The Oil Drum

146 comments on Will Canada Fuel Fortress America?

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westexas on March 11, 2006 - 2:53pm

I made some guesses on what it actually costs the Canadian Oil & Gas industry to add one barrel of new incremental oil per day, on a net energy basis. It's probably on the order of something in excess of $100,000 to add that one BOPD, on a net energy basis. (Just the capital cost per BOPD on new tar sands is approaching $60,000 or more per BOPD in some cases).

Unfortunately, if you look at 2005 versus 2003, Canada is going backwards--even without taking the EROEI factors into consideration. 2005 Canadian oil production is 700,000 BOPD less than what the EIA (in 2003) predicted it would be in 2005. So, I guess if you look at the cost divided by zero net new barrels of oil, you get something approaching an infinite cost per new net barrel.

The bottom line for the nonconventional sources of liquid transportation fuels (LTF's) is that they require far more capital and energy than it takes to refine light, sweet crude oil. In addition, every fossil fuel that we are looking at as a source of LTF, except for kerogen, is currently being used for heating and electrical generation. Therefore, in a desperate attempt to keep the supply of LTF's stable or increasing, all we are talking about doing it digging ever deeper into our supply of fossil fuels.

Also, I predict that all energy exporters are going to start asking some very hard questions about whether or not they should--or can--continue to ramp up their production of a depleting resource in order to keep our fleet of Hummers driving to and from $500,000 mortgages in the US.

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beggar on March 12, 2006 - 12:44pm

Excellent analysis, Westexas.

Will Canada have an energy policy? Will it be science-based or reality-based?

Will the Canandian government figure that the only option is to comply with the demands (disguised as suggestions or requests or recommendations) of the US government regarding Canandian energy policies?

So far I see some evidence that some Canadians are concerned about careful stewardship of Canadian resources. However, it seems that the USA is likely to call the shots for North America. Has the US in fact begun to annex Canada as a resource colony?

I've not got time to find the list of agreements made and pending, but it does seem like the US is moving toward consolidating NA as one economic and military unit. Such consoidation will in fact trump much of the local political power Canadians now enjoy.

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SocraticGadfly on March 13, 2006 - 2:24am

In essence, this is robbing Peter to pay Paul. Of course, here in the U.S., the same will be true for things like the F-T coal-dieselfication process.

Meanwhile, beyond health problems, environmental degradation and economic dislocation, let's not forget one other problem with the tar sands, especially when being exploited at breakneck speed:

Greenhouse gases.

The only way Canada can come close to winning this deal if it becomes so warm as to massively slash national heating bills. (Of course, if the globe is that hot, greedy Americans will want yet more Canadian gas for electricity to run icebox-temperature AC units.)

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SocraticGadfly on March 13, 2006 - 2:43am

Forgot to enter the specifics on greenhouse gases. From Wiki's page on tar sands, here's a few numbers.

"For every barrel of synthetic oil produced in Alberta, more than 80 kg of greenhouse gases are released into the atmosphere."

And how does this impact Kyoto and Canada's efforts to meet its stipulations?

"In ratifying the Kyoto Protocol, Canada agreed to reduce, by 2012, its greenhouse gas emissions by 6% with respect to the reference year (1990). In 2002, Canada's total greenhouse gas emissions had increased by 24% since 1990."

Oops.

Since these are both formal treaties, does one trump the other? Can Ottawa use that as an legal justification to junk NAFTA?

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