Peter, cc Greg, Charles and List
The issues you discuss below are obviously related to the ethics of the
McClade-Ekins article that has been introduced in this thread by Charles. This
is to ask that you talk about that article’s message as well.
There is wide (of course not universal) agreement that we must leave a
large portion of the already identified fossil resources in the ground.
Probably much less agreement on when that should start. President Obama has
political cover here (re Keystone) because of quite widespread agreement,
especially/primarily in his own political party, with activists such as Jim
Hansen who have engaged in peaceful civil disobedience, as well as the many
participating in the recent New York march.
Of course, this “weaning” option has to be balanced against the
security and economic aspects that you raise. I believe the US coal industry
would disagree with you that little is being done already to wean the US off of
coal.
So this is to ask your (and others) views on three items:
First, if not on the Keystone pipeline, when and how President
Obama should have taken a first major action on leaving fossil fuels in the
ground?
Second, is there reason for the US to not further endorse
weaning off fossil fuels in Paris in December? (This last based on my
assumption that he has spoken on Keystone now to be able to endorse Pope
Francis’ announced 2015 major ethics-based involvement on this weaning topic.)
Third, do you agree the ethical timing issues raised re this
weaning topic are pertinent to how geoengineering (both SRM and CDR) will be
adopted?
Ron
On Jan 11, 2015, at 7:57 PM, [email protected] wrote:
> Greg and Charles, thanks for your comments on mine, and Andrew, I support
> your right to both moderate and, at times, give voice to your own opinion.
> The comments below are North American centric only because the issue of
> Keystone is at the moment a North American issue (which will change if Canada
> builds a pipeline to tidewater, east or west).
>
> And I’ll start my comments with again the observation that I see Keystone as
> a mixing two issues, climate and economic security. If one focuses on only
> one of those two values the issue becomes a no brainer, but for me it is a
> “brainer”.
>
> So drawing on the many good comments:
>
> 1. That oil is currently $50 a barrel is exactly why I end up, on balance,
> thinking Keystone should be built. I believe that the current oil price is
> political, with Saudi Arabian punishment of Russia (the prop of Syria) and
> Iran (ditto and the center of power of the Shiite world) as the motivator,
> perhaps with US encouragement. But do I want to trust pricing to a small
> non-democratic oligarchy in the most unstable part of the world? Ditto: do I
> want to trust supply? Am I confident in either price or supply three years
> from now? How much US military spending is oriented to ensuring that Saudi
> Arabia, a far cry from US values, remains allied with the US?
>
> I don’t do long range planning based on a $50 oil price, since if it is true
> that punishment of foes is the motivator (and there is much evidence of this)
> then if/when the punishment achieves its objective the price can rise as
> rapidly as it dropped; the supply/demand imbalance is quite small.
>
> 2. It is interesting to imagine a world in which North America was
> self-sufficient in oil and natural gas. Concerns in the US over world
> stability wouldn’t disappear, but they might drop from “frantic” to “urgent”.
>
> 3. I wish that the US had a chance of tackling coal (the attached graphic is
> instructive). But “wishin’ don’t make it so”, as the song goes. Given US
> governance, I see negligible chance of a truly effective push on coal fired
> power, despite the marvelous case for switching power generation to both
> green sources and natural gas. All of our GE group’s concern and moral
> suasion isn’t going to move Mitch McConnell, or Jim Inhofe, the Senator who
> flatly denies any link between human activity and climate change who now
> chairs the Senate Committee on Climate Change (!). Ignorance shouldn’t be in
> power, but it is, and watching that, I move from “what should” to “what can”.
> Similarly, I wish the US would, in its own right, adopt a substantial carbon
> tax, and again, I think that the prospect of this in the near to mid future
> is highly unlikely in the absence of bargaining.
>
> 4. There is absolutely no question that in the absence of energy/economic
> security issues, if reserves around the world were being sterilized the
> Canadian oil sands would be high on the list, as would coal, and coal fired
> power in North America. But as noted above: there is a both high risk and
> high cost (military) to relying on an energy framework that includes
> “cleaner” oil from Nigeria, Russia and the Middle East and “dirty oil” from
> Venezuela: these are all scary suppliers. For me, the safety of energy supply
> trumps the incremental impact of Keystone vs. no Keystone. This is a value
> judgment, and I recognize that others will weigh the choices and come to a
> different conclusion.
>
> 5. Hence I am drawn to the concept, voiced by others, of using Keystone
> approval as a bargaining chip: tie approval of the project to offsetting
> action: carbon tax, mitigation, support of green energy, in both Canada and
> the US. If the presidential veto is overridden the opportunity to extract
> some good from the approval will sadly be lost: the project will proceed with
> no environmental quid pro quo.
