Global warming threatens alternative-oil projects

Development of oil-sand, oil-shale, and coal-to-oil projects could be slowed by a new California law.

from the July 6, 2007 edition

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"Schwarzenegger's latest agreements with Canada are groundbreaking in creating consequences for oil producers to address climate change and help the environment," says Drew Kodjak, executive director of the International Council on Clean Transportation, an alliance of air-quality experts and regulators.

The contracts break new ground in at least two significant ways, say Mr. Kodjak and others. First, the regulations require oil companies to take responsibility not just for the carbon in the emissions from their refineries, but also from the fuels they sell into the marketplace, which are then combusted in cars. Secondly, the policies put a bright spotlight on the carbon emissions that are produced in other phases of oil production that are often overlooked – including extraction and transportation.

"Now the emphasis is on the carbon footprint left from the entire life cycle of a gallon of gas, from extraction to refining to distribution to burning," says Kodjak.

That spells trouble for the booming oil-sand industry in the Canadian province of Alberta, as energy companies warned when Ontario and British Columbia signed on to the California plan. The amount of carbon emissions produced in the steps to refine oil from oil sands would be far higher – 20 to 50 percent higher – than from oil pumped as crude to the earth's surface, Kodjak estimates.

That's because the land above the oil sands must be stripped away and the oil-saturated earth-sand mixture must be heated to extract a substance known as bitumen. The further refining of bitumen, a mixture of organic liquids, produces even more carbon.

The new standards could diminish Canada's growing role in the North American oil market, especially in the short run, analysts say. Canada has an estimated 179 billion barrels of proven reserves, second only to Saudi Arabia's 262 billion barrels. But almost all of those reserves lie in oil sands.

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