Occupy Calgary ~ Without KeystoneXL tar sands projects becoming unprofitable, The latest company to pull out of the tar sands is Norwegian oil giant Statoil. But just in the last year, Shell, the French energy company Total, and SunCor Energy of Canada have all cancelled tar sands projects. Brian Palmer, a writer for OnEarth Magazine (a publication of the Natural Resources Defense Council), says there are a variety of factors behind these decisions, but the main reason is the uncertainty surrounding the Keystone XL pipeline. That pipeline is crucial to tar sands projects becoming profitable, Palmer says. Without it, “a marginally profitable business [turns] into a completely unprofitable business — and thats scaring oil producers off of tar sands projects,” Palmer explains. Because tar sands oil is a much lower-quality version of crude oil, it sells at $20 to $30 dollars less than conventional crude. With conventional crude oil now selling for about $80 a barrel, the price of tar sands oil has fallen to around $60 a barrel. It also costs about $25 per barrel to move tar sands crude by rail from Alberta to the Gulf of Mexico, Palmer says. The Keystone Pipeline would cut that transportation price from $25 to $9 a barrel, which is why oil companies are so eager to see the pipeline move forward. If the price of tar sands oil continues to drop, and companies have to pay that extra $15 to $20 for oil-by-rail indefinitely, then suddenly the long-term viability of tar sands project looks very dubious, Palmer says
Posted on: Thu, 20 Nov 2014 05:31:52 +0000