The fastest, easiest way to solve the issue is to blend our light crude with heavy crude to have something usable in our refineries.
The cheapest, fastest and safest way to move oil is through a pipeline. The most geopolitically stable supplier of heavy and super heavy crude oil is just north of our border. Canada. The pipeline that was meant to bring their crude, the keystone pipeline was cancelled after its permits were revoked.
The con of Canadian oil is that some of it is produced by Steam Assisted Gravity Drain, a process were steam has to be injected into the reservoir to heat up and reduce the heavy oil’s viscosity, allowing it to drain into a horizontal well, drilled closely below the steam injecting well. This is an energy intensive process, and if the energy to produce the steam is derived from fossil fuels, it’s carbon footprint is large.
Another potential suppliers of heavy crude is Venezuela, but it’s dictatorship has mismanaged the industry to the point that they are importing crude and distillates.
There are no solutions, only trade offs.
The Keystone XL pipeline was meant to take Canadian oil to the Gulf of Mexico to refineries intending to export it. Very little of the refinery infrastructure at the terminal end of the pipeline was equipped to redistribute it domestically. Something like 70% of the oil transported by Keystone XL would have been for export.
Because the market is bigger and demand is greater
Because Quebec is powered by hydro and doesn't need oil and doesn't want the pipeline going east because they sell power.
The eastern provinces get oil from offshore locally or from Saudi/middle east so the cost doesn't make sense.
The oil is going south anyways on trucks. The pipeline took so many trucks off the road.
Quebec uses tons of oil every day, whenever they fill up their cars. Most of it comes from Saudi Arabia, brought into the Irving Refinery in New Brunswick. Irving would use Canadian oil if they could get it.
https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/pr...
"Line 9 has been delivering crude oil from Sarnia, Ontario to Montreal since its reversal became operational in December 2015. The line has a capacity of 300 Mb/d and transports a combination of oil from western Canada and the U.S. Midwest.
In 2018, deliveries of imported and eastern Canadian crude oil on the Portland-Montreal Pipeline fell to an average 2.5 Mb/d, less than 1% of its capacity." (italics mine)
That being said, GPP is partially correct: Quebec is the highest electricity producer and consumer in Canada, but it's almost entirely hydroelectric and their electricity is cheap. "Quebec’s emissions per capita are the lowest in Canada at 9.4 tonnes CO2e – 52% below the Canadian average of 19.6 tonnes per capita."
With the highest electric vehicle uptake in the country, and the lowest greenhouse gas emissions, seems Quebec has the right to be smug (see https://www.youtube.com/watch?v=AnFAAdOBB1c)
Anyways, please don't spread political disinformation. Quebec is not a significant consumer of Saudi oil, despite what Jason Kenney has to say about it.
Only because they don't count any emissions that come from Hydro. We have no idea what they actually producing because they don't test any of the dam reservoirs for methane emissions.
>Quebec is not a significant consumer of Saudi oil, despite what Jason Kenney has to say about it.
Not my province, so I don't consume anything he says. Considering the biggest refinery in Quebec (Valero refinery in Levis, 265M barrels/day) refines sweet crude, I sincerely doubt it's getting the majority of it's oil from Alberta.
I mean, I understand that may be a good policy for an Alberta, but there's no reason why anyone else should think it's a good policy for them.
Tar sands oil is an endless, pointless jobs program. It's barely afloat when oil prices are high, and a rock around the neck of the Canadian economy, and GHG commitments when they aren't. I'm not interested in drastically cutting back on my energy usage, to balance the books with one of the dirtiest fuel producers in the world.
Pipelines do nothing for me, but encourage this economically-destructive industry to expand. For every dollar of wealth it generates, it destroys a dollar and a dime.
I've lived in Edmonton during oil-boom times, and during not-oil-boom times.. and the corrosive effect of the boom and bust cycle on the Albertan economy, it's not pretty.
And a high per-barrel price in Alberta does nothing good for manufacturing in the rest of the country, dragging our dollar up and making our exports less attractive and the costs of production higher. When the dollar is high also makes my labour as a software engineer more expensive, without much benefit to me.
Ah well, enough ranting, off to go pick up sushi in my electric car and I'm not even joking.
That point alone makes me confident you aren't that familiar with the industry.
This source states an average of $40 today across all oil sands producers.
https://oilprice.com/Energy/Crude-Oil/Breakeven-Price-For-Ne...
