Oil From Canada’s Tar Sands Can Be Made ‘Clean,’ Obama Says

By Jim Efstathiou Jr.

Feb. 18 (Bloomberg) -- Oil extracted from tar sands in Canada can be made a clean energy source, and the U.S. will work with its northern neighbor to develop the technology, President Barack Obama said.

A joint effort by the U.S. and Canada, its biggest trading partner, on ways to capture and store carbon dioxide underground would “be good for everybody,” Obama said yesterday in an interview with the Canadian Broadcasting Corp. Obama will make his first journey as president outside the U.S. tomorrow to meet with Canadian Prime Minister Stephen Harper.

Conservationists on both sides of the border have called on Obama to reject any bid to exempt tar-sands oil from proposed climate-protection rules. Government officials in Canada say restrictions on oil-sands exports would increase U.S. dependence on oil from unfriendly countries. The oil is separated from sand and clay with intense heat in a process that releases more greenhouse gases than pumping conventional crude.

“The United States is the Saudi Arabia of coal, but we have our own homegrown problems in terms of dealing with a cheap energy source that creates a big carbon footprint,” said Obama, who has backed “clean-coal” technology in the U.S. over skepticism about its prospects from environmentalists such as former Vice President Al Gore.

Reducing greenhouse-gas emissions from energy sources such as coal and oil sands will promote economic growth in both countries, Obama said.

‘Ceiling’ on Growth

“If we don’t, then we’re going to have a ceiling at some point in terms of our ability to expand our economies and maintain the standard of living that’s so important, particularly when you’ve got countries like China and India that are obviously interested in catching up,” the president said.

The U.S. imported about 780,000 barrels a day of tar-sands oil in 2008, 60 percent of total production, according to the Canadian Association of Petroleum Producers. Petro-Canada, the country’s third-largest oil company, and other producers expect to more than double industry output to 3.3 million barrels a day by 2020.

Alberta’s oil sands may hold the equivalent of 173 billion barrels, enough to supply the U.S. for 24 years, according to some government estimates. Only Saudi Arabia, the biggest producer in the Organization of Petroleum Exporting Countries, has more reserves.

“Canada’s energy industry is willing to invest money, technology, know-how and time in this effort, but we really can’t do it alone,” Petro-Canada Chief Executive Officer Ronald Brenneman told reporters last week in New York. “It will take the combined efforts of the industry, government, regulators and consumers.”

Environment Minister

Canadian Environment Minister Jim Prentice has said Canada and the U.S. should work together to develop systems to capture and sequester underground carbon-dioxide emissions. The total “life- cycle” of emissions released, all the way to filling a car’s tank with gasoline, are 20 percent more than conventional oil, the Rand Corp. research organization of Santa Monica, California, said in a 2008 report.

Carbon capture would help “transition from a high-carbon present to a low-carbon future while avoiding a disruptive and dislocative period,” Prentice said on Jan. 20.

Obama backs slashing emissions of heat-trapping gases to 1990 levels. The new president will have to square his environmental agenda with his call to trim dependence on oil supplies from the Mideast and with the U.S.’s longstanding policy to treat Canada as a commercial and strategic ally.

“Would I rather rely on Canada for my energy security or would I rather rely on Hugo Chavez?” Gordon Giffin, U.S. ambassador to Canada during President Bill Clinton’s second term, said in an interview, referring to Venezuela’s president. “What Canada is saying to the United States is we now believe that we ought to be developing a North American approach to energy and to the environment. Our energy issues are not identically connected, but they’re logically connected.”

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net