A debate with Elizabeth May on Northern Gateway

Should we upgrade or refine more oil sands product at home? Discuss amongst yourself — on Twitter

Over-and-above the environmental objections voiced by many opponents to Northern Gateway and other oil sands pipelines, the question of whether we should upgrade or refine more oil sands product at home has attracted a great deal of attention.

Today, in a Twitter conversation about Northern Gateway, I had the opportunity to engage with Green Party Leader Elizabeth May on these issues.

I’ll expand on each of the issues identified in a post to come shortly. For the record, here’s our exchange from earlier today:




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A debate with Elizabeth May on Northern Gateway

  1. Just last week, June 12th, Jeff Jones had a column in the G&M (ROB B2) which I seem to recall all the regular suspects yukked yukked in agreement. Here’s the questions I posed to him, after quoting a section of his piece:

    The untraditional refinery and upgrader proponents, though, have not presented formal plans for profitable enterprises, including little details such as lists of willing, long-term buyers for products rather than raw bitumen, expected margins, support from oil sands producers that have actually sought to diversify markets, and ideas for attracting and housing the legions of skilled construction workers they want to hire.

    Old-school oil companies such as Imperial Oil Ltd., Suncor Energy Inc., Cenovus Energy Inc. and Husky Energy Inc. all operate major refineries and aim to export bitumen from the oil sands. None have come forward with a plan to build a new refinery thousands of kilometres from either the end market or production source.

    It wasn’t so long ago that upgrading in AB was “traditional” – including for those companies like Imperial Oil, Suncor, Cenovus, Husky (ever heard of Lloydminster?)

    But, obviously things changed in the mid 00’s when it was a “slam dunk” that the Keystone pipeline would be quickly built and those starved Gulf Coast refineries (and newly upgraded ones) lusted for bitumen. Yeah, shift happens.

    You’re in Calgary. Seems to me I heard talk about the World Petroleum Show generating a buzz about Pemex opening up to new rules for foreign investment for its heavy oil deposits. Not sure if Venezuela will follow suit. Hmmm, I wonder where that oil will end up?

    Say you were China, and you wanted to secure oil supply for the future (seems like something they might do). What’s the diff if you prefabbed a refinery in China and shipped it using from a tidewater port in China to a tidewater port in Canada for assembly by your own supplied skilled labour? Could a Chinese SOE come up with such a business case? It’s not outside the realm of possibilities. Maybe not in Suncor’s, IORL’s, CNRL’s or Husky’s portfolio of projects. But, these [resources] would not necessarily be freely traded on the [world] market [something that Lougheed was against btw].

    Mr. Jones, to his credit, replied. He appeared to acknowledge that may be a possibility he might not have considered.

    Things change rapidly in the energy sector…

  2. I’m not necessarily taking Ms Mays side of this debate. But there’s something deeply troubling at the core of AL’s argument. Taken in the abstract you could apply his principle of where the higher value of almost any product really lies.( and I’m sure there simply are times when he’s absolutely correct) But I really don’t like it when he tries to make the book theory fit the real world; the one in which people need jobs, particularly ones in smaller communities. Hence we have( or had) rules that tied allowable cut to timber supply for the local mill and badly needed jobs. We have( had) rules that stipulated fishermen had to sell some portion of their catch to the local plant in order to employ locals.
    I get it that in an increasingly connected world folks want to market their products in a way that brings them most profit. But there’s got to be some space left over for collective and communal needs.
    Now Andrews going to come back with some witty bon mot along the lines of: socialisms all well and good..but..
    Inefficiency is wired into our democratic economies, cuz people aren’t some abstract factor you can just plug into your equation.

    • More likely he will call you a lentil bucket weaver.

      • Ha! And i’d be proud to wear it…eat it…whatever.

  3. “I give kudos to @ElizabethMay for engaging in this discussion. Many MPs wouldn’t.”