>
> 6. Finally, I share Andrew’s concern re “site battles”; they feel good, and
> they meet the social need of “don’t just stand there, do something”, but they
> often miss the mark that might have been met by cooler consideration. They
> also, as Andrew notes, give scary licence to the rabid. As regards the loss
> of a social licence in North America for pipelines, the immediate consequence
> has been a truly staggering increase in the shipment of oil by train. Had
> anyone said ten years ago that volatile crude oils (e.g. Bakken) would be
> moved around North America by rail to get around the populist targeting of
> pipelines I would have scoffed, in error as it turns out. I think Canada
> holds the record for the most spectacular consequence, the fatal incineration
> of 50 people in Quebec from a train wreck transporting US oil (Bakken) to
> tidewater through Canada. Lest rail be seen as minor: rail shipment of oil
> from Alberta alone is on track to convey more than half of what would go
> through Keystone (400,000 BPD), this from projects where the capital cost is
> already sunk and the marginal production cost is well below $50.
>
> Keystone is interesting to me because the tradeoff between conflicting values
> is always hard to measure. If the world were a single peaceful country with a
> rational government we would indeed likely shut in the heaviest oils and
> quickly wind down the generation of power from coal in all areas that had
> access to natural gas. Given the real world, I don’t want to shut in heavy
> oil to the US from a source with shared values and non-state ownership of the
> assets of resource development; I accept that others will weigh the same
> factors and come to a different conclusion. Given the real world I sadly
> think coal will still be a major source of electrical power generation in the
> US and vehicles around the world will use fossil fuels far longer than they
> should. The pessimistic thoughts on coal and gasoline/diesel spawned my
> interest in geoengineering.
>
> Peter
>
> Peter Flynn, P. Eng., Ph. D.
> Emeritus Professor and Poole Chair in Management for Engineers
> Department of Mechanical Engineering
> University of Alberta
> [email protected]
> cell: 928 451 4455
>
>
>
>
>
> From: Greg Rau [mailto:[email protected]]
> Sent: January-11-15 3:45 PM
> To: [email protected]; [email protected]
> Cc: Geoengineering
> Subject: Re: [geo] Keystone pipeline veto importance?
>
> Is there now an economic rationale for the KXL? As for energy security, what
> premium will Americans be willing to pay for KXL oil and shouldn't the
> premium also apply to exploiting domestic non-fossil energy? Wouldn't this
> also reduce the very high cost of militarily protecting foreign oil (thanks
> for being frank about this, Peter). Couldn't all of this make domestic
> non-fossil energy (more) cost-effective and KXL irrelevant? Aren't the tars
> sands "secure" whether we exploit then now or not?
>
> Greg
>
> From: Charles H. Greene <[email protected]>
> To: "[email protected]" <[email protected]>
> Cc: Geoengineering <[email protected]>
> Sent: Saturday, January 10, 2015 7:29 PM
> Subject: Re: [geo] Keystone pipeline veto importance?
>
> Peter:
>
> Your expertise is in energy economics, and therefore I would like to read
> your opinion about KXL after you read the analysis of McClade and Ekins
> (2015). While is true that we are not going to transition from fossil fuels
> overnight, we can begin to choose which ones to start deleting from the mix,
> and Canadian tar sands are near the top of the list for oil and gas reserves.
> McClade and Ekins analysis is probably not going to be received warmly in
> Alberta or by Stephen Harper and his colleagues in Ottawa. Similarly,
> arguments for leaving coal in the ground are not going to be viewed favorably
> in Kentucky, West Virginia, the Dakotas or by Mitch McConnell and his
> colleagues in DC. Fortunately, whether KXL is approved or not, tar sands look
> like a very poor investment while oil is priced at less than $50/bbl. While I
> think oil prices are going to increase to greater than $50/bbl again, I don’t
> think it is going to happen very quickly since Saudi Arabia can make plenty
> of money while undercutting the break-even prices of its competition. Since
> Americans are not going to pay for gasoline based on $75/bbl tar sand-derived
> oil when they can get gasoline based on $50-60/bbl Saudi oil (see analysis
> below), I think the only way to achieve energy security in the US is to get
> off of fossil fuels as quickly as possible. We will never be secure until
> that happens.
>
> Chuck Greene
>
>
> High Noon on the Gulf Coast: Canada, Saudi oil set for showdown
> BY CATHERINE NGAI
> NEW YORK Tue Jan 6, 2015 7:56am EST
> ·
> · inShare94
> · Share this
> ·
> · Email
> · Print
> <image001.jpg>
> Oil goes into a tailings pond at the Suncor tar sands operations near Fort
> McMurray, Alberta, September 17, 2014.
> CREDIT: REUTERS/TODD KOROL
> RELATED NEWS
> · Oil down almost 10 percent in two days as hunt for bottom continues
> · Global stocks fall, bonds rise on oil, euro zone worries
> · UPDATE 1-Hedge fund manager Andurand strikes gold again by betting
> on oil crash
> · UPDATE 2-MIDEAST STOCKS-Gulf mkts tumble as oil slides below $53
> · GLOBAL MARKETS-Asian shares slump as oil gloom deepens, euro falters
> ANALYSIS & OPINION
> · The oil price is just plain wrong
> · Begin Again
> RELATED TOPICS
> · Saudi Arabia »
> (Reuters) - As a test of wills between OPEC nations and U.S. shale drillers
> fuels a global oil market slump, a brewing battle between Canadian and Saudi
> Arabia heavy crudes for America's Gulf Coast refinery market threatens to
> drive prices even lower.
