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Page added on May 3, 2015
Canada is North America’s Great Oil Security Blanket
The Keystone XL pipeline debate that unfortunately continues to drag on has pushed Canada’s oil production potential into the spotlight. Canada is our neighbor and leading trade partner, with U.S. goods and private services trade with Canada totaling around $750 billion a year, interestingly equal parts imports and exports. More oil connections are a natural match. The U.S. is the largest consumer in the world, 80% above second place China, and Canada is an emerging powerhouse, now producing 4.1 million b/d, 33% more than in 2005. U.S. energy policy must realize Canadian oil for what it is: North America’s great oil security blanket. Canadian oil is also “ethical oil” since Canada is a democracy and free market sought by investors that desire less risk. This is in contrast to members of OPEC, an “oil cartel” that holds 6 of the top 7 oil reserve holders. For the U.S., the real importance of Canada is an expanding capacity to export oil – rising production, amid flat demand. All three categories of oil production continue to increase, crude oil, natural gas liquids, and unconventional oil sands. Canada’s growing ability to export is unique compared to the other top exporters, countries that are young and consuming more of their own oil. To illustrate, of the top 10 crude oil exporters, Canada has the highest median age at 42 years, versus 39 for Russia and the other eight nations all below age 30. Canada is a well developed economy, where incremental oil needs are slow growing. Competition for liquid fuels will be increasingly fierce, with global demand rising a Saudi Arabia worth of production by 2025 (12 million b/d).
The Enormity and Importance of Canadian Oil
Energy Security
Although the U.S. has made great progress in reducing the crude requirement from outside North America in recent years, imports from OPEC have fallen 33% to 3.2 million b/d since 2009, OPEC still supplies about 35% of our imports and 17% of our total use. From an energy security perspective, the U.S. only lost 6% of oil supplies during the 1973 Arab OPEC Oil Embargo. As the U.S. economy continues to grow, oil consumption will increase or at least stay “very high.” Oil security is based on securing safe, reliable access to diverse, abundant, and reasonably priced resources (ask Winston Churchill). Canadian oil alleviates our dependence on distant tankers, often from less stable regions that are more susceptible to disruption. As opposed to waterborne shipments that can be diverted even en route, pipelines are “hardwired” links that would help connect the U.S. and Canadian oil markets for the long-term. There is also an ongoing legal rationality for Keystone XL under NAFTA, as Canadian energy companies must be afforded the same opportunities as American companies operating in the U.S. (see here, here, and here). TransCanada’s Keystone XL would be the safest pipeline ever built, and the rail that has become the default transport mode is more dangerous and prone to spills. U.S. Department of Transportation statistics indicate that pipelines are over 450 times safer than rail on a per-mile basis.
Other Potential Markets
With or without Keystone XL, Canada’s heavier oil will still be developed and reach available markets: oil sands contribute nearly $100 billion to Canada’s GDP. Even without Enbridge’s Northern Gateway pipeline, the westbound portion of which will run diluted bitumen from the Athabasca oil sands in Alberta to the marine terminal in Kitimat, British Columbia for transport to the Asian markets via tanker, Canada will still be getting its oil to China. The IEA reports that Canada could ship as much as 300,000 b/d to China by 2019, volumes that don’t depend on new pipelines to send Albertan oil to the Pacific Coast. Per the IEA, “It is presumed that volumes will grow in the event of an expansion of Canadian companies being permitted to re-export crude via the United States or by increasing volumes being railed to the Pacific Coast.” Albeit with a slightly confusing 209 conditions, the Canadian government last June approved the Northern Gateway, but the 2018 start-up date is unlikely to be reached. Prime Minister Stephen Harper, in a battle to win reelection to a rare fourth term in October, has long pushed for Alberta’s booming oil sector to have access to West Coast ports, especially since the Obama administration continues to delay Keystone XL. Some 99% of Canada’s oil exports go to the U.S. Northern Gateway would deliver 525,000 b/d of diluted bitumen to export terminals in Kitimat where it can board supertankers headed for the fast-growing Asian markets.