    Very true. If I were May, I’d have told you to go stuff yourself after “Here’s some information on that which you might find useful: http://www.merriam-webster.com/dictionary/non sequitur”

    Honestly, Leach.

  4. So am I to fathom that,
    in the West, it is cheaper to ship our “raw” many several thousands of miles to China,…, and/or South thousands of miles
    to the States,…, and have them “refine” it, for what? -just to have the avg-Canadian buy it back at higher rates at our gas-pumps?

    ok, Questionable trusts aside,
    Who is it cheaper for?, surely not the canadian end-user? No.
    That’s just profits for Enbridge,…, and other Foreign Corps, and Gov’t coffers via Tax,
    but that’s definitely not beneficial/cheaper for the avg. canadian.
    Job-wise is another consideration, Refineing here means more jobs,.., and many more spin-off industry jobs, manufacturing,…,
    that will be required in the refineing industries.

    On the contrary, in the East,(Ont, Que,…) we welcome the Pipelines, and we already have some Refining stations,…,
    And, accordiong to Enbridge’s Plan9 proposals, we’ll have even more Pipelines, as well as even more (ehm-proposed) refineries.?
    Ok that seems logical.

    Canada already has the refineing technologies down pact, there’s always room for improvement and innovation though.

    Why not invest in our own refining technology, in the West too, and sell the refined products to any, and ALL, overseas,
    as I should hope, we already do locally ? -but hey, that’s another trust issue I have via price-controlling.

    Invest in our own R&D refineing technologies, instead of just “exporting” those technologies overseas, and instead of just being
    “fetchers of raw”, and too-dependent on other countries, for our oen end-products.
    The fetchers of trees, as an example, hasn’t exactly worked out for us now, has it?

    And yes, Canadians should then be paying a little less at the pumps,…, since we’d obviously be refineing it for ourselves too.
    Refineing here means potentially higher profits by selling the “refined” product.
    Refineing here means more jobs, higher-skilled training, better education for that saidof as well.
    Refineing here, means WE control our carbon-footprint, through technologcal-innovations, instead of trusting “foreign”
    refineing interests, whose track-records show, that right now, they don’t really care too much about “carbon-footprints”. -there is ALWAYS room to refine more efficient energy/gas for more efficient Engines, … But we cannot do that without R&D, and controlling our refinements.

    The more canadians work, the more they spend, invest,…, the more they pay Taxes, the more that those Taxes go back into
    infrastructure improvements, such as healthcare, education, …, yada, yada, yada.
    It’s a win/win cycle that’s taught in any Economics-101 course.

    … and yes, I’ve read the May/Leach reporum, last nite ;), and I don’t care if he thinks he’s the “Andrew of Reaganomics” – I’m just not convinced of the “why’s”, yet?
    Will Canada have enough Refineries for ourselves, and to meet ALL of our future needs ?-we’ll need to keep up with this technology.
    Should we just be “fetchers of raw”, or,
    all Canadians, being the “real” investors of the whole thing, from beginning to end(products) ?
    I question myself, and my pipedreaming here too.

    In retrospect, maybe China, …, doesn’t want anything but the “raw”-’cause obviously,
    they’ll want to control they’re own Refinery methods,…, and hence profit-pricings…
    But, if we atleast build most of the needed Refineries ourselves, here, where are they gonna to go? -there’s still gonna come here,
    but then again, that depends on how much Harper has already given away (in “raw”) to China. ?, maybe we’re partially screwed already?

    Anyway, this whole thing, is going to be the single largest Investment decision ever for Canada’s long-term future.
    Sooo, we better get it right, now, for our future Canadian generations to come.

