Operation Greenwash: Oil Sands Sells Itself as the Cleaner Alternative

Last Updated May 19, 2010 10:57 AM EDT

Environmental disasters, like the oil spill in the Gulf of Mexico, typically produce a standard, unwavering reaction among the public and the folks they put in office. Government hearings and panels; calls for greater regulation; enactment of greater regulation; fines to the guilty party; and a push for cleaner energy. This time around, a rather unlikely (and dirty) alternative source of energy has snuck into the clean energy category: Canadian oil sands.

Supporters of the oil sands industry have jumped on the opportunity to tout the "unconventional" fossil fuel as a cleaner alternative to deepwater offshore drilling. Their contention? Environmental damage from land-based operations like oil sands are local and more manageable.

Perhaps not the best argument here. Just this week the investment activist group Ceres described oil sands as a slow-motion oil spill. Oil sands are either mined -- a process that involves scraping the ground clean, scooping up the bitumen and then upgrading -- or a new method called steam-assisted gravity drainage. That process doesn't ravage the surrounding landscape, but it does produce more greenhouse gas emissions. The oil sands industry might be better off pushing the old standby argument of energy security.

Their cleaner energy argument may be thin, but Canada and the growing number of energy companies investing in oil sands aren't going to stop using it any time soon. Canada is a major oil supplier to the U.S., a multi-billion-moneymaking relationship that is now at risk. A climate-change bill or the EPA could place a cap on greenhouse gas emissions, a move that threatens to cut off the sale of oil sands crude to refineries in the U.S.

Canada's economy isn't the only one at risk from increased greenhouse gas regulation in the U.S. Exxon (XOM), BP, Conoco (COP), Shell (RDS) and now several Chinese oil companies are expanding their oil sands business in Canada and other countries including Venezuela. These are the same companies heavily vested in offshore drilling operations as well. Which means if stricter regulations make deepwater offshore drilling more expensive, oil majors will have to turn to less costly projects. And that's probably not going to be the oil sands, a pretty costly endeavor. Crude prices have to be above $65 a barrel -- at the very least -- before companies will even consider oil sands projects. This scenario leaves oil majors to seek offshore drilling in other countries including Brazil or Africa, or finding a way to make oil sands more affordable to develop.

Photo of oil sands operations in Fort McMurrary from Flickr user species snob, CC 2.0 See additional BNET coverage of oil sands: