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Tuesday, January 10, 2012

Time to rethink Alberta’s oil sands strategy?


Suncor Energy upgrader and tailings ponds. Fort McMurray, AB. | Photo by Edward Burtynsky

The minister of Natural Resources, Joe Oliver, is being flogged by the CBC’s Evan Soloman for saying, “there are environmental and other radical groups that would seek to block this opportunity to diversify our trade.” Apparently, Soloman has seized onto the word “radical” as being some sort of epithet that disparages all environmental groups.

From where I sit, many environmentalists do seem radical in their belief that we in the West can remake our economies to replace the use of fossil fuels, and to do so virtually overnight and without beggaring ourselves into the bargain. And on that basis, I see MP Elizabeth May, for example, as holding radical beliefs. (By the way, The Iceman blog is hosting a survey on this very question here.)

It seems to me, Soloman all too frequently, and I believe purposely, misinterprets or takes out of context remarks made by conservatives. Other than the radical elements in environmental groups themselves, does anyone truly believe Joe Oliver meant all environmental groups are radicals? I doubt it. But Soloman seemed to build most of his show around that premise.

The discussion on Power & Politics, though, did start me thinking about the struggle we seem to be having as we try to expand markets for bitumen from Alberta’s oil sands. And I began to wonder whether—in our apparent haste to diversify our markets by shipping bitumen overseas or down the coast to California in super tankers—have we fully explored the option of refining Saskatchewan and Alberta’s bitumen in Canada, thereby developing a whole raft of secondary industries around by-products such as gasoline, heating oil and plastics (polypropylene).

Have we fully explored the option of turning our prairie provinces into an industrial heartland that would market petrochemical-based products that are well along the value added chain, thereby retaining more of the spin-off in jobs and investment right here in Canada?

There is nothing really new about this idea. The concept has been debated for years. (Over a year ago I read about a very promising campaign, “Refine It Where We Mine It.”) I wonder, though, why Alberta-Saskatchewan is not a greater rival to Texas as a North American giant in petroleum products manufacturing. We have the raw materials and there are U.S. and other world markets for the products. So why ship bitumen at all? Wouldn’t refined products be more practical to ship by rail to either coast for shipment to Europe and Asia? Right of ways already exist.

Imagine what adding an additional 25 to 40 per cent of GDP—by adding value to our existing resources—would do for the wellbeing of our country.

Except image, Copyright © 2012 Russell G. Campbell. All Rights Reserved.

13 comments — This is a moderated blog and comments will appear when approved. Please don’t resubmit if your comment doesn’t appear immediately, and please do not post material that is obscene, harassing, defamatory, or otherwise objectionable.

  1. Russ -- I wondered the same thing and then read that it takes a decade to build a refinery and that the same environmental groups would do their best to halt that too. We just have to someone move forward. I read today, for example, that there is already a pipeline to the B.C. coast (I think it is near Burnaby) which is tankered to the coast for shipping. So, I wonder, why are we not hearing more about an already existing pipeline from Alberta?

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  2. Getting someone to invest $100 billion or more to refine the bitumen here would be difficult but probably possible. However, refining past the point of a light crude has other difficulties. Gasoline, Naptha, Jet Fuel, Diesel, are all a lot more volatile than bitumen or crude and transporting them would require more sophisticated infrastructure. You would need to keep them separate while transporting, another expensive (if not impossible) hurdle to get over. These are just a few of the arguments against refining here. However, partial refining may make sense.

    Wayne

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  3. Keep ALL Government OUT!!!

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  4. Sir,
    The voulmes are too large at 3,000,000 bopd. Refined products shipped by rail would soon bring the trains to a dead halt due to the at capacity now problem. The oil refineries in Texas are geared up to refine heavier crude.

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  5. The whole environmental movement has long been hijacked by the radical Left, like just about every other group that started with a good cause. One way to determine if the group is radical is whether or not it is possible to have a reasonable debate on the issue with such group, and I have yet to find any so called environmentalists able and willing to do so. As for the CBC, well it is the CBC with its radical leftist agenda, so anything the Conservative government does or says will be attacked. Hopefully the CBC's days at our expense are numbered.

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  6. I posted too quickly. I also would prefer to see a refinery built in Western Canada instead of shipping the raw product abroad, but it does not seem that any of the players are interested due to cost. It is hard to believe that it would not pay for itself over the long term, but I am no expert in this area.

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  7. Short answer is we don't have the capital to invest in the start up costs and if you think the environmentalists are upset now just wait until you try to build a refinery somewhere.

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  8. I've often wondered why there hasn't been more effort (and capital investment) devoted to domestic refining the petroleum resources of the "tar sands".

    It seems like such a waste to be exporting slightly "upgraded" bitumen sludge all over the place when we could add value to it right here in Canada. Why aren't the foreign oil companies that own extraction rights to most of these natural resources investing in a massive industrial complex in northern Alberta to refine our fabulous, ethically-pure, environmentally friendly bitumen into an amazing range of life-enhancing petrochemical products?

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  9. Russ, even assuming that a refinery could be built in Alberta or Sask.(do you think that the greenies would let that happen any more easily than a pipeline) how do you suppose that the refined products would get to market without a pipeline, which puts us back to square one?

    Russ, who is going to work in the refineries? Here in Alberta high-paying skilled jobs a going unfilled because there aren't enough people who want to work or are ca[able of getting off of their asses on a regular basis.

    Refine it where we mine it is a nice slogan thought up by someone that would never have to put up the money to get the refinery built or dirty their hands working there.

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  10. I guess the fact that the oil sands were created by mother nature and the oil companies are just cleaning up the mess does not get mentioned anywhere.Just pictures of the mess get spread around the world,but not a mention of the clean up.Something like the baby seal hunt,but nothing about the damage the seals do to the fish population.Do you not think it is time for someone with brains to start advertising the oil sands is a clean up of a mother nature mistake.

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  11. Good article on why oil refineries are a bad idea in Canada
    http://www.investmentu.com/2009/July/oil-refinery-downturn.html
    fh

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  12. Anon 12:58 PM,

    I don't think this article takes into account the situation here in Canada--it's all from a US perspective. I still hold the view: refine it where you mine it.

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