The Politics of Pipelines
Siegel, Shefa, Americas Quarterly
The global commodity boom and innovations in technology have led to an upsurge in the extraction of unconventional resources in Canada. But transporting them to new markets has proven to be more difficult than expected.
Over the past decade, prices of major commodities (e.g., oil, coal, copper, gold, silver, tin, and iron ore) have skyrocketed, igniting a global boom in natural resources. Before this fairly recent development, a common assumption was that the world was entering a period of resource scarcity, most notably for oil, which would accelerate an eventual transition to renewable energy and weaken the reliance on carbon-loaded fossil fuels.
While popular perceptions of oil and gas extraction are marked by explosive gushers needing only to be pumped-think of the 2007 film There Will Be Blood-deposits of commonly used resources are deeper, more remote, require more mining and processing, are more energy- and water-intensive, and more toxic than such images represent.
The shiftto these kinds of deposits, often called unconventional resources, validates part of the scarcity theory. Accessible conventional resources, including light and sweet crude oil found relatively near the surface of the earth in the twentieth century, are no longer keeping pace with global energy demand.
As defense- and energy-policy analyst Michael Klare chronicles in The Race for What's Left, the move into the age of unconventional resources is not limited to energy. It includes many of the aforementioned mineral resources. For example, in extracting gold, mining companies are exploiting grades-the percentage of gold in every ton of ore- below one gram per ton, whereas 70 to 100 years ago, a typical grade was two to four ounces per ton, and could be as high as 20 ounces.
Resource depletion, however, is not the same as resource extinction. Here, the scarcity theory is offthe mark.
Instead of a renewables revolution, the depletion of conventional resources, coupled with the commodities boom, has accelerated the market for lower grades and different varieties of the twenty-first century's dominant extractive resource industries. Mineral and fuel deposits whose geochemistry, geography and political risks made them uneconomical a decade ago are thriving.
Canada and the U.S. Reap the Benefits
Canada's recent resource prosperity has been a long time coming, especially with regard to the Tar Sands in Alberta province, which boast a 1.7 trillion barrel potential, exceeded in scale only by Saudi Arabia.
The Tar Sands' existence was known as early as the 1780s, according to Andrew Nikiforuk, Canada's premier energy journalist. The eighteenth-century field notes were followed by more detailed reports from the 1880s and by failed exploitation efforts in the 1930s and 1960s. Throughout the twentieth century, the market value of oil remained too low for fossil fuel companies to profit from the higher costs of extracting and processing the tar sands.
The discovery of the Tar Sands is not new. The economic viability of mining them is.
Tar sands are a mixture of sand, clay and roughly 10 percent bitumen. As opposed to liquid crude oil, they are a heavier, more viscous hydrocarbon, requiring processing to turn the asphalt-like deposits-90 percent of which are waste-into synthetic crude before it can be piped to refineries to be further refined into fuels. The technologies for mining and pre-processing are expensive and resource-intensive, consuming the equivalent of one barrel of oil and 2 to 10 barrels of water for every three barrels of oil produced from the Tar Sands.
Writing in The New Yorker in 2007, environmental journalist Elizabeth Kolbert reported that the cost of converting tar sands into synthetic crude is roughly $30 per barrel. In the past decade, crude oil prices rose from $25 per barrel to more than $100 per barrel- peaking over $140 in 2008. These margins have made it financially sensible to exploit Canadian tar sands. …