The United States imports almost half of its oil (49%), and about 25% of our imports come from one country — our friendly neighbor to the North, Canada. Today, Canada supplies more oil to the USA than all Persian Gulf countries combined.

With an estimated 175 billion barrels of technically recoverable oil, Canada has the world’s third largest oil reserves. About 170 billion of those barrels, or 97%, are located in geologic formations called oil sands — a mixture sand, water, clay, and bitumen, a sticky tar-like form of petroleum.

Unlike “conventional” oil, bitumen is too viscous to be pumped without being heated or diluted.

Last Wednesday and Thursday, courtesy of the good folks at American Petroleum Institute (API), I and other bloggers toured two large Canadian oil sands projects near Fort McMurray, Alberta.

The Surmont Project, operated by ConocoPhillips, uses a technology called steam assisted gravity drainage (SAGD) to melt the bitumen so that it can be pumped back to the surface. At each well site, two parallel pipes descend to about 1,000 feet below the surface and then extend horizontally for several thousand feet. Heated steam in the upper pipe melts the bitumen, which then flows back up to the surface through the lower pipe. Natural gas may also be injected in the upper pipe to further reduce the viscosity of the bitumen. Along with the melted bitumen, the lower pipe brings hot water and natural gas back up to the surface for capture and reuse in a closed cycle.

This process is relatively new but within a few years it is expected to dominate Canadian oil production, because about 80% of Canada’s oil sands are too deep to be mined. The Surmont Project, which started production in 2007, currently produces about 23,000 barrels per day (bpd). It is expected to be producing 136,000 bpd by 2015.

The Millennium site, operated by Suncor Energy, relies mainly on mining to access the bitumen. The oil sands here are at a relatively shallow layer — about 350 feet below the surface. Millennium started production in 1967, making it the world’s first commercially-successful oil sands venture and the longest-running oil sands project in Canada.

Millennium’s scale is truly breathtaking. Suncor’s leases (which also include SAGD drilling sites) cover more than 1,800 square kilometers. A fleet of giant trucks with shovels that remove 100 tons of earth at a bite operate day and night. Some trucks remove the “overburden” — a surface layer composed of muskeg (a peat-like substance), clay, and rock, while others dig up the oil sands beneath. The largest of these trucks, which are built by Caterpillar, haul loads up to 400 tons. Each day, the trucks haul about 2,000 loads of overburden and 1,600 loads of oil sands.

The next photo is me pretending to be the master of all I survey. The distant object to the left of my outstretched hand is a monster truck.

After being mined, the oil sands are sent to massive facilities that use water and steam to extract the bitumen from sand and other minerals, separate the bitumen from water, and chemically treat the bitumen until it has the consistency required for transport as crude oil through pipelines.

My reaction to the Millennium project was one of awe. I could not but marvel at the immense scale of market-driven coordination that has turned an otherwise worthless material – sticky, smelly, black sand – into a valuable resource empowering literally millions of ordinary people to enjoy a degree of mobility unknown to the kings and potentates of old.

Some of course may only see — and decry — the industrial footprint, the “scars upon the land,” as the John Denver song put it. What they may not know is that Suncor also engages in land reclamation on a gigantic scale.

The overburden is not only removed, it is also saved, so that it can used to restore landscapes and create habitat after mining operations are completed. In addition, Suncor has developed a process (Tailings Reduction Operation, or TRO) for accelerating the extraction of suspended particles called “mature fine tailings” (MFT) from its tailing ponds (small lakes where water, sand, and clay are sent after separation from the bitumen). After drying, the MFT hardens and is used as landscaping material.

Suncor’s first tailings pond operated for 40 years from 1967 through December 2006. This 220-hectare area today is a contoured medowland with more than 600,000 planted trees and shrubs. Called the Wapisiw Lookout Reclamation, the area’s rock piles provide habitat for small animals, its tree poles provide habitat for raptors, and its wetland provides habitat for aquatic waterfowl. The picture below shows three raptor poles. While our tour group was there, we spotted a black bear cub moving among the hillocks a few hundred yards away.

Canada already ships almost 2 million barrels of oil a day to the USA, but the existing pipeline infrastructure must be expanded not only to handle the larger volumes that Canada will produce in the future but also to transport Canadian oil to U.S. Midwest and Gulf Coast refineries, where it can be turned into gasoline, jet fuel, and other finished petroleum products.

