Purvin & Gertz, Inc., has released a report on the
effect low-carbon-fuel standards (LCFS) will have on oil sands.
The report notes that LCFS programs are being implemented in
California, Oregon and British Columbia. They are under
consideration in many other states and provinces and are
becoming regional in nature. LCFS programs differ by
jurisdiction, but have in common mandated reductions in the
carbon intensity of transportation fuels. By targeting
petroleum-derived gasoline and diesel and promoting low-carbon alternative energy forms such
as electricity, hydrogen, natural gas and next generation biofuels, LCFS programs are intended
to reduce overall greenhouse gas (GHG) emissions on a
In effect, LCFS programs contribute to an
off-oil strategy, said Tom Wise, who directed
The energy needed to produce oil sands crudes is higher than
for most conventional crudes, so the resulting carbon intensities of refinery-produced gasoline and
diesel from oil sands are also higher. Tom Wise points out it
is a mistake to paint all oil sands crudes with the same brush
because there are different oil sands crudes, such as synthetic
crude oil and bitumen blended with various diluents, and each
has a different pathway and carbon intensity.
Contrary to widely held perceptions, our study
concludes that some oil sands diluted bitumen does not have
high carbon intensity under the California regulations and
should not carry an LCFS penalty, Mr. Wise said.
The Purvin & Gertz study estimates the well-to-wheels
carbon intensities of refinery-produced gasoline and
diesel from various oil sands and conventional crude oils. The
study estimates the impact on consumer product prices, refinery
margins and oil sands crude prices, for a range of LCFS carbon costs. In market regions that
implement LCFS programs, consumer product prices will increase
and refinery margins will fall.
Some of the oil-sands crudes would require price
discounts to compete with conventional crudes due to a reduced
incentive to refine or upgrade heavy crudes, said Mr.
Further, reduced crude runs in market regions with LCFS
programs could result in refinery closures and displace oil
sands crudes to other markets. For instance, LCFS programs in
the US Midwest would cause leakage of oil sands crudes to the
US Gulf Coast or Asia-Pacific. HP