishing the kids”

I turned off the radio.

Teachers are workers. Union or not, an employee has rights, we all have rights, including the right to withdraw our services in protest at our employer. Withdrawing services, be it quitting, or protesting en-masse is simply the culmination of longterm, often hidden, internal strife and protest.

The difference with teachers, and all public sector workers, is that they work for the public good as well as their own.

There is pride in serving others and in being part of a system, no matter how convoluted and bureaucratic, that you know we all need and that should, at its core, work for the betterment of all. It is supposed to be above political stripe or station. We work for the citizens of a town, City, Province or country that we live in.

However, there is another side to that coin.

As public servants, their job, even though it is a-political, their experience, their effect, is directly connected to the party in power and the policies they bring to bear. The worker and the public share control of the services through their connection to government and so they also share responsibilities.

So when teachers start protesting against what they see their employer (the government) doing to their working conditions and thus the services they provide, I submit that it is up to the public, and especially the Media, to investigate. If they find something wrong as well, then they must speak out as well and pressure the government and hold it to account.

We all have a responsibility, as citizens, to protect the services that we claim to value, we should not, we cannot, leave it solely to workers to protect because we have seen governments legislate their decision.

In the end, public service workers are just voters, and it takes a majority of voters to truly demand change and improvement.

Coal Trains still coming back to Vancouver Island?

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Certainly looks like it.

A few months ago there were some articles online about a company looking to get the rights to and then mine coal near Courtney here on Vancouver Island. It caused quite a stir, particularly in the rail community as the company directly mentioned the close proximity to the E&N and the deep sea port at Port Alberni in its literature.

Well, even though the economy has gone in the tank, it seems as though things are still proceeding.

In February and March, Compliance Energy Corporation went through and signed a partnership in the project with I-Comox Coal Inc a subsidiary of ITOCHU Corporation and LG International Investments (Canada) Ltd. a subsidiary of LG International Corp. They also signed a deal with West Fraser Mills, the original holders of the land to purchase around 29,000 hectares near Buckley Bay and Courtney.

Below is an overview map of the area… with the “Bear” area just south of Cumberland and Comox Lake and the “Raven” area nearer Buckley Bay.


View Larger Map

The Main find that includes Metallurgic (iron/steel) grade coal is in the bottom middle of the image, near where it says “Comox Strathcona A”. This terrain view is easiest to see where the claim is as it relates to surrounding communities. The entire flat area between the water and where the mountain hills start from Fanny Bay in the South to Comox Lake in the North is the general area of the plot.

Here is a slide from a recent presentation given by CEC.

Presentation Screen Cap of VI Coal interests
You can see the various interests CEC has, with Raven being the one considered most profitable.

Their latest filings show that they are still actively pursuing the Raven project.

CEC has provided $7 Million to its Asian backers to “fund all of the activities necessary to reach a production decision on the Raven Coal Project.”

Notice that they said “production decision”, which is quite different from production itself. That said, they seem very optimistic on both the quality and marketability of the project. Other documents say they are hoping to have their first shipments in 2011 or 2012… but this little paragraph in their latest filing indicates there are financial pressures coming to bear that are not unrelated to the wider economy.

The Company will continue to require funds and as a result, will have to continue to rely on equity and debt financing. There can be no assurance that financing, whether debt or equity, will always be available to the Company in the amount required at any particular time. Management is of the opinion that sufficient working capital will be obtained from external financing sources to meet the Company’s liabilities as they come due.

So we’ll see what happens here. The partners in the project, ITOCHU and LG, are multi-billion dollar players in the asian coal and steel industry, so their financial well being is not in doubt. What is in doubt with whether this small company, lead by CEO John Tapics (out of Alberta electricity/coal sector, click for more on the Board), can make this happen, and more importantly, sell it to Island residents.