Environmental groups should thus know that liquid fuels are better consumed in the U.S. than in China. China has emerging high standards for petroleum-based fuels, but like most environmental laws, implementation and enforcement are the problem. “The vague wording of regulations often leaves room for interpretation, and without a fully independent legal system, the effectiveness of reforms depends on local enforcement” (see here). Less pipeline connections from Canada to the U.S. mean more tankers across oceans to China, a more risky environmental choice with higher life-cycle GHG emissions. As of 2014, China had a current diesel sulfur limit of 350 ppm and an adopted standard of 10, compared to 15 current and 15 adopted for the U.S. For gasoline, China’s current sulfur limit is 50 ppm, with adopted at 10 ppm, compared to 30 ppm and 10 ppm respectively for the U.S. As for the notion that Keystone XL oil to the U.S. will just get exported: according to the U.S. State Department, exports of Canadian crude are “unlikely to be economically justified for any significant durable trade given transport costs and market conditions.”
Looking Forward
The Gulf Coast refinery region relies on heavy crude oil from Mexico and Venezuela, both facing production problems from investment shortages. From 2006-2014, Gulf Coast imports from Mexico fell 53% to 765,000 b/d, while imports from Venezuela fell 35% to 717,000 b/d. Heavy crude supply from neighbor Canada is a key alternative, just one of the many “national interest” justifications for Keystone XL. Even without Keystone XL, the U.S. is absorbing record amounts of Canadian oil. In 2014, imports from Canada to the Gulf Coast reached 210,000 b/d, versus just 76,000 b/d in 2006. The projection for 2015 is that Canadian oil processed at Gulf Coast refineries will hit 400,000 b/d, as Enbridge’s Flanagan South and an expanded Seaway pipeline raise their capacity. The emerging Russia-China energy relationship, signing a $270-billion oil deal in 2013 and a $400 billion natural gas deal in 2014, is just another example of how those that block energy links between Canada and the U.S. are actually blocking North American energy security. Some cannot get past their harsh reality: oil and gas will supply at least half of the world’s energy through 2040. The Canadian Association of Petroleum Producers expects oil sands output to increase over 150% to 4.8 million b/d by 2030. And the national forecasts keep rising. The EIA’s International Energy Outlook 2009 projected that Canada would produce 5.4 million b/d in 2030; the 2014 edition has 2030 production at 6.2 million b/d.
Rising U.S. Oil Imports from Canada…Canada’s Rising Capacity to Export Oil
43 Comments on "Canada is North America’s Great Oil Security Blanket"
paulo1 on Sun, 3rd May 2015 8:50 am
Well, I’m Canadian and not against ‘reasonable’ Oil Sands development and export. However, I think we have passed what could be termed ‘ethical’ development and should go slow and slower on development. If this high-price and dirty oil is eclipsed by renewables, then great. If renewables take a larger role in energy and we reserve this goop for necessary portable energy requirements, then great.
Necessary portable energy requirements, for me, does not include airliner trips to tropical vacation spots, Sunday drives, or one person commutes.
This should be highly taxed and expensive oil….more than it already is.
regards
paulo1 on Sun, 3rd May 2015 8:51 am
By the way, why are we still being exposed to these shitty Forbes articles and why did I read it?
eugene on Sun, 3rd May 2015 8:58 am
Paulo1
I, often, have the same thoughts. Lotta shit out there.
Jimmy on Sun, 3rd May 2015 9:10 am
I imagine Plant will be posting comments soon to impress us with his grasp of the obvious. Thanks in advance Plant for pointing out the painfully obvious.
PS- Nony is an asshat.
Jimmy on Sun, 3rd May 2015 9:14 am
Too bad for Americans that Canadians think they’re idiots. I think they’d rather sell to China. I hope America dies off in the next famine.
Davy on Sun, 3rd May 2015 9:54 am
Paulo, true, liquid fuels will be vital in the nearing descent. AltE, storage, and smart grids will never scale and in time. NUK is a dead man walking. In any case nothing can substitute for liquid fuels.
Paulo is correct in my mind we have to continue with any and every oil source even as the energy equation goes negative per Shorts thesis. There will be a lag effect to this negative energy equation as cannibalization occures.