Typically when oil prices drop (they were <$40 in early 2020), the oil sands companies put production on standby. It's like most oil exploration - it's either feast or famine depending on global prices.
The chemical industry pollution in Sarnia is pretty bad from what I hear.
https://en.wikipedia.org/wiki/Environmental_impact_of_the_ch...
Sarnia is refining an already upgraded bitumen though, so it's only getting half of the garbage. Also Line 9 goes from Sarnia to Montreal, Enbridge Mainline goes from Alberta to Sarnia.
Line 9 runs practically right behind my house, and since it was reversed some years ago it feeds facilities in Ontario (and Quebec) with Alberta oil. Line 5 runs under the great lakes, all the way from western Canada to refineries in Sarnia (and is currently under threat from Mich. governor, but that's a separate topic)
90ish percent of Ontario's oil consumption is domestic oil depending on time of year and so on. The remainder is mostly from the US. Small % from middle east.
Oil from Alberta makes it all the way to refineries near Montreal. Last I looked 70% of Quebec's oil is domestic origin.
Politicians in Alberta have become masters of ignoring this key fact in their rabble rousing.
Could capacity be increased? Maybe. Is it strictly necessary? I don't know. Should we be reducing consumption anyways? Yes.
See map here, on Enbridge's website, zoom in to Ontario:
https://www.enbridge.com/reports/2021-liquids-pipelines-cust...
Now, the Atlantic provinces, that's another story. But a much smaller market.
https://www.politifact.com/factchecks/2017/apr/16/kirsten-gi...
https://www.lsu.edu/hss/english/files/university_writing_fil... (Page 5)
If I understand these summaries correctly:
1. Countries in Latin America are developing and therefore using more oil so they have less to share with us.
2. We are consuming slightly more oil.
3. Oil obtained from hostile and unreliable regions should be replaced.
The effects would be that oil consumed from the pipeline would be cheaper, it would be more reliable, and while not being totally for domestic use would make a significant dent in our oil consumption in the right categories.
Edit:
Opposition to the Keystone XL likely would have been more effective if it focused on (potential) environmental impacts as well as the spill that occurred in 2017. I think that's what the Biden administration focused on when it cancelled the permits.
They're not the only refineries that handle heavy crude but they are the ones with the easiest access to the export markets of Central and South America.
I don't think it's splitting hairs, that's the main point of the conclusion. What she said:
The Keystone XL pipeline "doesn’t even have any oil for America."
"The competent department of environmental protection administration under the State Council shall conduct unified supervision and management of the environmental protection work throughout the country."
When the EPA plays the delay, deny and harass game they amass brownie points with politicians.
Likewise it's probably safe to assume that the Chinese agency is much more set up (and well practiced at) making sure things actually get done on defensible timelines.
Oil markets are pretty tight to begin with- they're finely tuned to react to even marginal shifts in supply/demand. Have massive changes like the lockdowns or turn off a major supplier, you see equally massive swings in price, backwardation/contango levels, etc.
All it took to get rid of sanctions on a nation that has never harmed or threatened anyone was for one of their competitors in the petroleum market to invade another nation...
[0] https://www.wsj.com/articles/u-s-officials-meet-with-regime-...
Competent Venezuelan oil professionals have been fleeing the country and can be found in Colombia, Brazil, and other oil producing countries farther away.
The Venezuelan regime is far, far from being harmless and nonthreatening, their human violations are numerous and nobody is suffering the consequences of their actions more than Venezuelans themselves. I've seen the plight of their people on the immigrants who fled to my own country.
Even their own PDVSA stars don't drink the Kool-aid... It was sad to share a table with disillusioned young, bright, venezuelan engineers at the SPE Latin America Heavy and Extra Heavy Oil Conference, so ask me how I know...
[0] https://www.telesurenglish.net/news/Timeline-of-Half-a-Decad...
There is no freedom of press in Venezuela.
Their take on law 113-278 is blatantly false.
https://www.govinfo.gov/content/pkg/PLAW-113publ278/pdf/PLAW...
Venezuelan sanctions targeting PDVSA sanctions start in EO 13808.
https://home.treasury.gov/system/files/126/13808.pdf
The immigrants I see in my country are fleeing a dictatorship.
