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Article Excerpt
After more than a century of temptation, setbacks, anticipation, and challenge, one of the world's great storehouses of energy finally appears ready to give up its treasure. Thousands of workers and their families, plus billions in capital investment from the United States and many other countries, have poured into northeastern Alberta Province, especially in the past several years, in the hope that the oil-rich sands there will turn an often-slighted "back of beyond" into a modern bonanza (Figure 1). Governments and corporations around the world, but especially in the United States and Canada, recognize the advantages of developing such huge reserves. The Alberta oil sands, for so long little more than an enticing possibility, today are being prepared for continued large-scale expansion, even as oil prices fluctuate.
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Many circumstances, including the demand for oil on the world stage, are inciting this change from promise to reality, but the most important factor is georgraphical: The giant Alberta reserves are next door to the world's most voracious oil consumer. At the same time, their location creates several drawbacks. I first examine the conditions that make the Alberta oil sands particularly attractive to the United States, then assess the environmental costs to Canada of increasing production, given the location of the oil sands. In other words, I consider resource development not just from the customary perspective of user or supplier but from both. In the current case, this means from both sides of a common border.
THE VIEW FROM SOUTH OF THE BORDER
To view the Alberta oil sands from south of the U.S.-Canada border one must start by examining the American demand for oil in the context of conventional crude-oil supplies, both present and future. The daily world demand for crude oil is expected to reach close to 96 million barrels by 2015 and 113 million barrels by 2030 (EIA 2008b). With 21 percent of that thirst coming from the United States, additional supplies seem critical for the continued national and political stature to a country able to produce only about 40 percent of its own needs. The prospect for lowering this dependence is slim. For example, Prudhoe Bay, once able to push more than 2 million barrels southward every day, now sends less than half that amount. Production has also faded dramatically in Texas, Oklahoma, California, and most other places under U.S. authority, despite a record number of drilled wells. Even in the prolific Gulf of Mexico, production declined from about 1.6 million barrels per day off Louisiana and Texas in 2003 to about 1.27 million barrels per day in 2007 (EIA 2008a).
Making conditions worse, production of some of the most traditional foreign suppliers is also down sharply. For example, Mexico's great Cantarell oil field, originally 15-20 billion barrels in reserves, is in quick decline, having dropped in total production from more than 2 million barrels per day in 2004 to an average of 1.46 million per day through the first ten months of 2007 (Harrup 2006; Bermer 2007; Morton 2007). Oil-rich Venezuela, with reserves that exceed 30 billion barrels, is becoming unstable as a supplier and is having to adjust to its own production problems. Farther away, production in the North Sea fields that have been supplying oil to the United States for more than thirty years are also in virtual free fall. Indonesia, long a supplier of low-sulfur crude to the western United States, is suffering from such large production shortfalls that it is contemplating withdrawing from the Organization of Petroleum Exporting Countries. Adding to the worries of falling supply, demand for oil is rising elsewhere, particularly in China and India. All of these events are reflected in global oil statistics: In 2006 surplus production capacity was approximately 1.3 million barrels per day, down from 1.6 million barrels per day in 2005 and 3.0 million barrels per day in 2003 (EIA 2007a). By 2008 that surplus had largely disappeared.
Four responses to oil shortfalls come to mind: to increase domestic production, to develop alternative energy resources, to decrease demand, or to increase imports. The first option is the most difficult, especially when it comes to conventional oil, because U.S. proven reserves total only about 20 billion barrels and new discoveres are increasingly rare. Some attempt has been made at the second option-for example, increasing the production of ethanol--but the social costs may be too high (Edwards 2007).
The third option--lowering demand--might succeed in the shortest amount of time because both the United States and Canada are inefficient consumers. Already, the efficiency strategy has produced substantial progress, especially in California, in use electricity and natural gas (Rosenfeld 2003; WRI 2007). Even applying all practicable saving strategies as quickly and successfully as possible, the absolute U.S. demand continues to climb as domestic production continues to drop. This means that oil shortages will increase and that prices will rise. This leads us to consider the fourth option.
Option four--increasing imports--seems inevitable, at least over the next fifteen to twenty years. Recognizing this, the U.S. Department of Energy forecasts that U.S. imports will increase by 30 percent between 2006 and 2030 (Foreso 2007). Such an increase will affect the entire economy, because energy presently amounts to almost 18 percent of the value of everything the U.S. imports (PPI 2008).
In response to the anticipated oil-supply deficit and the need for increased imports, those people tasked with finding future supplies for the United States face three interrelated geographical questions: Where are additional reserves available? Which routes between the areas of supply and the United States are most secure and reliable? And which reserves would produce the lowest environmental and social costs of production, transportation, and delivery?
One of the most noteworthy realities of the countries that currently provide oil to the United States is reliability. Identifying countries with large oil reserves is no longer sufficient; now their ability and willingness to provide their oil to U.S. markets must also be considered. The Persian Gulf attracts the majority of concern because most of the world's reserves are there--on the order of 725 billion barrels, if internal national reports are to be believed. Several factors, however, including political stability, supplier policies, and the cost in U.S. lives and money, cast doubt on how much of these reserves will actually be available to the United States. For example, apart from the direct energy needs to pursue the war in Iraq, the cost for military protection of Persian Gulf oil destined for the United States was $50 billion in 2003, about $139 billion by 2006, and even more in 2008. If these costs were included, it would raise the price of gasoline at least 73 percent (NDCF 2007). Moreover, with the oil infrastructure concentrated in relatively few pockets around the Persian Gulf, the majority of world's oil-supply apparatus is vulnerable to damage, sabotage, change in economic condition, and shift in government outlook.
Even where oil is available, supply routes are a concern. Transportation out of the Persian Gulf must negotiate the most critical choke point in the world, the Strait of Hormuz,...
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