Once in a liquid fuel crisis a food crisis will likely develope. The combination of the two will go a long way to changing attitudes and lifestyles by necessity. This should force a rebalance of consumption lowering the nastiest fossil fuel sources. At least that is per Davy doom theory.
Davy on Sun, 3rd May 2015 9:55 am
Jimmy, I hope you choke on a chicken bone preferably from KFC.
Perk Earl on Sun, 3rd May 2015 10:00 am
Jimmy, my wife ran into your type of prejudice in B.C. several years ago with her sister at a conference talking about a book they co-wrote. She said the hatred of Americans was so obvious she never wanted to return. She hasn’t and we will never visit your country. So now you just have to find a way to either close the border or get the message out loud enough to close Canada from Americans. Maybe you can push for a referendum.
shortonoil on Sun, 3rd May 2015 10:16 am
Let’s see how long the bitumen industry can continue on $60 oil when it cost $80 to produce it. Maybe two, three years if the FED gets involved!
Herbert on Sun, 3rd May 2015 11:51 am
I am a Canadian living in the refugee utopia known as Ontario, where only the very rich or the very poor survive. Green Energy is not ready for prime time. It is a huge waste of money and resources. Ontario bankrupts its middle class with outrageous hydro bills filling the coffers of the unionized hydro workers, while the refugees, new immigrants aka canadians of convenience enjoy a free ride. In Ontario most firemen and cops clear well over 100k per year. All liberal union suppoorters. Disgraceful.
Herbert on Sun, 3rd May 2015 11:52 am
Davy. Jimmy is a refugee luvin liberal luvin person who thinks he represents Canadians. He doesn’t. Most Canadians love America. You should know better than to reply to a clam like him.
Boat on Sun, 3rd May 2015 12:03 pm
Short, plenty of reading out there out there saying much of the fracking will survive at $50. Not like they didn’t make a ton of money when prices were at $100. Lots of cash sitting around waiting for a price rebound.
Davy on Sun, 3rd May 2015 12:07 pm
Yea, Herb, I would love to live in the wilds of Canada. I relate to balanced open minded Canadians better than Americans. Going to the far north of Michigan in August. Parents have a home on Lake Michigan. Taking my boys up to Canada.
As for Jimmy and his chicken bone. That was fun but it sucks the Pussy didn’t respond. I get your point Herb. The mature thing to do is let The Jimbo be a slut and make of fool of himself. I will work on my maturity Herb but it is hard being a horse’s ass.
JuanP on Sun, 3rd May 2015 12:23 pm
I am with Paulo on this one. I consider tar sands a necessary evil, but calling them ethical is going a little too far.
I spared myself the article and came straight to the comments. 😉
Herbert on Sun, 3rd May 2015 12:39 pm
I think obama is a traitor to the american people and he by no means is a friend to Canada. We can take it though. We know he will be gone soon. Keystone was a no brainer but the relationship between America and Canada is much deeper than one pipe. Hell look at all the pipes that already exist.
apneaman on Sun, 3rd May 2015 12:52 pm
paulo1- reasonable Oil Sands development? That’s like reasonable child rape. WTF are you talking about? Have you ever been there? It sounds like you have fallen prey to the years of propaganda TV commercials and bought and paid for opinion pieces. Your a perfect example of how a better standard of general education only makes for better rationalizes. Us Canadians are fucking phonies. The minute it came time to actually prove that we held ourselves to a higher level we caved and went straight for the consumer savior – Stephan Harper. A spineless nation of privileged super consumers. In fact, I have to say on a per capita basis, more Americans have stood up for doing the hard thing (at personal risk) than Canadians. I’m not saying we are the worst humans on the planet, but those Canadians who forged our reputation as critical thinking peacemaker diplomats of a nation of moral and fair citizens are long gone. Were pacified and cowed and have stood silently by while The Harper gang has sold out this country to his neo liberal/neo con ideology and 1% masters. Many have even cheered it on. I know many university educated people here who’s biggest concerns are trying to eat at every food truck and out remodel the “Jone’s”. At this point I try not to blame too much. These people are my family and customers. They have kids and it must be hard to admit that most of them will not see middle age.