In March 2008, the U.S. State Department granted TransCanada Keystone Pipeline a permit authorizing the company to construct pipeline facilities from Alberta to refineries in Illinois and Oklahoma.

Then in June 2008, Keystone proposed to build an extension, called the Keystone XL Pipeline, to move Canadian oil to refineries in Port Arthur and Houston, Texas. Initially, Keystone XL would be able to deliver 700,000 bpd of heavy crude to U.S. refineries.

From 2010 to 2035, this “shovel ready” project could create 85,000 U.S. jobs, provide $71 billion in U.S. employee compensation, and boost cumulative U.S. GDP by $149 billion, according to the Canadian Energy Research Institute.

Predictably, green pressure groups and their allies on Capitol Hill have mounted a campaign to block the Keystone project, alleging that the pipeline will expose neighboring communities, aquifers, and wetlands to oil spill risk and increase America’s “dependence” on “dirty” energy. Let’s briefly consider these accusations.

The State Department’s massive April 2010 Environmental Impact Statement (EIS) notes that the pipeline “would be designed, constructed, and maintained in a manner that meets or exceeds industry standards and regulatory requirements” (ES 6.13.3). Although some leaks and small spills are bound to occur, “There would be a very limited potential for an operational pipeline spill of sufficient magnitude to significantly affect natural resources and human uses of the environment” (ES 6.13.2). If zero risk of even minor spills is the only acceptable standard, then no petroleum should ever be shipped anywhere. That may be what green groups ultimately have in mind. Such a standard, however, would condemn mankind to Medieval squalor, not enhance public health and welfare.

By “dirty,” Keystone XL opponents refer to the fact that the process of transforming oil sands into petroleum emits more carbon dioxide (CO2) than conventional petroleum extraction. However, whatever Canadian oil does not get shipped to the United States will eventually go elsewhere — mainly to China and other Asian countries, which are investing billions of dollars in Canadian oil sands projects. Just last month, for example, the Chinese company CNOOC agreed to buy Canadian oil sands producer OPTI for $2.1 billion. On a life-cycle basis, shipping oil to China is more carbon-intensive than shipping oil to the USA, because it must be transported on mammoth CO2-emitting tankers.

As for the Keystone XL Pipeline itself, yes it will deliver more Canadian oil to U.S. refineries, but this will mostly offset declining oil shipments from Mexico and Venezuela. Thus, “the incremental impact of the Project on GHG [greenhouse gas] emissions would be minor,” concludes State’s EIS (ES 6.14.2). Again, if no incremental CO2 emissions is the only acceptable standard, then we should welcome high unemployment rates, because there’s nothing quite like a deep recession for cutting CO2 emissions.

The long and the short of it is that building the infrastructure to deliver oil from friendly, democratic, politically-stable, environmentally-fastidious Canada is in the U.S. national interest, as the State Department concluded in March 2008. The review process has dragged on, with State in March 2011 issuing a Supplemental EIS that affirms the findings of the earlier document. In May, the House Energy and Commerce Committee held a hearing on legislation to expedite a presidential decision on Keystone XL, and in July the House passed H.R. 1938, the North American-Made Energy Security Act, by 279-147. The bill would require the President to issue a final order granting or denying a permit to construct Keystone XL by no later than November 1, 2011.

Global demand for oil is growing and America will continue to import oil over the next 25 years even if biofuels and electric vehicles achieve unexpected breakthroughs. As Mark Milke of the Fraser Institute explains in a new report, what this means is that blocking Keystone XL and restricting U.S. access to Canadian oil would not move the world closer to some imaginary environmental utopia. The effect, rather, would be to increase U.S. imports from unsavory regimes where corruption is the norm, environmental safeguards are weak, autocrats brutally suppress dissent, and women are denied economic opportunity and equal protection of the laws.

Alas, I suspect this is actually one of the main reasons green groups oppose Keystone XL. They would like us to believe (a) that oil is a rapidly dwindling resource from which we will soon have to decouple our economy anyway, and (b) that using oil = sending $$ to OPEC. The vast potential of Canada’s oil sands and Canada’s emergence as the leading source of U.S. petroleum imports fractures both pillars of their gloomy, scaremongering narrative.

