Oil Sands Stand to Gain from Deepwater Horizon Disaster

No one is celebrating the Deepwater Horizon disaster unfolding in the Gulf of Mexico. But once the oil settles, so to speak, one big beneficiary could be the Canadian oil sands industry.

The province of Alberta contains petroleum reserves second only to Saudi Arabia: 173 billion barrels oil in the form of a thick, sticky substance known as bitumen, aka oil or tar sands. This nearby, safe, secure and increasingly cost-competitive source of energy has just one big problem: it is far more polluting to extract than conventional sources.

But now the Gulf oil spill may make the environmental costs associated with bitumen look relatively manageable in comparison.

Don Coxe, a financial analyst, told the Edmonton Journal, “The oilsands were referred to as ‘bad oil’ … but it’s nowhere near the same thing as [the Deepwater disaster]. I hate to say it, but what is really bad news for offshore is good news for the oilsands.”

These sentiments were echoed in an editorial in the Calgary Herald. The paper noted that “to appear triumphalist in the face of the calamity in the Gulf would be insensitive,” but added “there is, however, an opportunity here for Alberta to reinforce the obvious without actually stating it: environmental damage from land-based oil operations remain localized and are more manageable.”

It doesn’t take a petroleum engineer to understand their argument: it is hard to imagine a land-based oil disaster that would be as difficult to control as a gusher 5,000 feet below the surface of the ocean.

In some ways it’s a question of the Devil we know. The environmental costs of oil sands are well documented, and not negligible: toxic lakes capable of snuffing out entire flocks of birds, poisoned rivers, deforestation, and life-cycle “well-to-wheel” emissions 15-40 percent higher than traditional oil, according to Green Century Capital Management, green investment advisors.

On the other hand, each week that passes without a fix to the Gulf oil spill further undermines conventional wisdom that the risks associated with offshore drilling are minimal, or at least manageable.

If the Gulf spill does curtail US offshore development — and the President has already suspended exploration as a result of the spill — then the country will be forced to buy more oil from foreign sources. Where better than friendly, stable Canada?

As if in anticipation of the Gulf spill, late last month the US Environmental Protection Agency determined in a draft statement that a proposed pipeline to bring oil sands crude from Canada to Port Arthur, Texas “would have limited adverse environmental impacts.” The 1,980 mile long pipeline is expected to begin construction this year.

BC (Ben) Upham is a freelance writer based in Los Angeles. He has written for the New York Times, and was a writer and editor for News Communications, Inc., a local paper consortium serving Manhattan. When he's not blogging on green issues -- and especially renewable energy -- he's hiking in the Angeles Mountains or hanging out at El Matador.