Canadian Tar Sands Companies: Why the US Favours Them (Video)

This year, oil production in Western Canada is predicted to reach record highs of 4.45 million barrels per day (bpd). This marks a significant increase from the 3.9 million bpd production level in 2020.

Companies using fossil fuels in the United States welcome any expansion of the Canadian tar sands. This is because the vast majority of their crude is exported across the Canada-US border.¹ 

What are the Canadian tar sands?

The Canadian tar sands, better known as oil sands, are a significant fossil fuel deposit. They are a mixture of sand, water, clay and bitumen (a viscous type of oil).²

Tar sands get their name from this thick and sticky bitumen. It is heavy and difficult to extract compared to conventional crude.³ Much of this crude oil lies beneath Alberta’s boreal forest. It covers an area about the size of Florida.⁴ 

Extracting and refining Canadian tar sands oil

As tar sands oil is thicker than conventional oil, it requires more energy and processing to extract and refine it. For instance, it is too heavy to pump directly from the ground or transport it through pipelines.⁵ Therefore, extracting bitumen necessitates pumping large quantities of water underground.⁶ Indeed, it takes three barrels of fresh water to produce just one barrel of oil.⁷ In fact, Canadian oil sands production uses as much freshwater as the combined daily consumption of several major Canadian cities.⁸

Extracting and processing Canadian tar sands oil is highly energy-intensive

Moreover, extracting and processing Canadian tar sands oil is extremely energy-intensive. Tar sands oil generates more than twice as many emissions per barrel than the average North American crude.⁹ It accounts for 12 per cent of Canada’s greenhouse gas emissions and 0.2 per cent of global emissions.¹⁰ 

Canada’s emissions’ growth

Between 1990 and 2019, Canada’s overall emissions grew by 21.4 per cent. This rise was “driven primarily by increased emissions from oil and gas extraction as well as transport”, according to the government of Canada.¹¹

Yet, the tar sands industry claims to have reduced its greenhouse gas emissions by 36 per cent since 2000.¹² The industry celebrates this as a successful reduction. But, how can this be possible?

Research reveals that the biggest carbon cut was a one-off advance in emissions intensity made almost 20 years ago. The industry has been celebrating this successful reduction ever since. In truth, the emission intensity from extraction actually increased nine per cent between 2004 and 2015.¹³ This is an industry that uses fossil fuels to produce fossil fuels. Therefore, any development of the Canadian oil sands will increase Canada’s emissions.

Environmental effects

Obtaining crude oil from the Canadian tar sands necessitates draining wetlands, diverting watercourses, displacing ecosystems and deforestation.¹⁴ Furthermore, it produces vast quantities of waste tailings fluid. This toxic concoction of heavy metals and hydrocarbons is an inevitable product of the bitumen separation process. The slurry is poisonous to both wildlife and humans.¹⁵ 

Tailings ponds

There are so many tailings ponds along the Athabasca River. As a result, they can be seen from space. In fact, they can fill more than 500,000 Olympic swimming pools.¹⁶ They are also leaking into the Athabasca River.¹⁷ 

Both the federal government and the tar sands industry have been aware of tailings waste leaking into the surrounding soil since 1973.¹⁸ However, they have done little about it.

How are they affecting the local area?

Consequently, the hamlet of Fort Chipewyan, downstream of the tar sands industry, is experiencing elevated cancer rates amongst its residents.¹⁹ Developing this dirty industry means poisoning more fish, birds and people. 

Why does the US have an interest in Canadian oil sands production?

The Canadian tar sands provide a major source of oil for the fossil fuel-dependent US market. In the US, oil supplies over 40 per cent of the energy consumption.²⁰ Canada is the biggest foreign importer of oil to the US. In 2020, 52 per cent of US total gross petroleum imports and 61 per cent of gross crude oil imports came from Canada.²¹ 

Likewise, 98 per cent of Canada’s oil exports cross the border to the US. The oil sands hold 97 per cent of Canada’s oil reserves. This makes the tar sands a key source of US fuel.²²

The oil sands industry in the future

Though oil demand is not anticipated to rise in the US in the next decade, the US will continue to lead the world in oil consumption. For example, oil will continue to be the largest source of transportation fuel for the next 20 years. Subsequently, some estimates expect the Canadian tar sands to contribute as much as 36 per cent of all US oil imports by 2030.²³

The US prefers Canadian tar sands crude

Furthermore, the US has a preference for Canadian crude. It is close by, can be transported by pipeline and it reduces dependency on Middle Eastern importers. The US and Canada have historically enjoyed good relations, and Canadian tar sands companies represent a safe investment for US businesses. Also, supporters of development in the region argue that increasing the supply of oil from Canada will lower prices for consumers.²⁴ 

Moreover, the Canadian tar sands are landlocked. This severely restricts their access to international markets. It leaves the fossil fuel companies largely dependent upon refineries in the US for development and expansion. Unfortunately for them, many of these refineries are in the Midwest or the Gulf Coast. Reaching them means transporting tar sands crude from Western Canada to the southeast coast of the US.²⁵

Canada-US pipelines

Most of Canada’s oil exports travel through pipelines. In 2018, 86 per cent of the country’s crude exports were transported in this way.²⁶ Total crude exports from Canada to the US are about 3.8 million bpd. The existing pipelines can export over four million bpd.²⁷ This does allow for an increase in production. However, companies on both sides of the border want more. 

