Alberta-Texas pipeline looking like a sure thing

These days, jobs trump environmental concerns.

Given the current high unemployment, it’s not looking good for environmentalists after last week’s decision by the U.S. State Department to green-light the Keystone XL pipeline from Alberta’s oil fields to the Texas refineries. Because these days, potential jobs trump greenhouse gases.

Also, Canadian energy security trumps environmental risks.

Canadian oil company TransCanada’s $7 billion, 1700-mile-long proposed pipeline has become an environmental cause celebre, with recent week-long protests outside the White House resulting in 400 arrests. One protestor’s sign last week read, “Nebraska Can’t Afford an Oil Spill.”

Alas, it may have to.

The Obama administration can’t afford to be seen standing in the way of job creation. Most published reports say Keystone XL will create 120,000 jobs — 20,000 in actual pipeline construction and 100,000 indirectly in supplies and services. In a bad economy, that isn’t chopped liver.

And besides, if the U.S. doesn’t get the Alberta oil — as it almost certainly will, after a few more months of contentious hearings in the U.S. — energy-thirsty China surely will. That’s because Canada will go ahead with its expansion of oil sands (or tar sands) production whether or not Keystone is built. It’s already producing 1.5 million barrels a day from the Alberta oil/tar sands, and 700,000 barrels a day will go through Keystone XL, which now seems likely to start construction next year. (Personal aside: The Keystone XL still sounds more like a radial tire than a pipeline to me).

“When it comes to energy, the United States is lucky to be next to Canada,” writes Washington Post columnist Robert Samuelson in a recent piece endorsing Keystone XL. He reminded readers that peaceful Canada is already the United States’ main oil supplier. Canada has the second-largest oil reserves in the world after Saudi Arabia — 97 percent of them deposited in Alberta’s gooey, controversial oil sands.

Crude and messy

Today, most of the oil that’s easy to get at has been “gotten at.” Most of what’s left is either tricky and risky to reach — remember that Gulf oil spill? — or else it’s messy, like Alberta’s oil sands, where crude (called bitumen) is energy-consuming and messy to extract.

And even though the United States isn’t technically “decreasing its reliance on foreign oil,” as more than one U.S. President has urged, at least it’s now relying for its oil fix on friendly “non-conflict” oil from Canada. That plus job creation seems likely to trump environmental considerations when the President makes his final decision on Keystone XL.

While getting at Alberta’s oil is indeed messy, it still doesn’t look like we’ll be moving away from a petroleum-based economy any time soon, even though some change is happening. Portland, Ore., to use one example, recently pledged to go electric and eliminate all petroleum in its first-rate public-transit system.

There’s a lot of pressure on TransCanada to insure that there won’t be pipeline spills, and the Canadian company has agreed to over 50 State Department conditions for building the XL pipeline, which will double the capacity of the existing Keystone pipeline to Oklahoma and Illinois.

Canada making green moves

Meanwhile, on the Canadian side of the border, a lot of groundwork — and actual work — is being done on the scientific (and P.R.) fronts to make Alberta’s oil-sands more politically and environmentally palatable.

Seven major oil companies mining Alberta crude have formed a consortium to work together and find new technologies to remediate things like the huge tailings ponds that result from mining bitumen. There have already been some positive results in water reclamation, reports the Calgary Herald.

Plus, the Alberta government in 2009 instituted Directive 74, ordering oilsands companies to reduce fine particles flowing into tailings ponds by 20, 30 and 50 per cent over the next three years.

Directive 74 followed the international censure after the death of 1,600 ducks at Syncrude’s Aurora Mine pond in 2008. The Alberta oil companies have committed $90 million this year toward research and development of techniques to manage tailings together. There have already been results, with tailings ponds getting cleaner and vanishing more quickly.

The Oilsands Tailing Consortium consists of Syncrude, Suncor Energy  (the only one of the group to meet its Directive 74 requirements), Canadian Natural, Exxon Mobil-owned Imperial Oil , Shell Canada, Teck Resources  and Total E&P Canada. They’re all participating in a rare and free exchange of technology and information.

Ottawa recently announced it would be the final arbiter of environmental matters relating to provincial oil fields.

Many Albertans resisted that, but Canadian Prime Minister Stephen Harper comes from Alberta’s oil country, and he’s friendly to “crude people.” Given that energy is the engine of the Canadian economy (and the reason for the strong loonie). Harper’s not about to hit the oil companies with onerous restrictions.

And it looks more and more these days like there will be a second important pipeline to a deep-water port besides Keystone XL: A proposed pipeline west to British Columbia’s coast and an oil terminal to be built at Kitimat, B.C., is getting closer to reality.

Canadian leader’s strong hand

The reasons for more pipeline capacity are, for Harper, both political and economic, as they are for Obama. Harper wants to sell (and deliver) the oil, and the United States and China want to buy it.

But Harper is playing a much stronger hand than Obama is.

To start with, the prime minister finally controls a majority government after Canada’s federal elections in May. And under Canada’s parliamentary system, that means you control not one, but two branches of government — executive AND legislative. (Harper’s Conservatives control Parliament.)

And last week’s surprise death of the Canadian opposition party’s top man, beloved NDP leader Jack Layton, leaves Harper’s opposition in Ottawa without strong leadership.

If Canada were in the Middle East — a farfetched idea, granted — Harper might rule as ruthlessly as a Moammar Gadhafi, siphoning off billions from U.S. oil payments and building a Fortress of Solitude in the Canadian arctic.

But Canada isn’t Libya, and yes, the United States should be thankful for that.

MarketWatch