I’ve long suspected that Rep. Henry Waxman (D-Beverly Hills) keeps Brawny paper towels in his kitchen cabinet. Brawny paper towels are the best—they’re the quickest, thickest picker-uppers—and Rep. Waxman lives in one of the richest Congressional districts, so it makes sense that he uses them, right? I think it does. Rep. Waxman’s logical affinity for Brawny paper towels is troubling, because they are manufactured by Georgia Pacific, which is owned by….KOCH INDUSTRIES!!! Possibly, every time Rep. Waxman wipes spilled caviar off his marble countertops, he’s funding the insidious KOCHTOPUS!!! I doubt his far-left base would appreciate this apparent financial link to a company reviled by liberals for supporting conservative causes. Why, it’s as if Rep. Waxman is contributing to the Tea Party!

I know what you are thinking: These are baseless and ridiculous claims. Indeed. Yet they are no more baseless and ridiculous than the stunt Rep. Waxman pulled yesterday at a House Energy and Commerce Committee hearing on the Keystone XL Pipeline. I explained in detail the politics of the pipeline in a previous post. Suffice it to say, it would double U.S. imports of Canadian tar sands oil, and it is staunchly opposed by environmentalist special interests. The focus of yesterday’s hearing was a Republican bill that would speed up the pipeline approval process, but Rep. Waxman wanted to take the panel in a different direction. Namely, he wanted to fabricate an association between the Keystone Pipeline and the left’s favorite piñata, Koch Industries, a.k.a, the Kochtopus.

According to a write up in today’s ClimateWire (subscription required),

At yesterday’s hearing, Waxman continued to press for investigation of the Keystone-Koch connection. He said his staff had contacted Koch representatives to learn more about its investments in the oil sands, but that they had not been willing to answer basic questions alongside other oil companies such as ConocoPhillips Co. and Royal Dutch Shell PLC. “The representatives would not discuss whether Koch would export oil from Canada through the new pipeline, whether Koch holds tar sands leases, or whether Koch has plans to produce oil from tar sands,” he said.

While I disagree with everything he does, I nonetheless esteem Rep. Waxman as a master tactician. More than once, I’ve wished that the other party had someone as cunning as the Congressman from Beverly Hills. However, in this instance, he sounded foolish. Koch Industries has denied any link to the pipeline, but even if they stood to gain, what does that have to do with expanding and diversifying our energy supply? If the Keystone XL Pipeline is good for America, and it is, then why does it matter if the Koch’s profit?

In any case, Rep. Waxman didn’t have the goods. He wanted to tar the pipeline with an association to the Kochtopus, but he didn’t have any evidence, and he threw it out there, anyway. In fact, it’s as silly and unfounded an association as the Rep. Waxman/Koch connection I describe in the opening paragraph of this post.

Fortunately, Rep. Waxman’s tom-foolery didn’t go without rebuke. Energy and Power Subcommittee Chair Rep. Ed Whitfield (R-KY) said he could care less about George Soros’s (the right’s version of the Kochtopus) documented investment in Suncor, a company that is actively involved in Canadian tar sands oil production.

The stunning victory by Stephen Harper’s Conservatives in Canada’s election means the death of cap-and-trade or a carbon tax in Canada.  The Conservative Party’s platform firmly opposed both cap-and-trade and carbon taxes. The Liberal Party, which was annihilated in the election, equally strongly supported imposing a cap-and-trade scheme to reduce greenhouse gas emissions.

Conservatives won  a clear majority of 167 seats in the 308-member federal Parliament.  They had formed a minority government since 2007.  For the first time in Canadian history, the Liberal Party dropped to third place with 34 seats.  The hard left New Democratic Party (NDP) wiped out the Bloc Quebecois in Quebec and will become the official opposition with 102 seats.  The NDP and the Bloc Quebecois also support cap-and-trade.  The Green Party won its first seat in Parliament.

This is another clear sign that public support for cap-and-trade and other energy-rationing policies is waning.  Cap-and-trade has been dead in the United States since the Waxman-Markey bill narrowly passed the House of Representatives on June 26, 2009.  And in Australia, the Labour Party government is in deep trouble as a result of proposing a carbon tax.  The global warming fad appears to be fading fast.