Herbert on Sun, 3rd May 2015 1:04 pm
Canadians who are enviromentalists are national security threats. Canada is a nation of 34 million people give or take with the second largest landmass in the world. If you were to shut Canada down totally the percent of world emissions would be less than 2 percent. That is right. Less than 2 percent worldwide. I can understand places like japan being eco friendly, but Canada. Disgraceful. Then to top it off you have places like india, china and america who give off much more emissions than Canada could ever dream of. Canadian eco freaks are ego driven assholes, who are usually financially well off or think like a GD hippie.
shortonoil on Sun, 3rd May 2015 1:19 pm
“Short, plenty of reading out there out there saying much of the fracking will survive at $50. Not like they didn’t make a ton of money when prices were at $100. Lots of cash sitting around waiting for a price rebound.”
The shale industry now has over $300 billion in HY debt, and according to GS $980 billion in total debt. They have 1,500 unfracked wells, and 15,000 wells that decline by 65% the first year. If they were making tons of money “where is it”? It sure isn’t in their bank accounts or they wouldn’t be selling new equity all over the globe, and diluting the existing stock holders. Piling up almost $1 trillion in debt does not mean that you are making money! It means that they are borrowing more money than they can pay back.
apneaman on Sun, 3rd May 2015 1:37 pm
Everyone uses the same excuses Herbert. There is always a reason why we can’t or shouldn’t shut it down from self appointed experts like you. My buddie blames the “Chinks”. If you think I’m an eco freak then you just got here or have not been paying attention. I’m a retired Boilermaker – I built the Tar Sands plants and refineries and pulp mills and petro chemical plants, etc. I have also worked as a logger and various construction jobs. I have never been to an environmental meeting or march/protest. I don’t do well in groups and I see no reason at this point to fight a hopeless battle. We lost decades ago. Were done. The thing is I don’t filter out physics, chemistry, and biology that tell us we have fucked the very systems that support our biology. Systems that have been extremely stable and reliable for the last 12 thousand years. About as stable as any period. Tell yourself whatever you need to to sooth those anxieties. It will change nothing. Nothing we do now can change the forces we have unleashed. If you want to enjoy what little normal time remains without as much anxiety Herbert then stay away from that prefabricated two team, in group-out group system they have refined to a science and promote ad nauseum – divide and rule.
apneaman on Sun, 3rd May 2015 1:41 pm
Polls show Conservatives in oil-rich Alberta may be set for defeat
http://ca.reuters.com/article/domesticNews/idCAKBN0NM46220150501
Herbert on Sun, 3rd May 2015 1:43 pm
Hey apneaman. Lack of sleep is not a good excuse for lack of logic, rationality and common sense. What in the fuck are you talking about. How are we done. Explain what the big apocalypse is we are facing or are about to face. You are talking in riddles.
Herbert on Sun, 3rd May 2015 1:44 pm
I would vote for ndp over the liberals also.
apneaman on Sun, 3rd May 2015 1:46 pm
Dahr Jamail | Experts Warn of “Cataclysmic” Changes as Planetary Temperatures Rise
http://www.truth-out.org/news/item/30449-experts-warn-of-cataclysmic-changes-as-planetary-temperatures-rise#
Herbert on Sun, 3rd May 2015 1:47 pm
There is no such thing as global warming or climate change induced by man.
apneaman on Sun, 3rd May 2015 1:50 pm
Herbert, you really are a newbie.
////////////////////////////////////
AGW Amplified Drought is Increasing its Destabilization of Countries Around the World
http://collapseofindustrialcivilization.com/2015/05/01/agw-amplified-drought-is-increasing-its-destabilization-of-countries-around-the-world/
apneaman on Sun, 3rd May 2015 1:51 pm
Climate Science Predictions Prove Too Conservative
Checking 20 years worth of projections shows that the Intergovernmental Panel on Climate Change has consistently underestimated the pace and impacts of global warming
http://www.scientificamerican.com/article/climate-science-predictions-prove-too-conservative/
apneaman on Sun, 3rd May 2015 1:52 pm
Scientists horrified by speed of glaciers melting
http://www.scotsman.com/news/environment/scientists-horrified-by-speed-of-glaciers-melting-1-3761168
apneaman on Sun, 3rd May 2015 1:53 pm
Survivable IPCC Projections Are Based On Science Fiction
IPCC ‘Representative Concentration Pathways’ are based on fantasy technology, concealing a very bleak trajectory for humanity.
