Thoughts on cost overruns in the oil sands will be coming up quickly. Right now, just the (belated) news that the U.S. government has approved the Alberta Clipper, a pipeline that will move crude from Hardisty, Alberta, to Superior, Wisconsin.
So what is the environmental problem? Well, aside from the problems with tailings pools and the like within Alberta, the oil sands release a boatload of carbon. After all, in order to make the stuff you need to inject steam right into the ground. That takes a lot of energy. In other words, you need to burn a lot of stuff in order to get stuff you can burn.
Dealing with that carbon will be Canada's problem. If Waxman-Markey passes, it is quite possible that the U.S. will tax Canadian oil exports. Even if that doesn't happen, the adjustment burden will fall north of the border, unless Canada and the U.S. get together on a combined cap-and-trade system. Unless ... well ... unless both countries decide that it is just more important to have a big and growing share of North American oil consumption produced in North America, with the rents (such as they are) going mostly to the Province of Alberta.
One reason why oil sands project run overbudget below the fold. Full explanation still forthcoming, with the preview that the comment thread pretty much nailed the reasons.
Oil sands field pipeline systems are tricky beasts. They need to be double-barrelled. The reason is quite simple. The stuff extracted from the oil sands is bitumen, which is basically asphalt, and not very congenial to moving through pipelines. You have two options for that. One is to upgrade the stuff into synthetic crude oil (SCO) on the spot. The other is to mix it with diluents. Naptha and natural gas condensates make “dilbit.” Using SCO as a diluent makes “synbit.” These can be piped.
Snag is (well, other than the fact that condensates tend to be mildly carcinogenic) is that you have to get the condensate or SCO to the oil sands. Ergo, a second field pipeline system. And more expense.
Strangely, I have it on word from some officials that the need to build up a field infrastructure capable of moving diluents was not anticipated. That seems odd, but that is what they tell me. Should I believe them?