OIL WARS HEAT UP - BETWEEN CANADA & U.S.

Yesterday, NewEnergyNews headlined COAL WARS HEAT UP, noting conflict between Virginia rate payers and a new Virginia coal plant because the plant builders cannot promise carbon-capture-and-sequestration (CCS) technology and cannot promise to keep power prices low in the coming emissions-constrained marketplace.

Now a war is heating up between Canada and the U.S. over emission-constraint issues.

In its 2007 energy bill, Congress included a section prohibiting the government from buying “alternative fuels” with greenhouse gas (GhG) emissions greater than those of conventional petroleum. Canada’s oil sands, crucial to its economic growth, are considered “unconventional” and therefore, by a strict interpretation of the law, could fall into that “alternative” category. Oil sands petroleum requires enormous GhG emissions, some say as much as five times that of conventional petroleum, to produce and refine.

It could seriously cut into U.S oil supplies and seriously damage Canada’s economy if a strict interpretation of the law is applied and the U.S. is forced to stop purchasing oil sands petroleum. But both the conservative Bush administration and the current conservative Canadian Prime Minister Harper’s administration favor strict legal interpretations.

Does the phrase “…hoist on his own petard…” ring a bell?

Prime Minister Harper’s government, however, will probably want to remind the Bush administration of Emerson’s observation about consistency (“the hobgoblin of little minds”) and get a favorable ruling on this immediately rather than leave the decision to the next administration. All 3 remaining presidential candidates are much stronger than President Bush on emissions regulation.

Note that the North America column is dominated by "unconventional" reserves. That's the Canadian oil sands. (click to enlarge)

Canada warns US over oil sands
Sheila McNulty, March 9, 2008 (Financial Times)

WHO
Michael Wilson, Canadian ambassador to the U.S.; Robert Gates, U.S. Secretary of Defense; Condoleezza Rice, U.S. Secretary of State; Samuel Bodman, U.S. Secretary of Energy

Canada is the single biggest U.S. supplier. (click to enlarge)

WHAT
Wilson’s letter to Gates, copied to Rice and Bodman, warned of problems if the U.S. excercises Section 526 of the Energy Independence and Security Act 2007 to bar U.S. compnaies from buying oil produced from Canada’s oil sands because it generates excessive greenhouse gas (GhG) emissions.

WHEN
The Energy Independence and Security Act was passed by the U.S. Congress to much fanfare from the Bush administration in December 2007.

Very convenient to U.S. markets. (click to enlarge)

WHERE
Canada’s oil sands are located in the oil rich province of Alberta.

WHY
The “oily” relationship between the U.S. and Canada suits both nations, allowing the U.S. to have a degree of independence from both hostile Middle East and hostile Latin American suppliers and allowing Canadian producers to pump their unrefined or partially refined product directly into U.S.-bound pipelines.

However this works out with the U.S., Canada needs to do something about the oil sands if it is going to meet its own emissions-reductions goals. (click to enlarge)

QUOTES
- From Ambssador Wilson’s letter to the U.S.: He “would not want to see an expansive interpretation…” of the U.S. energy bill and foresees “unintended consequences for both countries…”
- Amy Myers Jaffe, energy expert, Rice University, on the consequences of cutting off U.S. supplies from the Canadian oil sands: “$106 a barrel is going to look cheap…The Canadians do, in fact, have something to worry about, particularly from a Democratic administration…”
- Tristan Landry, spokesperson, U.S. Canadian embassy: “Classifying fuel from the oil sands as non-conventional fuel ... would unnecessarily complicate the integrated Canada-US energy relationship.”
- U.S. Department of Energy (DOE): “[DOE is] assessing any implication to the US federal fuel procurement practices arising from the bill and will work co-operatively with Canada.”