In The Black: Why Alberta's Oilsands Will Remain Profitable for Decades

We've all seen the news of Dion's new National Energy Programme equivalent; The ducks that died after landing in a Syncrude tailings pond, which made global headlines; the next U.S. president who will be 'tough' on climate change. All of this prompted an aggressive PR campaign by the Canadian Association of Petroleum Producers (CAPP), and supported by Premier Ed Stelmach. Included in this campaign was a website, http://canadasoilsands.ca, used to help raise awareness and improve the image of the oilsands. Not surprisingly, greenpeace countered with a satirical version of this website, http://www.travellingalberta.com.

Albertans need not be overly concerned about all this negative talk about the oilsands. It should and will not damage the Alberta economy. I will attempt to explain why in this post. At the same time, I am very supportive of the idea of improving the image of the oilsands producers. In one of my last posts, I quoted John Fanci as saying that creating long-term stakeholder value is dependent on recognizing that "corporations are dependent on licenses provided by society to do business."

Infrastructure
The transport infrastructure of the United States and pretty much every industrialized nation is currently centered around fossil fuels. There are many reasons for this of course, but as I mentioned in one of my previous posts, the most basic reason is that the fossil fuels from prolific sources have such high energy densities and very high returns on energy invested.

Transport Technology
In order to transport energy, deciding on a suitable fuel for any vehicle (car, truck, airplane, train, etc.) needs to have several consideration factors:
storage capability--
energy density--this is the amount of energy produced per unit volume. In terms of common fluid fuels, diesel is amongst the highest, biofuels (ethanol and other alcohols) are on the lower end, followed by hydrogen and natural gas. Natural gas powered cars do exist but because of the low energy density, they require very large cumbersome gas tanks that usually take up most of the trunk. Hydrogen is not even feasible for use in airplanes unless it is liquified first because of insufficient energy densities.
weight/mass-I know weight and mass are not technically the same thing but on Earth the distinction is subtle. The
power--power is the amount of energy delivered per unit time. It is closely related to both explosiveness and energy density, although they are not the same thing. Again, diesel and airplane fuels are pretty much king in the transport industry. Lack of power is why electric cars have relatively low maximum speeds and hybrids use the engine rather than the battery on the highway.
waste products--very pure hydrocarbons and ethanol produce carbon dioxide (CO₂ and gaseous hydrogen oxide (water vapour) and trace amounts of carbon monoxide (CO) when burned properly in air. Common fossil fuels are usually very pure. Hydrogen fuel cells only produce the water part. Electric batteries do not have any waste products until the battery recharge cycle is exhausted and the battery must be disposed or recycled. Coal and other heavy refined crude oil products contain solid matter that leaves significant amounts of residue that must be disposed of. Most other chemical formulations are not even considered for the tramsport sector because either they produce solid waste products or they produce toxic gases (such as sulphites which produce sulphur dioxide).
EROI - I have already defined this term in a previous post. Early sources of fossil fuels had great EROI's. A rigorous calculation of EROI also includes the amount of energy required for transport to the market. It is widely believed that the highest EROI sources of oil have been largely depleted, especially in geopolitically stable regions of the World. What remains are lower EROI sources. Those who believe this consider it to be part of the reason oil prices are high and will remain relatively high for the forseeable future. EROI's for transport fuels are summarized in this table.

Alternative fuels have many hurdles to overcome, including the consideration factors I mentioned above. If oil prices do remain high and climate change concerns cause governments to phase out carbon, than they will obviously take over much of the market share that fossil fuels currently have a stranglehold on.

The Hydrogen Economy

As for the Dion Carbon Tax?
I don't think it would cause an economic disaster but I also think it's neither a good plan nor a necessary one. In particular I'd be concerned about it causing serious inflation, among many other things with it being completely untried and untested. In any case, as I've said I don't think it will get Dion elected. I wouldn't hire Dion as my sales rep. and even if he were able to sell the plan to Canadians, he probably still can't sell himself as a good Prime Minister. Failing that (getting elected), Dion will make a timely exit from the Liberal Party of Canada.

Definitions:
Transport Fuel - The energy carrier that is capable of delivering both energy and power. Although electric battery used to power a car is not generally considered a fuel, I will place them under the umbrella of "transport fuels" for the purposes of this post.
Fossil fuel - a combustible organic material derived from the buried remains of former life. I will refer to coal and other solid fossil fuels independently from this definition because they often do not meet suitability requirements for todays transport fuels.