Blog Post

Energy Independence - What Then? (Part Four: The Environment)

Dec 18, 2012 | Joel Darmstadter

This post is the last in a four-part series on energy independence and its significance (or insignificance). Click to read the first, second, and third installments. Note also that while earlier posts in this series were jointly authored with Roger Sedjo, this post represents only the views of its author.

As we’ve explained in earlier posts increased US and Canadian production and more efficient use of liquid fuels has meant declining energy imports, with energy security and economic benefits for North America.

On the production side the driving forces have been the remarkable development of petroleum reserves in the Bakken deposits of the Williston Basin of North Dakota and nearby Saskatchewan and constantly expanding output from Alberta’s huge reserves of oil sands. But these developments have environmental consequences along with their security and economic benefits.

Canadian Oil Sands. Even at current oil-sands output of close to two million barrels/day – let alone the increases foreseen over the course of the next several decades – there are significant environmental challenges facing both oil producers and governmental authorities charged with crafting environmental policies.

Extraction of the energy content (called “bitumen”) of the resource is by mining or in situ. While mining currently dominates the recovery process, in situ will begin to be dominant within a few years as the bulk of reserves are deep underground. Either way, managing wastes constitutes a major challenge. Tailing ponds “must be isolated and monitored for at least a decade to ensure the integrity of surrounding soils and groundwater.” There are ecological worries too. The deposits are in boreal forest, whose diversity and wildlife habitat represent a prized part of the nation’s national endowment and where successful reclamation of disturbed lands is not yet a demonstrated fact. Preserving the Athabasca River, even as its waters are needed in waste-management operations, will also be a challenge.

Bakken Shale Oil. The shale oil (or, as it is sometimes labeled, “tight oil”) deposits of North Dakota and surrounding areas may not have achieved the prominence of shale gas development in the Marcellus formation in the Eastern US, but we should not dismiss the implications of uncertainties that have arisen around Marcellus. That is because both formations contain energy resources whose economic recovery requires the use of hydraulic fracturing (“fracking”) –around which nontrivial environmental concerns have been raised.

The fracking process involves the use of explosive charges and the injection of sand, water and chemicals to break up the rock and allow, not just gas or oil, but also the injected—and contaminated—fluids to be pumped to the surface. It is largely the fate of these waste fluids that has produced environmental anxiety. As of this writing, though short of definitive scientific and epidemiological findings, anecdotal evidence has led to suspicions pointing to the presence of chemical wastes in air, soil, and groundwater to which the public may be exposed as a result ofthe fracking process. These concerns have led to moratoria in some jurisdictions and pressure for tighter regulation.

It remains unclear when and whether these environmental concerns can be scientifically validated and, if they are, whether better regulation, better technology, or better policy can adequately address them.

The CO2 Dilemma. On a life-cycle basis – from-well-to-wheel, in the common characterization – neither oil sands or shale oil add appreciably to the volume of CO2 emissions that would have ensued from recourse to conventional crude oil. To be sure, oil-sands extraction is highly carbon-intensive.; but by the time transmission, refining, distribution and combustion are factored in, the added CO2 penalty amounts to about 15 percent.

Inescapably, the resource advances reflected in developments like Bakken, Marcellus shale gas and oil sands have wider-ranging energy implications. For example, a sustained disparity between high oil prices and low gas prices may prompt a shift from diesel to compressed natural gas in heavy trucks – ironically making the US even less oil-dependent. Further afield, consider the situation facing the US coal industry. Having lost a share of the electric-generation market – as a result of gas-for-coal substitution—satisfying increased foreign demand for US coal takes on an economically important priority strategy. Yet, ensuring sufficient export-terminal capacity to ship the coal faces vocal environmental and regional opposition. In both the gas- and coal-export instances, the implied upstream resource expansion, however indirect in the immediacy of the trade question, has prompted calls for environmental impact statements (EIS) under provisions of the Clean Air Act, which, in turn, raises questions about the indirect reach of such legislation in its application to downstream stages of a production cycle.

Finally, consider the implications for long-term carbon-mitigation strategy of resource developments which – as with Bakken and oil sands – could significantly prolong the duration of the “fossil age” beyond the point at which earlier analysis may have judged its waning significance. At the very least, it is an issue that underscores the criticality of both policy and technology to counter the global warming threat.

Posts in this series:

1. The Centrality of Oil

2. Zero Oil Imports: Benefits – But With Some Lurking Uncertainties

3. The Broad Goal of North American Energy Independence

4. Energy Independence and the Environment