Sunday, September 28, 2014

Why It Matters That Statoil Just Shelved Its Multi-Billion-Dollar Tar Sands Project

An aerial view of a mining site for Canadian tar sands in Alberta, Canada. Tar sands are the type of fuel that would be transported in Keystone XL. (Credit: Josh Burstein/Nextgen Climate Action)  Click to enlarge.
In what’s being hailed as a huge win for environmentalists, Norwegian oil company Statoil announced on Thursday that it would postpone a planned multi-billion dollar tar sands oil development project in Fort McMurray, Alberta for at least three years.  The major project, when completed, was supposed to produce 40,000 barrels of Canadian tar sands, or oil sands, crude oil every day.

Statoil is putting the project on hold for a few reasons, but the most notable is the company’s assertion that there is “limited pipeline access” for the oil.  In other words, Statoil is not sure there is enough pipeline capacity for it to actually get the oil out of northern Canada.  According to Reuters, Statoil is the first company to explicitly cite pipeline access as a reason for delaying or cancelling a project.

For environmentalists and advocates opposed to the controversial Keystone XL pipeline, this decision is huge.  A group of six environmental organizations including the Sierra Club and are calling it “tangible proof” that strong, coordinated opposition to big pipeline projects like Keystone XL “lead to real reductions in tar sands investment and associated carbon pollution.”

Over its lifetime, Statoil’s project would have emitted 777.4 million metric tons of carbon dioxide, the groups said — the equivalent to 164 million cars, or one year’s worth of emissions from 204 U.S. coal plants.

It’s important, however, to emphasize that Statoil’s postponement probably didn’t have to do with the fact that Keystone XL itself has not been approved.  Andrew Leach, a professor of energy and climate policy at the University of Alberta, told ThinkProgress that Statoil did not secure an agreement with Keystone operator TransCanada to transport its oil on the pipeline. “So even if Keystone XL got built … [Statoil was] still potentially left without a home for the barrels they want,” Leach said.

While Statoil’s decision to halt its project does not have to do specifically with the Keystone XL pipeline, there are nevertheless several reasons why the postponement matters for the environmental community.
  1. It shows that pipeline protests really can impact the future of oil sands development

    The momentum surrounding opposition to Keystone XL has done more than just delay the one pipeline — it’s made companies extremely wary of pursuing pipeline projects that cross the border to bring Canadian tar sands oil into the United States.  According to Leach, that broader fact is now making some companies rethink tar sands production projects.

Why It Matters That Statoil Just Shelved Its Multi-Billion-Dollar Tar Sands Project

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