Oil companies in Alberta have learned a key lesson about the tar-sands business. Namely: Extracting tar-sands oil is one thing. Getting it refined and sold is another.
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Tar-sands oil prices continue to fall as companies struggle to figure out how to get it to customers. There are three routes to do so, shown above. The route headed west (in blue) represents the proposed Northern Gateway pipeline — a project that is on the brink of being cancelled. Heading south into the United States (in red), Keystone XL, the tribulations of which are legendary. Headed east (yellow), a possible pipeline to the St. Lawrence Seaway which, as far as I know, exists only in theory.
But there’s another possibility, one previously unmentioned — and previously impossible: Build a pipeline due north, to the formerly frozen Arctic Ocean. From Bloomberg:
Alberta’s landlocked oil producers facing pipeline bottlenecks to the south, west and east are welcome to ship their product north, according to Northwest Territories leader Bob McLeod.
McLeod, 60, said the territorial government would consider proposals to ship crude from Alberta oil sands producers, which include Suncor (SU) Energy Inc. and Canadian Natural Resources, to the Arctic. The territory would consider piggybacking on any new infrastructure to ship its own oil and gas, he said. …
“The reality is, it’s doable,” McLeod said. “With climate change, the Arctic ice pack has melted significantly.” Asked if Alberta’s difficulties getting oil to market presents an opportunity for his region, McLeod said: “We think so.”
Ah, yes, the long-anticipated Northern Coast of North America. As Arctic ice reaches new lows during the summer months, ships have increasingly been able to navigate the Northwest passage. The changing climate for which we can thank the consumption of fossil fuels could finally allow us to bring the pollution-intensive tar sands to market. It’s the circle of life.
There’s one catch, though, which McLeod may not have considered. The pipeline would have to be built across a stretch of permafrost — an increasingly unstable foundation as temperatures warm and frozen earth transforms into soft muck. Not to mention the challenge of building a port for ships that won’t shortly be inundated with ocean water from higher sea levels. What climate change giveth, climate change taketh away.
The odds that this northern pipeline will come to fruition are slim, McLeod’s dreams notwithstanding. The salvation for companies trying to sell tar-sands oil remains in the same direction it’s pointed for years: south, over the U.S.-Canada border, through the Keystone XL. Whether or not that’s a pipe dream, only time will tell.