Energy Independence Today/Fossil Fuel Independence Tomorrow

“One of the great ironies of my life is that I have a carbon footprint the size of a small Indian village.”   –Bill McKibben, outspoken environmental activist.

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While everyone was fretting over how to survive a 2.4% reduction to the growth of federal spending from the so-called “sequester” (an apt illustration of the incompetence of our federal government if there ever was one) many of us in the energy business were perusing the US State Department’s dry “Draft Supplementary Environmental Impact Statement” (SEIS) for Transcanada’s proposed Keystone XL pipeline. This project was put forward in 2008 as a 1,600 mile extension of an existing network.  Its purpose would be to tap into oil supply currently being extracted from Alberta’s controversial tar sands and ship it south to the storage facility at Cushing, Oklahoma and again to the Gulf Coast for distribution.  Because it enters the US from a foreign country, in order for the project to proceed, the White House must first approve its construction.  As such the Department of State must deem it in the national interest. The SEIS shows that, like previous cursory DOS reviews that the pipeline should have no significant environmental impact.

The prospect of an Obama White House approving the Keystone XL is drawing heated protests from environmental groups who see its green light as a betrayal by an administration they counted on to be more eco-friendly.  Ostensibly their concerns are the potential hazards of a spill somewhere along the massive trunk line.  But really the issue is about a broader opposition to the tar sands extraction itself and the process’ rather large carbon imprint.

I could understand the protesters’ concerns more if the issue was a proposed strip mining excavation within our borders in say Utah where our own tar sands reside.  They are correct in that the process of extracting heavy crude oil from the sands is messy and inefficient.  For example two tons of sands will yield a barrel of crude and it takes two gallons of water to extract a gallon of oil.  The greenhouse emissions from the entire process from mining to burning the refined fuels in one’s tank is anywhere from 5% to 20% more than traditional drilling methods.

On the flip side Canada’s fields are vast.  EIA estimates reserves at 178 billion barrels but Shell Canada estimates it to be as high as eight times Saudi Arabia’s proven reserves.  Estimates vary but the Keystone XL if built will transport roughly 500,000 bbls/day…which would certainly help us to achieve the vital goal of weaning ourselves off Middle East oil. 

We can and should have a substantive and rational discussion about whether achieving energy independence is worth the risks to the environment.  But, alas, as with many divisive issues that require the coolest heads to have productive, substantive dialogue, the most vocal in this climate change/fossil fuels debate seem to be the proponents of either manic hyperbole on the left or stubborn denial of any human climatic impact at all on the right.

My thoughts are as follows: In the case of the Canadian product, I think the economic and national security benefits of permitting Transcanada to lay their Keystone extension to tap into Canada’s huge oil reservoir outweigh the potential risks of environmental impact.  I certainly believe the protesters of the new pipeline are being ideologically rigid, economically foolish, hypocritical and even disingenuous. They are also taking a stand that is detrimental to national security.

First of all, the tar sands in question do not rest in the USA so even if the pipeline is not approved, the fields will still be mined, oil will still be extracted from the slurry and the end product will still be shipped, either by rail—which carries its own environmental risks—or be pumped in trunk lines across hundreds of miles of North America to the Pacific coast, ultimately to be shipped overseas in dangerous oil tankers destined for more than eager buyers in Asia. To resist the pipeline in the name of eco-friendship is irrational. The Canadians will develop this product and sell it with or without us as trading partners.  So ~500,000 bbl/day of oil will be lost to us from a stable and friendly supplier, right on our peaceful border.

So what‘s going on here?  Is the issue for the environmentalists the inherent dangers in the operation of 1,600 miles of new trunk lines?  There are already over 2.3 million miles of lines in the US network that transport hazardous materials including natural gas and crude oil every minute of every day. Why protest this one?  When placed up against such numbers, their dirty pipeline concerns ring hollow.  Once again, the real answer is that they’re simply opposed to tar sands excavation on principle. It also has to do with what the pipeline symbolizes to them as a whole: to wit, the continuing dependence of our society on filthy fossil fuels.  (That they then hop in gas-powered autos after the rallies are over, drive home and turn on their electricity generated from a coal or natural gas burning power plant, open their humming refrigerator to grab a bite of food shipped in from remote farms by gas-guzzling trucks, brew some tea on a natural gas flame stove, and then sit down to blog on personal computers or laptops made from plastic which is a petroleum by-product seems not to trouble them in the least.)    

