In his book, "Why we hate the oil companies", John Hofmeister, former President of Shell Oil Co., reiterates the need for having a diverse and varied set of resources to meet future energy demand. No hydrocarbon resource should be demonized or deemed unfit as a potential energy source. Over the next 30 years, all hydrocarbon resources will play a role in meeting future energy demand. Time is needed to allow innovation and R&D efforts to crack the code and bring “green” nonfossil fuel energy to economic viability.

Unfortunately, heavy unconventional oils and oil sands are under immense scrutiny and, in some case, are being demonized as a “dirty” oil by environmentalists. Case in point, Canada has been at odds with the European Commission (EC). The EC, an executive body comprised of all European Union (EU) member counties is considering classifying bitumen (oil extracted from oil sands) as a “dirty” oil. Such a designation would limit bitumen as crude feedstock. This is a death blow for Canadian oil exports. This proposal has been sent to the member EU states to ratify over the next four to six weeks. Approval would limit use of bitumen in European refineries unless users decreased their carbon footprint by 6%. Such an effort definitely has the potential to raise oil prices higher, as a major hydrocarbon resourced is effectively “banned” in the EU.

The problem is not limited to Europe. In the US, a heated discussion continues over the $7 billion Keystone XL pipeline. This pipeline would provide more than 500,000 bpd of Canadian crude through the mid west to the US Gulf Coast refineries. More important, the pipeline would be a reliable crude oil supply to US refineries.

Hearings on the Keystone XL pipeline are pitting jobs vs. the environment. During a town meeting in Port Arthur, Texas, members of local unions supported the pipeline to provide much need construction jobs and to ensure crude supplies for the local refining industry. However, a busload of Houston-based environmentalist arrived at the same meeting and protested constructing the pipeline, citing negative impacts on the children’s health from higher pollutant levels over refining oil-sands crude.

The “rub” in using oils sands as a feedstock center on greenhouse gas (GHG) emissions generated to produce, process and combust oil sands-based transportation fuels. Depending on which study is applied, the GHG emissions range from 3 times to just over 6% the GHGs emitted by traditional crude oils. There is a huge gap on what the valid GHG emission levels are.

Before, much of the negative views on oil sands were due to strip mining and tail ponds from oil sands extraction. The industry is improving the process and reducing environmental impacts. Imperial Oil, a major oil sands producer, is developing next-generation processes to decrease tailing ponds usage and recover old tailing ponds for industrial use. New processes are more efficient in water usage. Imperial Oil is investing $60 to $80 million on R&D efforts for innovative oil sands technologies.

NPRA continues to testify for the approval of the Keystone XL pipeline. Canadian oils sands do fit into the US plan for reliable crude supplies from a friendly neighbor. For Canada and the US, oil sands are a jobs issue. Alberta Canada has 170 billion barrels of recoverable oil reserves, out ranking the reserves of Saudi Arabia. Availability of light sweet crudes is diminishing. Much of new capacity expansion ongoing in North America will be to handle the heavy crudes now on the market.