http://www.envisionation.co.uk/index.php/blogs/nick-breeze-blogs/111-survivable-ipcc-projections-are-based-on-science-fiction
apneaman on Sun, 3rd May 2015 1:55 pm
Everything you need to know about Mass Extinction, Sea Level Rise and Amplification
https://www.youtube.com/watch?v=r4jKo2-dS4M
apneaman on Sun, 3rd May 2015 1:56 pm
So what did-in the dinosaurs? A murder mystery…
Posted on 12 March 2015 by howardlee
Scientists have assembled a slew of new forensic evidence – from high-resolution dates to microscopic fossils – to prosecute the dino-killer. Their indictment has worrying implications for us.
http://www.skepticalscience.com/news.php?n=2892
apneaman on Sun, 3rd May 2015 2:00 pm
The Keeling Curve
https://scripps.ucsd.edu/programs/keelingcurve/
Herbert, I’ll let you digest all that for now. Don’t worry it gets worse the more you know. Would not want you to get overwhelmed 😉
Herbert on Sun, 3rd May 2015 2:37 pm
Losers. The lot of you. Typical fear mongering tactics while the middle class pays for it. The lunatic left.
apneaman on Sun, 3rd May 2015 3:04 pm
Herbert, why not refute the science? Show us the truth. You say your a Canadian, yet you talk left-right just like an American. You must be young and not realize that, that particular language was never spoken in Canada before. It came from think tanks and is now spoken by those who are the most easily propagandized. First started creeping in about a decade ago. Same language simultaneously started appearing in NZ, Australia and Great Britain too. The English speaking sheep have been united.
apneaman on Sun, 3rd May 2015 3:06 pm
Herbert, you should learn how to farm. It might buy you a couple more years of life.
paulo1 on Sun, 3rd May 2015 3:52 pm
Apneaman,
There is available medication that will help you. Yes, I have been there. Yes, I know many who work there. Yes, we live a pretty quiet life and try not to waste resources in our house.
Jimmy, you are rude and sound unlikeable.
Perk Earl, we would love to host a visit for you and your wife. I’ll take you fishing. All BCers are not like that. Just saying….
Mark Ziegler on Sun, 3rd May 2015 4:24 pm
Tailing Pond Breach.
https://www.youtube.com/watch?v=VYYwzAvQIF8
viewcrafters
Davy on Sun, 3rd May 2015 4:37 pm
Ape Man, you talk like an uptight ass wipe when you talk too much. Your left right comment on Americans that talk left right is you talking up down like a numb nut. Mentioning med’s is a good thing maybe you are reading up on them. I appreciate allot of what you say and link but tone your ass wipe anti American potty mouth down.
apneaman on Sun, 3rd May 2015 5:02 pm
Or else what? You gonna put me on the terrorist list? Drone my town? Sanction my country? Freeze my accounts? Label me unexceptional and dispensable? Rendition me away to a torture black site? Call me a freedom hater? Atheist? Communist? Socialist?
Davy on Sun, 3rd May 2015 5:18 pm
I’ll create a voodoo Ape doll and tickle your nostrils so you constantly sneeze. I’ll start there and progress depending on the outcome.
Dredd on Sun, 3rd May 2015 6:06 pm
Any piece that equates oil to security is produced at the keyboard of a lunatic.
Herbert on Sun, 3rd May 2015 6:40 pm
Rest assured boys and girls I am one hundred percent Canadian. Middle Aged. I have roots here that go back very far. Native, Irish and French. Trust me. My views represent how real Canadians think along with the ones who steer the boat. God Bless America.
apneaman on Sun, 3rd May 2015 7:00 pm
Herbert the self appointed spokesperson for 35 million Canadians. Tabernac Herb the boat is sinking and your concerned about deck chairs. You most definitely sound like a typical 21st century Canadian. Bha bha bha……..
PCTECH on Mon, 4th May 2015 11:24 am
This article reads like most, is counting on that every molecule of Tar Sand oil is recoverable. At what price? At what energy input level?