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Latin oil supplies for U.S. start to dry up
Canadian pipeline can fill gap
Question of the Day
Patrick Moore, a former leader of Greenpeace who dropped out of the environmental movement because he disagreed with its almost single-minded focus on global warming, said Canada has one of the best records of any country on protecting the environment.
Environmental activists “live in a dream world,” he said, where they believe exotic, expensive and intermittent energy sources like wind and solar power will soon replace proven fuels like oil and coal — even though those conventional fuels provide an overwhelming share of the world’s energy and will continue to do so for decades.
“We need oil now and we’ll need it for the foreseeable future, so it matters greatly where the oil comes from,” he said. “Canadian producers must meet some of the toughest environmental and social standards on the planet” — far above the world’s other top oil producers.
Energy analysts say the decision goes far beyond the tension between jobs and the environment. The battle over the pipeline may determine whether the U.S. is able to cultivate reliable sources of oil in its own backyard or will continue to be whipsawed by the vagaries of politics and foreign suppliers.
Beyond the border
Oil production in Venezuela has been on the decline since President Hugo Chavez — who is openly hostile to the U.S. — nationalized the country’s resources in the past decade, making what was once a top source of imported fuel now among the most iffy for U.S. consumers.
Meanwhile, production in Mexico’s huge oil fields — the largest of which was once as prolific and extensive as Saudi Arabia’s — has peaked and is rapidly falling. Mexico lacks the technological expertise to maintain output in its aging wells, and its constitution prohibits teaming with Western oil companies to do so.
The question goes beyond replacing one source of foreign oil with another, energy specialists say. Enormous reserves of oil that are trapped in shale rock have been discovered in the U.S.
Technological advances such as “fracking,” which fractures the rock to release oil, have started to produce significant amounts of fuel.
The biggest shale oil producer, North Dakota, pumps more than 450,000 barrels a day. About 100,000 barrels of North Dakota’s output were slated to be funneled into the Keystone pipeline, a move that would have encouraged further development of such domestic oil reserves.
“The project is an essential piece of new petroleum infrastructure as the midcontinent region of the United States no longer has any water-borne imports,” Mr. Pugliaresi said.
He noted that Ohio may be the next to start producing oil from the shale rock underlying the state.
In Canada, leaders are patiently awaiting Mr. Obama’s decision and remain hopeful, but they have made clear they will continue to exploit their oil resources with or without the U.S. Ottawa has the option of building a pipeline to its west coast, where the oil could be loaded onto tankers and shipped to Asian markets.
China appears to be waiting eagerly. Three of its state-owned oil companies have established stakes and spent $10 billion developing the Canadian tar sands. One has shown interest in helping to build a west coast pipeline.
“It’s a bit naive to think the tar sands would not be developed if they don’t build that pipeline,” Austan Goolsbee, Mr. Obama’s former top economic adviser, told the Economic Club of Canada last month. “Eventually, it’s going to be built. It may go to the Pacific, it may go through Nebraska, but it’s going be built somewhere.”
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