Alberta tar sands oil — diversifying its outlets and profits

By Drs. Robert & Sonia Vogl
President and Vice President, Illinois Renewable Energy Association

The Canadian energy situation is complex. Canada produces about 3 million barrels of oil per day, consumes about 2 million and ships 2 million to the United States. They import 1 million barrels per day to meet their demand, since they found it cheaper to import foreign oil to the East Coast than to extend a pipeline from Alberta to ship higher-priced Canadian oil.

Canada claims to have 180 billion barrels of oil reserves, 95 percent of which is locked up in the tar sands of Alberta. Most of the bitumen oil is shipped to the United States south of Lake Superior, processed into gasoline, and sold at relatively low prices in the Midwest.

Increasing oil exports are expected to increase Midwest oil prices by 30 cents per gallon. The exported oil is not taxed, and the increased profits pass directly to the investors in the project.

Some of the Alberta oil reaches Sarnia, Ontario, through two pipelines. One runs through northern Michigan to Sarnia. The second runs south of Chicago to Patoka, Ill. From there, some is sent on to Sarnia for processing, and some is shipped south to Cushing, Okla., for processing.

The pipeline from Patoka, Ill., to Sarnia leaked tar sands oil into the Kalamazoo River in 2010, causing more than $700 million in damages. The spill from a relatively new pipeline serves as an example of the risk of shipping tar sands oil to the Gulf Coast for processing via the proposed Keystone XL pipeline.

The question has been raised as to why Alberta does not refine the oil in their province rather than shipping it away. Refineries, costly to build and dirty to operate, exist elsewhere and have established outlets for the oil. Some will be processed in Washington and California to utilize spare capacity since supplies from Alaska are dwindling.

The proposed Keystone XL pipeline would carry Alberta bitumen oil to the Gulf Coast for refining. It has been suggested that depleting Gulf oil supplies leaves refineries there with excess capacity.

The oil industry is a global operation, driven by economic and political considerations. Oil is sold to whatever markets bring the highest profits. The industry’s loyalty is to profits, not to the countries from which they collect the oil or to which they sell it. Their public relations campaigns speak in terms of national benefits to allow them to secure the oil, but their profit motives dictate where the oil is processed and sold.

Our consumer, community and national interests are best served by cutting oil and overall energy consumption.

At a hearing regarding shipping Alberta oil through British Columbia to China, the son of a Canadian international oil developer presented an interesting perspective on what continued dependence on oil means to our future.

In the summer of 2009, Lee Brain’s father arranged for him to spend one month on an oil refinery processing 800,000 barrels of oil per day on the Arabian sea.

One day, several managers decided to take him to see how the super tankers were unloaded at sea and the oil pumped to shore. One of them pointed to the ship and informed him: “We are destroying future generations for now, and forever.” The others all nodded in agreement.

Drs. Robert and Sonia Vogl are founders and officers of the Illinois Renewable Energy Association (IREA) and coordinate the annual Renewable Energy and Sustainable Lifestyle Fair. E-mail

From the March 21-27, 2012, issue

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