From The Calgary Herald, “Oilsands billions expected to be unlocked“:

CALGARY – Steadily rising oil prices will combine with lower costs to put some of the more than $100 billion in cancelled oilsands projects back on the front burner, according to a new study.

“I think we’re going to see over the next six to eight months more projects coming on,” said research director David McColl of the Canadian Energy Research Institute.

See also The Edmonton Journal, “Alberta oilsands could deliver $850B in royalties by 2035: research institute”

There are those among the environmental groups and in Congress who look askance at developing oil sands because they are comparatively energy-intensive to developing other, more traditional forms of oil. To limit U.S. access to oil produced from our nation’s No. 1 energy supplier, Canada, they’re trying political feints like a “low carbon fuel standard.” Because if the United States doesn’t consume it, nobody will, right?

From The Globe and Mail, “OPTI Canada on lookout for buyer“:

In recent months, a resurgent interest in the oil sands has brought multibillion-dollar investments from Chinese and South Korean interests. In August, PetroChina Co. Ltd. bought a 60-per-cent stake in two oil sands projects from Athabasca Oil Sands Corp. Last month, the Korea National Oil Corp. bought out Harvest Energy Trust for $1.8-billion in cash, plus $2.3-billion in assumed debt.

For more on CERI and its studies, click here. (However, this latest study is not yet online.)

It’s been three decades since a brand new oil refinery has been built in the United States due to regulatory restrictions, the power of NIMBY-inspired litigation, and already low margins for the refinery business. New domestic capacity has been added to existing refineries through upgrades and expansions, but it’s more common for companies to build new refineries outside the United States.

The brightest prospect for a new refinery has been in South Dakota, where the Dallas-based Hyperion Energy Company plans to build a $10 billion facility in Union County between Sioux Falls, S.D., and Sioux City, Iowa. That’s a lot of investment and jobs. As the PrairieBiz magazine reports, “During construction alone, Hyperion would employ approximately 4,500 workers in the four years that it will take to build. At full production, 1,800 full-time jobs would be available at the plant.”

But all for naught if Congress enacts a low-carbon fuels standard. As we wrote earlier in the week, supporters of the standard claim an environmental imperative, but the proposal would make the U.S. even more dependent on Middle Eastern or Venezuelan oil. And as for the Hyperion project (earlier posts here), the Sioux City Journal reports, “Industry group: Low carbon proposal threatens Hyperion refinery“:

New environmental regulations for transportation fuels being considered in Congress would deal a “devastating” blow to U.S. projects like the proposed Hyperion Energy Center in Union County, according to a coalition of business groups.

Some majority Democrats back legislation that would lower carbon emissions in U.S. vehicles. The so-called Low-Carbon Fuel Standards, or LCFS, would unfairly penalize heavier, dirtier oil such as the crude from the Alberta, Canadian oil sands that Hyperion plans to process.

Last month, Hyperion secured a state air quality permit for its $10 billion refinery, which would process of 400,000 barrels per day.

“No permit in the world is going to save this project if LCFS is put in place,” said Chris Tucker, a spokesman for the Consumer Energy Alliance, a 125-member group that includes oil companies, retailers, trucking and transportation groups and business organizations like the U.S. Chamber of Commerce.

The Consumer Energy Alliance (which the NAM is a member of) has launched a new website on the low-carbon standards at SecureOurFuels.com, which includes a blog.

Good site. Good jobs.

One of the many campaigns the environmentalist left has organized to cripple U.S. energy production and consumption is an attack against high-carbon fuels, i.e., fuels that are derived from heavy crude that requires additional refining. In the brave new world we live in, carbon is bad because it contributes to global warming/climate change/doom.

In simpler terms: The American greens hate the success of Canada’s oil sands and they want to prevent any similar development in the United States, including shale oil.

In California, the political means being applied is a low-carbon fuel standard dictated by Gov. Arnold Schwarzenegger and now being put into effect by the California Air Resource Board. (Details here.)