> While the stand-off between the oil cartel and U.S. producers of light, sweet
> shale oil has captured the limelight in recent months, the clash over heavier
> grades - playing out in the shadowy, opaque physical market - may put even
> more pressure on global prices that have halved since mid-2014.
> Two factors will come into play over the next few weeks: From the North, new
> oil pipelines will pump record volumes of Canadian crude to the southern
> refineries, many better equipped to process heavy crudes than lighter shale
> oil.
> From the Middle East, top exporter Saudi Arabia is offering crude at
> discounted prices in an attempt to defend its remaining share of the
> important regional market, which has shrunk by more than half in recent
> months.
> "So far, the Gulf Coast has suffered from an oversupply of light oil, but now
> there's competition for heavier crude," said Sandy Fielden at RBN Energy.
> With the Saudis already facing fierce competition for their light grades, the
> arrival of Canadian crude "could add insult to injury", he said.
> On Monday, Saudi Aramco stepped up its counteroffensive, cutting its monthly
> U.S.-bound price for Arab Medium for a sixth straight month, putting it at
> the deepest discount against the regional sour crude benchmark since December
> 2013. [OSP/SA].
> The timing of this clash may magnify its market impact as Houston-area oil
> refiners shut down for maintenance in early spring, further reducing their
> demand by an estimated 1 million barrels a day (bpd).
> "We'll see that overhang into the summer, at least," said one physical crude
> trader.
> That will put further pressure on U.S. prices and may spur investors in New
> York and London to extend a sell off in crude futures.
>
> SPOILT FOR CHOICE
> The looming clash of barrels comes at a time when oil markets already face a
> global glut expected to last for a year or longer.
> Large volumes of foreign heavy oil reaching the Gulf Coast will give many
> U.S. refiners more choice after they have upgraded their systems to process
> cheaper, heavier crudes. The new supply also marks a breakthrough in Canada's
> years-long effort to bring its growing Alberta oil sands crude output to new
> markets.
> Enbridge Inc's 600,000 bpd Flanagan South pipeline, which runs from Illinois
> down to the Cushing, Oklahoma, oil hub began commercial service on Dec. 1;
> Enterprise Product Partner announced that its 450,000 bpd Seaway Twin
> pipeline from Oklahoma to Freeport, Texas, shipped its first volumes on Dec.
> 21.
> That promises another quantum leap for Canadian crude after its U.S. Gulf
> Coast sales already hit a record 274,000 bpd in October, nearly three times
> as much as a year earlier, according to U.S. data.
> The new flows will compete with other crudes as well. Some refiners see
> Saudi's medium crude as a more direct substitute for Mexican and Venezuelan
> crudes.
> However, some refiners are likely to blend oil sands crude with overabundant
> super-light U.S. condensate, creating medium blends that may rival Saudi
> Arabia's main grade, said Citi global commodities strategist Ed Morse. He
> warns the clash could set up another tumble in global prices.
> The growing pressure on the Gulf market is already showing up in pricing and
> inventories.
> Mars Sour, a domestic grade similar to Arab Medium, has fallen to a discount
> of $1.90 a barrel compared with U.S. crude futures after trading at a premium
> over 45 cents two months ago.
> Crude oil inventories in the U.S. Gulf have risen to nearly 200 million
> barrels, a record high for late December and up some 15 percent from a year
> earlier.
> The build-up comes as Saudi Arabia shifts its focus to fiercely defend what
> remains of its market in the United States - the world's largest consumer of
> oil.
> Until recently, it seemed to be holding its own in part thanks to a major
> expansion of its joint-venture Motiva Enterprises refinery.
> Saudi crude sales to the U.S. Gulf rose by a third to a record high of nearly
> 1 million bpd in the two years to 2012, a period where gushing shale
> production had begun to displace foreign suppliers.
> But this year it has begun to lose ground, with shipments tumbling to 461,000
> bpd in October, data from the U.S. Energy Information Administration showed.
> Ironically enough, the decline was driven partly by a one-third cut in
> imports by Motiva, jointly owned by Saudi Aramco and Royal Dutch Shell.
> Other customers have also turned away. Valero Energy Corp's cut imports by 85
> percent in the first 10 months of 2014, with Saudi purchases falling to just
> 35,000 bpd, according to EIA data. Marathon Petroleum Co cut Gulf Coast
> imports to 33,000 bpd in October from 205,000 bpd 10 months earlier.
> While most Saudi customers agree on annual contracts with little room to
> reduce purchases, the Kingdom's state oil firm knows it needs attractive
> prices to retain long-term buyers.
> "As refiners look at Canadian crude availability long term, they'll be
> thinking about ways to give themselves more options" said Richard Mallinson,
> an analyst at Energy Aspects in London.
>
> (Reporting By Catherine Ngai; editing by Jonathan Leff and Tomasz Janowski)
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> <North American GHG Emissions (2011) for Coal-fired Power and Oil Sands slide
> (2).pdf>
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