Hypocrisy aside, the enviro-activists’ opposition to the Keystone XL is self-defeating and a bit irrational. The oil is already there, it will not go away, and Canada will not let it go to waste, so we best take it before one of our global competitors jumps on the offer. 

I view it this way.  There are times when we have no power in our neighborhood due to  hurricane pop-in visits. Some of us have generators, others don’t.  To not take Canada’s offer is tantamount to someone turning down my offer of an extension chord from my generator to their house because he opposes the carbon imprint of the fossil fuel-powered internal combustion engine that drives my machine.  It matters little to me of course.  I’ll just offer it to the guy in the next house over while the eco-warrior waits for the advent of solar powered generators that may or may not be developed in the next decade or so.  It doesn’t help him now though…nor does it compel me to shut down my generator so the carbon foot print remains. But such is ideological rigidity when it trumps common sense.

The USA currently imports 40% of its oil.  This is actually a remarkable reduction from the 60% level we saw a mere six years ago.  This drop in foreign dependency can be directly attributed to the revolution in hydraulic fracturing—the technique of blasting water into shale to extract our vast reserves of oil and natural gas.  (This ramp up of production has occurred on private lands by the way; if these were government lands we’d still be awaiting permits, but I digress.) 

Fortunately much of the oil we do still import comes from our neighbors Canada and Mexico—roughly 3mm and 1mm barrels per day respectively.  But nearly 20% of the rest comes from Persian Gulf nations like Saudi Arabia, Kuwait and Iraq.  Another 10% of our imported oil comes from the inherently unstable Venezuela whose strongman just died this week.  All in, OPEC members supply ~4mm bbl/day, roughly 20%, of our daily oil consumption.  If many of these OPEC nations from whom we import are not openly hostile, they are either unstable or certainly no friends of ours like Canada.  

The casus belli of many of our 20th century wars could be distilled down to a quest for natural resources, especially oil…Africa and Russia had it, Hitler needed it—El Alamein and Stalingrad were the results.  Indochina had it, Japan needed it—hence their savage rampage in December 1941.  Our own presence in the Persian Gulf over a half century later because of such a dependency on foreign oil should serve as a source for concern.  That both Nazi Germany and Imperial Japan were eventually brought to their knees as much by the cutting off of their raw materials—energy especially—as by combat in the field tells us that the extent to which a nation cedes control of its own energy infrastructure to a foreign source is directly correlated to its vulnerability.  Therefore, the more energy we provide domestically, the more secure we will be.  And the less need for costly and endless Middle East wars that do nothing but make us the world bogeyman while draining our coffers of treasure and filling our coffins with young soldiers who deserve better leadership than this.

Today where the USA is concerned, the unstable Middle East has much of the oil we need.  Hence our endless adventures in the region.   The upside of a peace dividend windfall from no longer maintaining a military presence in a thankless and hopelessly primitive area of the world we no longer need defend and secure is self-evident.  Such a windfall could even be steered towards green technology R&D if we so choose it. Ironically I’ll wager that same self-righteous crew out on the streets protesting domestic energy initiatives will also be the first to scream “No Blood For Oil!” when we’re compelled to enter into yet another Persian Gulf  conflict to protect our energy lifeline.  You cannot have it both ways…not today at least.

There are two congruent paths that our national energy policy should follow.  Short term: take advantage of the abundant resources on this continent in the form of sands, shale, coal, natural gas and biomass to wean us at least off those 4mm/bbl every day we import from OPEC.  That the United States with its vast energy reserves should ever need to import a tablespoon of oil from scheming emirates or tin-horn dictatorships who in turn take those same petrodollars and fund the very terror cells killing our young men and women overseas while consistently undermining our national interests is a scandal…one that supersedes minimal environmental concerns that even the Obama administration has shown to be of little concern.

Long term: We must create a healthy economic environment in the private sector free of draconian regulations thereby lowering barriers to investment and laying the proper foundations of profit incentives to be had in green technology.  The U.S. government can do its part by getting out of the green venture capital business—one in which it seems to be rather bad at—and allow us once and for all put a stake in the heart of foreign imports from hostile powers while empowering the private sector to be the arbiter of the best technologies for clean energy going forward.  If we cave to environmentalist objections rooted in emotion and ideology rather than data, China has already expressed that they will gladly take the 500k barrels off of Transcanada’s hands. 

Final thought: China burns a lot of oil for today’s economy.  But they are also the global leader in developing solar and wind power for the future hydrocarbon-free world we all want.  Why is it that we cannot do both as well?

That’s just my opinion…I could be wrong.