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SUN., APR 13, 2008 - 7:54 PM
Pipe(line) dream: Anti oil sands import ban
By Robert Fink

At a time when Congress and the states are trying to come up with solutions to the nation 's energy problems, it is vital that decisions be made on the basis of fact, not fiction.

U.S. Senate opposition to legislation that would speed up the permitting process for oil refineries, for example, comes in part from an impression that oil companies aren 't interested in increasing refinery capacity in the United States.

Worse, some members of Congress want to prohibit Midwest refineries from using Canadian tar-sands oil in the mistaken belief our refineries have easy access to crude-oil supplies from other countries that can fill the gap.

Canada and the United States have a strong energy relationship. Fortunately, U.S. firms are among the largest investors and producers of Canadian oil sands, because world oil supplies are stretched tight and it is unlikely our country would be able to replace the 1 million barrels a day of tar-sands oil brought in by pipeline. With projected investments, the supply is expected to reach 3 million barrels a day by 2015. U.S. crude-oil production is currently less than 5 million barrels a day but demand for oil is growing.

Meanwhile, the oil industry has expanded production capacity at existing refineries over the past decade, adding the equivalent of a medium-size refinery each year. This has helped bolster energy security. However, no major new refineries have been built in the United States since 1975, and among the reasons for this is difficulty in getting local approval for permits due to not-in-my-backyard sentiments, and restrictive regulations.

If we don 't fix the problem, we 're going to get more situations like the one encountered by Arizona Clean Fuels Yuma, an independent refiner.

The company has been trying to build a new refinery for eight years, and progress has been slow. It is still hobbled by a complex permitting process involving federal, state and local requirements, which are often overlapping and redundant. Even if all of the necessary permits can be obtained, the company does not expect the refinery to begin operating until the end of this decade.

From a pragmatic standpoint, and because the labyrinthine permitting process needs to be streamlined, the only wise course is for Congress to seize the opportunity to resolve the controversy over refineries.

The United States consumes about 21 million barrels of gasoline, diesel and other oil products daily, according to the Energy Information Administration, but only 17 million barrels are refined in this country. The rest is produced at refineries in other countries, some as far away as Europe and the Near East, and with growing demand for petroleum products, imports from foreign refineries are projected to more than double within 20 years.

"We 're going to become dependent on foreign refineries, " Sen. Orrin Hatch, R-Utah, warned recently. "If we can 't refine oil, others will do it for us, and it 's foolish if we don 't wean ourselves off imports. "

Environmentalists are making matters worse.

Here in the Midwest, companies are seeking to expand capacity at refineries in a number of states. Additional capacity would allow the refineries to make better use Canada 's tar sands, which is plentiful and a secure source of energy.

Clearly, it would be to our advantage to use oil from nearby Canada instead of relying on oil piped long distances from the Gulf Coast, assuming such supplies are available. Keep in mind that Midwest oil supplies were curtailed two years ago in the wake of severe hurricane damage to Gulf Coast oil facilities and pipelines.

But environmental groups are trying to stop oil-sands production. Groups like the Sierra Club and the Natural Resources Defense Council are pressing the Great Lakes states to reject permits needed for refinery construction, largely on grounds that the heavy oil from Canada produces more greenhouse gas linked to climate change.

The environmentalists are urging Midwest states to follow California 's lead in adopting a low carbon fuels standard, which prohibits the use of oil sands.

Never mind that as a result of new oil-sands production techniques, greenhouse emissions per barrel have fallen 32 percent since 1990, and Canada is committed to reducing emissions further.

Leave aside the fact that if the United States doesn 't use oil sands, China and India will. And that would result in higher levels of greenhouse-gas emissions, while leaving the United States less energy secure. What 's more, major U.S. oil refiners have pledged to reduce emissions of all kinds from refinery operations, and a number already have. And the refiners have agreed to adhere to emission regulations and conform to permit conditions.

Anyone who questions the oil industry 's intent should consider that companies have plans under way to expand capacity at refineries in northern Indiana, Detroit and a half-dozen other facilities in the Midwest. And they are partners in ventures to boost production of Canada 's oil sands.

By reducing our risky dependence on oil from overseas and expanding refinery capacity, we are putting energy security back under our own control.

Robert Fink is a petroleum geologist living in Cleveland, Wis.


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