Yes to Arctic drilling, no to Keystone XL – Has Obama lost his mind?

Support for risky Arctic drilling puts lie to Barack Obama environment arguments

Today, 35 million Canadians are wondering if President Barack Obama needs a mental health day after his Administration approved Shell’s Arctic drilling application in the Chukchi Sea, even though the Keystone XL pipeline remains unapproved.

Shell off-shore drilling platform that will be operating in the Chukchi Sea.

All right, maybe not all 35 million Canadians, but for sure the four million inhabitants of Alberta, home of the oil sands, whose crude oil would be delivered to Gulf Coast refineries by Keystone XL. They’re flat out gobsmacked.

There is no way to square approving risky Arctic drilling while calling Alberta oil sands crude “dirty oil” and refusing to sign the cross-border permit.

The Canadian Association of Petroleum Producers estimates that CO2 emissions from oil sands crude is nine per cent more intensive than the U.S. crude supply average on a wells-to-wheels basis. In a global market consuming 90 million barrels of oil per day, the nine per cent higher carbon intensity of the three million bbls/day of oil sands crude is like adding just another 270,000 barrels of conventional crude. A few drops in the bucket.

The Chukchi Sea between Alaska and Russia. Source: Google Maps.

And as the State Department keeps pointing out to the White House, oil sands crude doesn’t compete with US conventional crude. Gulf Coast refineries process 2.7 million barrels of heavy crude a day. Heavy crude that comes from Nigeria or Venezuela, which is deliberately shipping more and more of its product to China.

That makes the carbon intensity argument a wash at best.

Except that Canadian oil sands producers are working hard to lower the carbon intensity of their crude. For instance, the Kearl oil sands project by Imperial Oil, a majority-owned subsidiary of Exxon Mobil, uses a suite of innovative technologies to reduce the GHG emissions to the same level as many other crude oils refined in the United States. And in-situ producers like Cenovus are substituting solvent for steam to lower energy inputs, thereby reducing carbon-intensity.

President Barack Obama.

Which means that long-term more Alberta oil sands crude is a GHG-emissions upgrade for Texas refineries.

Albertans are well aware that Barack Obama is tightly tied to environmental groups and relies upon political donors like Californian Tom Steyer. And they recognize the sway Hollywood celebrities slash eco-activists like Leonardo DiCaprio – or Canadian music legend Neil Young, for that matter – have over the public agenda. They get that the President is looking to his environmental legacy as he prepares to exit office in 2017.

Even though they may not agree with Obama, they understand where he’s coming from.

But what they don’t understand is the same Barack Obama who disparages the Alberta oil sands approving Arctic drilling.

Here’s how the New York Times summed up the environmental dangers of Shell’s Arctic operations: “Both industry and environmental groups say that the Chukchi Sea is one of the most dangerous places in the world to drill. The area is extremely remote, with no roads connecting to major cities or deepwater ports within hundreds of miles, making it difficult for cleanup and rescue workers to reach in case of an accident.

“The closest Coast Guard station with equipment for responding to a spill is over 1,000 miles away. The weather is extreme, with major storms, icy waters and waves up to 50 feet high. The sea is also a major migration route and feeding area for marine mammals, including bowhead whales and walruses.”

One of the must dangerous places in the world to drill, eh? But Keystone XL is too “dirty” to approve, despite a clear majority of Americans favouring its construction? What a slap in the face for Canada.

Canada is historically the United States’ biggest trading partner, largest energy supplier (30 per cent), and closest ally. Great way to treat your best friend, Barack.