Think about your individual energy consumption. I assume you have to drive and heat your house, and how much you drive, and weather you heat up your house, does not, in the short run, vary much weather gas is 2 dollars or 3. Many many people behave the same way, thus we deem demand to be inelastic.
Something similar happens on the supply side. Oil projects are incredibly capital intensive, sometimes taking years to come online. Thus oil companies, in the short term, can only extract so much oil from the ground, regardless of the price.
A supply or demand shock, that is, displacement of either curve to the right or left, leads to a much larger change of the clearing price.
Capital intensive projects like Refineries, Storage and Shipment are inelastic, but actual drilling is relatively elastic. To the point where they leave wells sitting, pre-drilled ready to turn on in the event that they become profitable at some point. I'm assuming there is also excess capacity available in the inelastic parts of the system given that a lot of these infrastructure was built during times when the US was a larger extractor of oil.
Wells vary much depending on the reservoir. For the most part, easy oil has already been tapped. There are still some places with low geological risk, in the Middle East, Venezuela, and such. A driller friend of mine in the Middle East was drilling a well a month, so there is that. This is why, every time there is a disruption, one hears discussion about OPEC’s spare capacity.
But even then, before the drilling actually happens, there needs to be a well design, and studies done on how better to drain a reservoir to maximize recovery. All that also takes time.
And all that assumes that these companies operate on fields that are already discovered. Fields have a production curve, the area under the curve is the recovered oil. They all, at the end, decline.
Doing a full field development can take decades after discovery, and discovery can take years too. From prospection, to seismic, to the drilling of wildcat and delimiting wells. Moreover, investment in exploration has declined, and more and more new discoveries are in remote places, needing great investments in infrastructure.
A potential stopgap could be the adoption of fracking in places like Europe, but it is banned over there. It baffles me. The simple exercise of calculating the enthalpy of combustion of methane vs carbon (coal) makes it incredibly obvious that natural gas is a much better fuel from a carbon emitting perspective, and this is without accounting for the efficiencies of combined cycle vs steam cycle.
What likely is the issue is the cost - refineries will make less money refining light crude oil as part of them will be underutilized.
One thing that article did not mention is that perhaps refineries have setup to refine heavy crude because of Canada's tar sands and XL pipeline.
You act as if that was the only pipeline from Canada. There are several others. Here's a start: https://en.wikipedia.org/wiki/Enbridge_Pipeline_System
The US' energy needs don't rise and fall on the approval of one single pipeline project.
So yes, you could modify refineries (at significant expense) to process different grades of crude, but in order to target different outputs we still need to import the different grades of oil because the refineries end up mixing/matching to get the levels they need. The US produces a lot of light oil, but less of the medium/heavy grades you'll find in Canada or the Middle East.
If you have a refinery that's built for heavy sour oil, how much lighter and sweeter can it handle without any modifications at all? And how much time and money does it take to broaden its range further?
What are the heavier grades used for, I'd imagine stuff like bunker fuel and asphalt? If the prices of those end products went up, wouldn't the market adapt to a certain degree, say using more concrete and less asphalt, etc?
I wish there was an easy answer to your refinery question. They're all different, but there are three basic types of refineries:
The simplest is a topping plant, which is basically just a distillation unit. The output you get is basically whatever the natural yield of the oil is. These refineries can typically only process light crudes.
The next level refinery is a cracking refinery. These take the gas oil output from the distillation and breaks it down further using high temperature, pressure, and catalysts. This allows for the breakdown of slightly heavier crudes.
The final level is a coking refinery. This takes all the residual fuel and "cracks" it into a lighter product. This increases the yield of higher value gasoline, which allows a refinery to take in cheaper heavier crudes.
Building a new refinery is a 5+ year process that costs about $7-10 billion. I'm not sure what upgrading an existing one costs, but it's somewhere in that ballpark. Keep in mind that a large influence on the type of refinery is their geographic location. They're built to accept the type of oil that flows in the pipelines.
So one in Europe will have a higher fraction of diesel (used in most trucks, some cars, and some trains) compared to the USA (trucks and almost all cars use petrol).
(Compare: https://www.statista.com/statistics/189410/us-gasoline-and-d... - https://www.racfoundation.org/data/volume-petrol-diesel-cons... -- the ratio is very roughly reversed.)
https://www.nytimes.com/2020/08/10/business/energy-environme...