    • It’s a little ironic that AL takes Ms May to task for essentially being a “little Canadian”, in economic protectionist terms. Essentially she’s missing the bigger economic picture. It makes more sense to let someone else bear the cost of upgrading – we ought to be happy with our proportionally larger take of the extraction bit of the pie. I believe he also pointed out our footprint would increase substantially if we added more value this end. Ironic because I’ve noticed he often glosses over the bigger picture himself. His point on carbon emissions is moot. Obviously it’s immaterial whether the extra emissions occur here or elsewhere; the point is they occur. Odd the ethical oil argument runs away and hides at this point. Our oil is good because it helps NA security( a ludicrous argument if demand outstrips supply, and just as importantly nonesensical if we import increasing amounts of condensate from…wait for it…the ME!..Doh!)and our wages, envro standards are world leading. Apparently we don’t mind someone else having world leading emission abatement of our outbound carbon. Perhaps there’s an economic argument for this, but hardly an environmental one.
      Stick to the economic argument Andrew. There at least you have some credibility.

      • What? Wait a minute…we are already shipping record amounts of coal to China. How is this anything new. Canada and the US under Barack (Beware of Climate Change Deniers) Obama are happy to shift their emissions off onto China and lets face it, China doesn’t care. The entire world is playing a shell game with emissions.

  5. Comments back and forth on Twitter may suffice for the latest Hollywood gossip but they do not constitute a debate on an issue as complex as building the Gateway Pipeline.

    No wonder we’re reducing our collective attention span to that of a gnat.

  6. ” Andrew Leach @andrew_leach
    .@ElizabethMay You’re aware that extract->upgrade->ship->refine has higher life cycle emissions than extract->dilute->ship->refine?”

    Andrew, you’ve suggested this a couple of times. It is not supported. 1. Upgrading is a part of refining, and that refining function can be broken up as you wish. The alternative has not been properly evaluated with upgraders priced realistically for the basic purpose of producing synthetic crude. 2. Your sequence: “extract->dilute->ship->refine” is grossly incomplete. It should read: “deploy diluent ships-> construct diluent pipeline->extract->dilute->ship->refine-> ship diluent back->burn petCoke abroad” 3. Burning of petCoke is a filthy prospect, not allowed in North America, but storage of it at destination is not an allowable prospect, whether at Kitimat, Detroit, Chicago, or China. Yes, look at the problem in Detroit and Chicago, and then envisage the same for Kitimat. It should be processed back into the mines, and stabilized. Additional cost, yes, but far less so than the alternatives.

    In short, your summary is grossly distorted. That stuff should never be allowed out of Alberta until upgraded, and the development of “oil sands” should not proceed, let alone be accelerated, until the technology and infrastructure is built in Alberta to ship a product that Alberta need not be deeply ashamed of.

    Finally, you ask how to slow development, and you answer your own question. Stop subsidies, and I would add, stop the gross subsidy that our federal government’s mindless promotion of that incomplete technology represents. Stop pricing royalties below world market. When you yell, that that will slow or stop the industry, I can only remind you of your own question; “slow it how”?

    • In fairness to AL, I had the same reaction as you did. He gave me a link to a study which supported the point he made to EM.

      From what I could discern (there was a lot of detail in the study and I couldn’t be bothered to go through it all), it was because you had to heat the product twice – ie heat to upgrade, cool down, ship, heat to refine.

      • There are several aspects in which that answer is simplistic at best, and possibly misleading. One is that depending on the diluent, the material to be shipped and later distilled or fractionated, can be estimated to be roughly 50% greater if the prefered natural gas condensate is used, to as much as double in the case where synthetic crude is used as the diluent. Assuming the former, that either means that in addition to the pumping and shipping of 1.5 times the volume, the entire volume must either be heated at the other end to distill the diluent out of the mixture to ship back for reuse, or the entire 1.5 times the volume must be heated to the higher temperatures required for the distillation tower. In either case, there goes all or most of your savings, even before you allow for the additional pumping and transportation energy. Addiitionally, you now need to consider the cost in energy and infrastructure, of transporting a third of that volume again (half the initial volume of crude) back across the ocean, and back across the mountains to Alberta… and no, it can’t be sent back in the same tankers, without considerable modification.