Legislation has also been introduced in Congress to disadvantage Canadian oil, H.R. 1787, the Low Carbon Fuel Standard Act, and S. 1095, America’s Low-Carbon Fuel Standard Act.

Just as some environmentalists seek to artificially limit U.S. access to Canadian (and Mexican and domestic oil, as the case may be), the Chinese are getting into the business.

From Don Martin, a columnist with The National Post, the nationwide Canadian newspaper, “China dives into oil sands as U. S. balks“:

To lift a quip from Prime Minister Stephen Harper’s Arctic sovereignty policy and apply it to the American view of Alberta’s oil sands: Use it or lose it.

The Chinese government pushed its shovel deep into Canada’s energy motherlode yesterday when it announced a $2-billion stake in a five-billion-barrel reserve of “dirty oil” that Americans increasingly find unworthy of fuelling their vehicles.

The 60% claim by Petro-China in two projects owned by Athabasca Oil Sands Corp., while small compared to the great gobs of capital pouring into oil sands expansion and extraction, are the global giant’s largest investment in Canadian energy yet.

And China usually buys into products it aims to consume.

Investor’s Business Daily comments editorially in “Shifting Sands,” noting, “We balk at importing ‘dirty’ oil from Canada, but others aren’t so reluctant. Exempt as a ‘developing’ nation from Kyoto-like agreements, China has decided to help Canada develop its energy-rich oil sands.” The Canadians, IBD reports, are already talking about a pipeline to bring Alberta oil to the West Coast so it can shipped via tanker to China.

It’s the producers’ oil to sell as they see fit, but it would be a policy mistake of the highest order for the United States to turn its back on its No. 1 oil supplier, a reliable supplier and solid U.S. ally, motivated only by dreams of a new “green” economy that bears little connection to reality. And if U.S. policymakers refuse Canadian oil sands, then they will logically have to refuse any future domestic energy from any U.S. shale or oil sand deposits.

To promote low-carbon fuel mandates is to reject U.S. energy security, plain and simple.

Missing from U.S. Trade Rep Ron Kirk’s admirable speech Thursday (see posts here and here) expressing the Obama Administration support of expanded trade was any mention of the Mexican truck controversy, i.e., the NAFTA-violating provision in the stimulus bill that effectively ended a cross-border trucking program. In response, Mexico slapped duties on 90-plus U.S. products, especially consumer and agricultural products. Here’s the latest consequence, as reported in the Green Bay Press-Gazette, “Mexican tariffs impede paper company exports.”

You can only address so many issues in a speech, and in any case, Kirk’s remarks emphasizing the importance of enforcing trade agreements were relevant. The United States should indeed aggressively address violations of trade agreements through established processes and authorities. As a country that generally embraces trade, those procedures will tend to favor the United States.

But not always. We see that California Gov. Arnold Schwarzenegger is trumpeting yet another market-distorting, cost-adding environmental regulation, the low-carbon fuels standard. As AP reports, the Governor expressed utopiangastic pleasure at the California Air Resources Board’s decision:

Gov. Arnold Schwarzenegger said the rule would “reward innovation, expand consumer choice and encourage the private investment we need to transform our energy infrastructure.”

Sure. Just like all the other excessive environmental rules adopted over the past decade in California. And how’s California doing?

• Los Angeles Times, “California unemployment rate reaches 11.2%“
• The Desert sun, “State leads nation in March layoffs“
• The Daily Sound, “Economists: things could be worse in SB County“

Then there is the trade angle. The state regulations have an obvious and disproportionate impact on fuels derived from Alberta’s oilsands, which require additional energy to process. From The Los Angeles Times: “Canada’s consul general in San Francisco charged that the rule discriminates against oil from Alberta tar sands. ”

Canada is the No. 1 supplier of foreign crude to the United States, and now California is declaring its own (non-tariff) trade (barrier) war against those imports. But just because they’re not tariffs or quotas doesn’t make the regulations any less a servant of the protectionist cause — especially since they represent unilateral state action.

And what form might retaliation take, a year or two down the road? The new Mexican tariffs hammered California farm products. That could look like a smart strategy to the Canadians.