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Bitumen's Extraordinary and Popular Delusions

"At length corruption, like a general flood,
Did deluge all, and avarice creeping on,
Spread, like a low-born mist, and hid the sun. 
Statesmen and patriots plied alike the stocks, 
Peeress and butler shared alike the box;
And judges jobbed, and bishops bit the town, 
And mighty dukes packed cards for half-a-crown:"

-- Alexander Pope

 
It has been an extraordinary couple of weeks for bitumen mania and related delusions as Canadian politicians and oil executives rally around the Keystone XL pipeline the way drunken bankers once talked up the ill-fated South Sea Company in the 18th century.
 
Canada's Natural Resource Minister Joe Oliver who hawks bitumen better than a seasoned tulip speculator, even dubbed the tarry junk crude a "greener alternative" in a Chicago speech.
 
The very next day Oliver told a Houston crowd they had but one choice: Americans could buy "low-cost oil from a friend and ally with a robust environmental protection regime" or purchase expensive oil from unsavoury people elsewhere.
 
Other bitumen champions hailed bitumen mines as a steaming example of "responsible resource development." Why the resource will even improve the energy security of North America!
 
In particular Saskatchewan Premier Brad Wall gushed liked a ruptured Enbridge pipeline in Washington, D.C., about bitumen's sordid charms which, of course, include more dollars and jobs for Americans than Canadians.
 
Al Monaco, CEO of Enbridge, the very firm that produced the continent's most expensive oil spill with diluted bitumen and then responded like the Keystone Cops, cheered on the mania with a call for a "balanced national discussion" on the immediate construction of more pipelines.
 
Alberta Premier Alison Redford crossed the border too and promoted Keystone XL as a glorious petroleum windfall for all. Oddly her rapturous presentations did not explain why the bitumen republic of Alberta has recorded five sorry deficits in a row and saved nothing for the future.
 
Given the hubris of bitumen's cheerful advocates, naive Americans might well conclude that a scandal-free Pope will also emerge from the end of the Keystone pipeline only to plop contentedly into the lap of a Valero refinery on the Gulf Coast. Bitumen, it seems, can deliver miracles.
 
Heresies
But Canada's slavish promoters omitted the troubling facts as hawkers do. They said nothing, for example, about bitumen's poor quality, unending carbon liabilities, soaring costs and appalling energy returns. They also lied about Canada's pathetic environmental record.
 
The first big omission, of course, concerns bitumen's role in climate change. The Canadians, for example, did not mention how the great ice fields covering the Canadian Arctic Archipelago, the largest collection of ice outside of Greenland and Antarctica, will soon lose a fifth of their volume due to the burning of fossil fuels.
 
In fact, the deeper that industry digs into the tar sands and the more shale gas the industry burns to upgrade the stuff (one-fifth of Canada's annual gas consumption), the smaller the continent's glaciers will become.
 
Bitumen, which now accounts for 10 per cent of Canada's warming emissions and explains the government's determined muzzling of climate scientists, can only contribute to climate instability and uncertainty. It is a dead end and part of the larger global assault on Creation.
 
Moreover Canada's environmental record reads like a con game with failing marks on energy intensity, smog and waste generation. Even the Conference Board of Canada recently gave the nation a mark of "D" on climate change.
 
Thanks to rapid tar sands production, Canada "remains one of the world's largest per capita GHG (greenhouse gas) emitters and ranks 15th out of 17 OECD countries on GHG emissions per capita." And contrary to Oliver's bitumen appeals, this dismal record is not improving.
 
Natural Resource Minister Oliver also fudged the facts on Canada's environmental regime. It is Third World. The right-wing petro state of Stephen Harper, acting on instructions fromaggressive pipeline lobbyists, has now dismantled three of the nation's most important environmental laws to ease the construction of bitumen pipelines.
 
Damn those fish
The Navigable Waters Protection Act has become the Navigation Protection Act. The Orwellian transformation effectively removed 2.5 million lakes and waterways from environmental protection. The government also gutted the Fisheries Act and Canada's Environmental Assessment Act. As a consequence, Chinese funded pipelines don't have to worry about destroying fish habitats or doing annoying impact studies.
 
And for good measure and to show the government's disdain for environmental science, Harper's team disbanded the Experimental Lakes Area, a federal research group that once made Canada a champion of freshwater protection.
 
Canadian pipeline executives also failed to declare their conflict of interest with bitumen mining. They love the ultra-heavy hydrocarbon because the difficult hydrocarbon requires twice as much pipeline infrastructure as light oil. That's right: bitumen is to pipeline companies what gamblers are to casinos: a way to get richer.
 
The junk crude is so thick and heavy that transporting the stuff takes 30 to 50 per cent more pipe in the ground. Industry not only needs one line to export diluted bitumen but another to import the higher-value light hydrocarbons needed to liquefy the tar for export.
 
Sensible public policy that demanded bitumen be upgraded and refined into synthetic fuel, gasoline or diesel within Canadian borders would, of course, end Canada's great pipeline mania. But TransCanada and Enbridge now hold Ottawa captive and have rewritten the nation's laws.
 
Then there is the issue of cost. The crowd in Houston probably snickered at Oliver's preposterous comments about bitumen being "low-cost." Wayne Kelley, a straight shooter at RSK Limited, recently noted an investment of $8 billion in the Middle East yields one million barrels of oil a day. That's low-cost oil.
 
In contrast, it takes $45 billion to mine one million barrels of bitumen and then tens of billions more to upgrade and refine it. That's the world's most expensive oil.
 
Energy returns and the return of reason
The real problem with high-cost bitumen, notes Tullett Prebon (one of Britain's largest financial players), are its lousy energy returns. Good light oil takes one barrel of energy to put another 20 on the market. That's a healthy energy return on energy invested (EROEI) and a good surplus.
 
Not so with bitumen. One barrel only yields five more in Alberta's open pit mines, while the awful steam plants offer returns as civilization-killing as corn ethanol: 1:1.
 
Energy returns of five-to-one would not only cripple the economy but also allow a huge wealth transfer to bitumen miners says Tullett Prebon. If the world ran on fuel made from dirty oil, the energy sector would absorb one-sixth of global GDP -- double what it now does. It would be like running the global economy on the equivalent of $280 a barrel for oil.
 
Devoting more capital to bitumen sprawl, of course, means squeezing and cannibalizing the rest of economy as well as shrinking food and water supplies, warns the terrifying 2012 Tullett Prebon report. "A declining EROEI could bomb societies back into the pre-industrial age."
 
Last comes the intoxicating B.S. on energy security. Since 2008 United States expenditures on gasoline have fallen like a stone while domestic production from the Bakken has soared. So moving bitumen to the Gulf Coast is really about finding foreign markets for a junk crude that foreign oil companies have overproduced due to Canada's "give it away" low royalties and taxes.
 
Charles Mackay, a sensible Scot, nailed it just right though three centuries ago: "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
 
Given the number of bitumen maniacs on the prowl, Canada's politicians show no evidence of recovery.

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