        It is instructive to consider how much energy is at stake here. The heating value of crude oil is approximately 44 MJ / kg. The specific heat of oil is approximately 2 kJ/kg.K, a little less than half of that of water. The specific heat of Coke and sand is only about a half of that, but also that is removed in the first upgrading. This is one of the advantages of a separate process, as the removal of solids, allows extremely efficient heat recovery in liquid to liquid, gas to liquid, and gas to gas heat exchangers, making the actual heat requirement much less for operations after the solids are removed… even for re-heating, or especially for re-heating.

        Now, conventional upgrading requires temperatures of approximately 560 C, so say an increase from ambient of 540 K. Thus the heat required for upgrading, even by conventional means, is a little under 1 MJ / kg, even before efficient heat recovery methods are employed. Allowing for fairly inefficient heat recovery, lets say that approximately 500 kJ / kg are required, or about 1.1% of the final heating value of the crude.

        How does this compare to the additional pumping costs for increased volume, increased agitation cost to keep the slurry from separating, increased shipping cost for 50% greater volume across the ocean and back again, and pumping cost for the diluent to be returned over the mountains, and cost of distillation or increased volume of fractionation at the other end? I do not have those figures at my finger tips, but I suspect that you can see that the additional heat claimed for upgrading dwindles or disappears entirely in the additional energy required for other phases of the process.

        • Well, you obviously are keen to get into details. Best if you get the report and go through it. Perhaps you’ll find the errors there as you seem to have the proper background. I seem to recall it was a report prepared on behalf of Alberta Gov’t. Lots of detailed modelling to go through.

          I’m not disagreeing with you that my response was simplistic.

          • Sorry, I did not mean to suggest that your response was simplistic. I meant that the suggestion that separating upgrading from fractionating increases emissions by requiring the material to be heated twice, as is seemingly suggested by the report that you referred to, was simplistic. I do get carried away with more detail than most people want to hear, but it does help to complete the picture.

  7. The elephant in the room is the petCoke.. The solids in the bitumen that we are proposing to export. Have you seen the enormous mountains of this along the Detroit river? Did anybody bother, before proposing to refine in Kitimat, to imagine what those mountains of petCoke would look like piled along the Kitimat River, or what the content of the leachate would be? Or when you envisage sending the stuff onwards to China, do you imagine it will simply vanish there? A better guess, is that the Chinese would burn it, which would not be allowed in North America… So then, how does that mesh with the political argument presented most shamefully by Canada, for not establishing greater environmental controls, because we can claim that China does not make enough effort in that regard. In short, we should not establish environmental standards, because China’s standards are too low, and therefore it is ok for us to ship to China, what we would not allow to be burned here. Andrew Leach, was the burning of the PetCoke included in your life-cycle emissions estimates? The only way to bring those down, is to put the petCoke back in the ground and stabilize it there. If you say the technology does not yet exist to do that, then the extraction should stop until it does.

    • Anyone know through what process this pet coke crap eventually winds up piled up in Detroit or elsewhere? To pretend that our hands are clean once this leaves our borders is unconscionable.
      I’m not a greenie[ liberal] but i’m completely onside on the points you raised. It isn’t enough simply to say it’s uneconomical to ship this stuff in an upgraded or refined as form as can reasonably be done, for the sake of the environment. If they can’t do this properly and responsibly and still make a buck, then the market has spoken. This ought to have been the rule with the tailings ponds too. Not stick them in a pond a stones throw from a river that goes through a considerable spring run off, and is subject and vulnerable too the same kind of catastrophic storm systems that inundated Calgary last year. If we have to upgrade to get the social license, and the stuff to market via pipelines such as Kinder Morgan or possibly PR [ kitimat is an obscene joke] and a pipeline to say, Tuk as a wild shot.[ not sure about number of annual ice free days] then that’s what we ought to do; not pass the buck on to China and other Asian markets.

