Many Ways to Move Our Oil - Hicks on Biz column from The Edmonton Sun of Sat. March 17, 2012
One way or another, our bitumen (heavy oil) will get to China.
There's a myth building up that the proposed but seriously opposed Northern Gateway pipeline is the only option to get oil from the oil sands to Asia.
Not true. It's the most practical and likely the cheapest option, heading straight as an arrow from Edmonton through the northern B.C. interior to the port town of Kitimat.
Here's the deal.
We now produce 2.9 million barrels of oil a day (MBD) in Western Canada, about 60% of that from the oil sands.
We can't come close to using that much - 2.1 million barrels are exported, fairly easily at the moment through existing pipelines, 99% of it heading to the Excited States.
The source of our wealth? Do the math! At $100 a barrel, that's $210 million a day — or about $75 billion a year.
By 2020, only eight years, we'll be up to 3.5 million barrels a day. Of that, 80% will be from the oil sands.
The pipelines will get crowded. The last thing we want, as the principal beneficiaries of this thick black gooey stuff, is to see oil "shut in" because it can't get out.
Meanwhile, oil producers and royalty-receiving governments are frothing at the mouth to get our oil to Asia, where it's worth 20% more than in North America.
Here's why the Northern Gateway pipeline doesn't necessarily have to be built.
A pipeline already runs from Edmonton down to Vancouver. You'd never know it, but you drive alongside it every time you go to Jasper.
For 50 years, oil from the TransMountain pipeline has been loaded onto tankers — about one a week — bound for Asia. In 50 years, not a drop of oil has ever spilled in the busy Vancouver port.
Owner Kinder-Morgan proposes to double the pipeline's capacity and enlarge its Burnaby terminal to accommodate super-tankers. The stretch across Jasper National Park has already been upgraded.
With an existing pipeline and the Lower Mainland used to ships, Kinder-Morgan's expansion won't face the environmental wrath centred on the Northern Gateway.
CN Rail is keeping quiet, probably for fear of protestors lying across its tracks. But moving 100,000 to 200,000 barrels of oil a day by rail on its main line from Edmonton to Prince Rupert, Kitimat's sister port city up the B.C. coast, is quite feasible.
Feasible, but more expensive. The experts say pumping diluted bitumen down a tube costs about $5 a barrel, compared to $10 to $12 a barrel by rail.
With each tank car carrying some 650 barrels of oil, two to three bitumen-express trains a day would meet demand.
CN already owns the rail, already is moving vast quantities of raw goods (including bulk chemicals) to Prince Rupert for export. If an oil train derailed, any oil spill would be confined to ruptured tankers.
Canada has refineries in Sarnia, Montreal and St. John, New Brunswick, all using oil imported from the Middle East or Africa. Historically, it's been cheaper to import crude oil into Eastern Canada than from Western Canada by pipeline. Why not, suggests Wildrose Party leader Danielle Smith and many others, tweak the existing pipeline infrastructure to move Canadian oil to Canadian refineries for use in Canada? And given the changing economic equations of oil, it might actually make dollars and sense!
Finally, an outside-the-box idea that's not without merit: Using an existing right-of-way left over from World War II, a pipeline could be built from the oil sands arching through unpopulated B.C. and Yukon into Alaska, to flow into the Trans-Alaska pipeline into Valdez, Alaska. Valdez now has three to five oil tankers a week sailing down the Prince William Sound across to China or down the coast to California — far enough out to sea to be out of sight and out of mind of West Cost dwellers.
Meanwhile, the protest against the Northern Gateway pipeline is riddled with contradictions.
The anti-pipeline people don't want an oil pipeline, but a major new natural gas pipeline is about to be built from Prince George to Kitimat, and nobody's saying boo!
They don't want oil tankers — now double-hulled and without a major spill since the Exxon Valdez in 1989 — but they're OK with ships soon to carry liquefied natural gas up and down the Douglas Strait to Kitimat. And further out to sea, tankers sail from Alaska to California.
They don't want a buried pipeline, but they accept the on-going twinning of the CN tracks to Prince Rupert.
The opposition to the Northern Gateway is about keeping the Canadian northwest coast pristine, which is admirable.
But at least two ships a day, carrying coal, logs, containers, aluminum and bulk petroleum products like methanol and condensate, are already sailing in and out of Kitimat and Prince Rupert!
Dear B.C. people, have some faith in modern technology!
Edmontonians do. We live with all kinds of "dangerous goods" flowing safely through our city and region, via rail , trucks and pipelines.
Remember when the last major pipeline accident happened here, in a city riddled with pipelines? Mill Woods. In 1979.