Until recently, there were three major pipeline projects under construction in Canada.²⁸ These expansions would add more than 950,000 bpd in export capacity before 2025.²⁹ Fortunately for the planet and the local environment in Alberta, two of these projects have been severely delayed due to legal and regulatory challenges.³⁰ The third proposed pipeline, Keystone XL, has now been cancelled entirely.³¹ 

Trump said the Keystone XL pipeline would create 28,000 construction jobs

Opposition to the Keystone XL pipeline

The first proposition for the Keystone XL pipeline was in 2008. It has been met by fierce opposition from Indigenous communities whose land it would despoil. It has also faced a backlash from environmentalists who want to reduce the production and consumption of fossil fuels. In 2015, US President Obama rejected plans to build the pipeline. But his successor, President Trump, gave it the greenlight.³² 

Trump’s claims were incorrect

Trump’s claim that the Keystone XL pipeline would create 28,000 construction jobs was incorrect. Additionally, most of the employment would be short term, lasting only on average 19.5 weeks. These short term jobs are difficult to express in annual figures. As such, State Department reports describe 10,400 construction workers, on four or eight-month periods of employment, as 3,900 jobs working for a full year – though none of the jobs actually last that long.³³

The oil sands industry and the actual number of jobs that it creates

The State Department also found that 12,000 annual jobs would follow from direct spending on the project. For instance, from building the pipeline itself. An additional 26,000 jobs are calculated through “indirect and induced spending”. This includes those employed by goods and services companies purchased by contractors and employees working on the pipeline. However, these are not construction jobs.³⁴

Therefore, the actual number of direct construction jobs that the Keystone XL pipeline would create is 3,900. Indirectly, the project could also create a further 12,000 roles. But the total number of jobs – including construction – is 16,000, according to the State Department. This is far below the 28,000 “great construction jobs” promised by Trump.³⁵

Canada sends 550,000 barrels of oil per day to the US

Keystone XL was a plan to expand TC Energy’s existing Keystone Pipeline System.³⁶ This current pipeline already sends 550,000 barrels of oil per day to the US.³⁷ The Keystone XL expansion would increase this figure dramatically to 830,000 bpd.³⁸

Therefore, it represents a commitment to expanding and developing the Canadian tar sands.³⁹ This is counter to the commitments of both the US and Canada to reduce fossil fuel emissions.

Does the cancellation of Keystone XL herald a decline in the Canadian tar sands?

Keystone XL is not the only Canada-US pipeline to be cancelled. Northern Gateway and TransCanada Corp’s Energy East have also been terminated.⁴⁰ Nevertheless, projections for the development of Alberta’s oil sands suggest that the industry could double production by 2030.⁴¹

The existing pipelines can export over four million bpd to the US.  Fossil fuel companies are keen to increase production, regardless of the environmental repercussions.⁴²

Pipelines that could go ahead

Furthermore, other pipelines are moving forward with construction. Enbridge Inc’s Line 3 replacement project is trying to double capacity. If successful, it could deliver around 760,000 bpd of crude to the US by the end of 2021.⁴³ 

Similarly, the Canadian government is increasing the capacity of the state-owned Trans Mountain pipeline. It could leap from 590,000 bpd to 890,000 bpd. Whilst this does not deliver the oil to the US directly, it ships it to Vancouver, where tankers can take it south of the border.⁴⁴ 

Finally, TC Energy is also expanding its current Keystone pipeline. It aims to transport an additional 170,000 bpd to the U.S. Midwest and Gulf Coast. Pipeline companies want to build more pipelines or expand existing ones. They are also boosting pipeline efficiency through the use of drag-reducing agents.⁴⁵

Scrapping the Keystone XL was a victory for environmentalists. However, it will not entirely stop the development of the Canadian tar sands.

Tar sands crude and climate change

Consequently, the fight against “the world’s dirtiest fuel source” is far from over.⁴⁶ Every day, fossil fuel companies continue to ignore the terrifying facts of climate change and produce millions of barrels of oil. Governments are complicit in this absurdity, as they permit more carbon dioxide to enter the atmosphere instead of transitioning to clean energy sources. 

The only apparent way to prevent global warming is to stop increasing greenhouse gases in the atmosphere.⁴⁷ But, until common sense prevails over profit, we stumble ever closer to a calamitous climate change precipice. 

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