    • Maybe Canadians should stop driving their heavy trucks and SUV’s while they try figure out a way to deal with better ways to deal with “pet coke”.

  8. @Steve Abbot: “Have you seen the enormous mountains of this along the Detroit river? ”

    YES,
    We’ve only been in Windsor, about a 1-1/2 years now, but these things were monstrous. From the Windsor side of the Detroit River they looked like rows of black hills, all of them situated on the Detroit riverfront, within a stones throw of the Detroit River. ! That’s when I started to reverse-investigate PetCoke. …, right back to it’s sources.
    I’m no expert in this field, by any means, but it had a lot to do with the Koch brothers,…, along with a corrupt Detroit mayor, at that time,…, -lol., which is also one of the reasons, all that PetCoke was finally removed from the Detroit-river sight, I’ve lost track of where it was shipped off to after…. or what exactly happened to all of it ?

    The Govt’s environmental policies, on both sides of the border, are still pretty misguided to say the least.
    anyway,…, carry on.

  9. refineries cost Billions of dollars, and currently, we have no guarantees any pipelines will be in place to carry the stuff out of the area. Who wants to invest that kind of $$ if there is a chance you will have to sell your product exclusively in Canada, or at a huge discount to the United states?

    Further, if anyone actually thinks Elizabeth May is really in favour of a refinery…give you head a shake. She doesn’t want ANY development in the oil sands; she’s just spouting off for the camera.

    Same goes for Trudeau…he says he’s in favour of Keystone, but I think his main handler (Gerald Butts) has been in touch with his American friends in the Enviro-movement and knows already that Keystone will not be approved. Now Trudeau can say he’s not opposed to ALL new pipelines….just the one to the West Coast.

    None of the greenies want any pipelines….and Lizzie May knows it.

    • Funny that you know just what Elizabeth May is thinking. Have you bothered to read the Green Party platform? You might be surprised, as it reads far more conservative in the tratitional meaning of the word, than any of Harper’s mouthings. (One wonders how his base can mistake his exclusionary ideology for anything resembling conservatism. Are there any intelligent Progressive Conservatives left?) For argument’s sake, and on the evidence of your unsupported and unsupportable comment, I will assume that you have not even bothered to look up the Green’s platform. It happens to have been the only federal party platform given to the PBO for comment before the 2011 election.

      http://www.greenparty.ca/sites/greenparty.ca/files/attachments/vision_green_en.pdf

      Mind you, I suspect that you haven’t read any of the other parties’ platforms either, no? So easy to make assertions about others’ motivations and beliefs, when you can just make them up out of whole cloth…. but it aint honourable or intelligent.

      • Don’t waste your time. James knows all, yet reads nothing that he doesn’t already know. On top of which he’s a first class bigot. Heads up if you’re hoping for a meaningful exchange there.

  10. Its simply not economical to process oil at source for exports. Its isn’t green either as it would require added packaging and more inefficient shipping methods. But then the left thinker never thinks logically.

    But the fact that is even raised, tells me there is a lot of loonacy” nonsense thinking going on. If business could make money, make if more efficient, it would be made here. But even if you wanted the inefficiency, who is going to run it? We have over 2 million able working age on one social assistance or another in Canada yet in Alberta and Saskatchewan jobs go unfilled.

    Its why Canada can’t exceed, we are run down by economic lunacy or is that loonacy?

    • I think you mean Canada can’t excell. Give some reasons why bulking the product to 1.5 times its original bulk makes it more efficient for shipping. Dilbit is roughly 1.5 to 2 times as bulky per kg of crude shipped, as is the same product when upgraded to synthetic crude. Furthermore, the additional 50% has to be stripped off at the other end and shipped back. Can you explain why that is more efficient packaging? Please note, that nobody (except apparently you) is recommending the shippment of refined fractions, but rather the shipment of upgraded crude. The lunacy lies in not asking the appropriate questions.

  11. You call that a debate son? Haw haw. :)

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