Amid the battle of rhetoric and emotion waged at the national level over the proposed transcontinental Keystone XL pipeline, Northwest Indiana is home to a quieter effort to import more Canadian crude oil.
Energy giant BP is more than three years into a project in Whiting to upgrade the Midwest's largest refinery to process more heavy, impurity-laden oil from Alberta, Canada. The London-based company is among refiners in the United States that have received the green light from regulators in recent years to process a product that has environmental critics concerned about higher greenhouse gas emissions and pollution at extraction and refining sites.
"As we do this, there are challenges," said BP Whiting Refinery water treatment adviser Ramachandra Achar. "A lot of the upgrades in the refinery are designed to take care of those challenges. ... It's about making sure this facility has a bright future."
Rise of the oil sands issue
Oil sands are naturally occurring geologic formations that contain sand, clay, water and a tar-like material called bitumen, which at about 50 degrees and colder is as solid as a hockey puck. Firms are spending billions of dollars to surface-mine bitumen or pump it out of the ground, because it can be refined into a variety of products that can run cars, generate electricity and provide road-paving material.
The reserves in Canada are the second-largest oil reserve in the world, behind Saudi Arabia. More than 170 billion barrels of reserves in the oil sands now are considered economically viable for recovery with current technology, according to the Canadian Association of Petroleum Producers.
Concerns about worldwide supply spurred the push to explore Canada's reserves, but it took years of research and new technology for extraction to become economically feasible.
One of the earliest modern oil sands recovery projects began in the mid-1960s, but technological breakthroughs in the 1990s helped accelerate developments, said Greg Stringham, a Canadian Association of Petroleum Producers vice president with responsibility for oil sands and markets.
Canada already is the United States' largest supplier of imported crude oil, and imports consist of about half the U.S.'s total consumption of petroleum products, according to Energy Information Administration data.
A crude reality
Environmental groups in both countries have been on high alert over extracting bitumen from oil sands, also called tar sands, for years, concerned about higher greenhouse gas emissions and water pollution.
Producing, refining and combusting a barrel of crude from the oil sands generates about 154 pounds of carbon dioxide -- about 6 percent more than conventional crude oil, said Jackie Forrest, director of research firm IHS CERA and an expert on global oil. She said automobiles contribute about 70 to 80 percent of greenhouse gas emissions in the oil production life cycle.
IHS CERA's oil sands development analysis published in 2009 said it takes about four barrels of fresh water to process a barrel of bitumen in surface-mining operations and nearly one barrel of water per barrel of bitumen for in-situ operations. In-situ, or in state, recovery is when steam is sent underground to liquefy the bitumen before it is pumped out for further processing.
In contrast, conventional crude oil production uses less than half a barrel of water, the report noted.
The Natural Resources Defense Council said in a report earlier this year the heavy crude extraction efforts lead to the destruction of forests and wetlands and leave behind large lakes, called tailing ponds, of a toxic slurry containing water, clay and bitumen. The bitumen product also contains more impurities such as sulfur and heavy metals such as nickel.
"Clearly there are environmental impacts from the oil sands," said Stringham, the Canadian Association of Petroleum Producers vice president. He said the industry is working to continue to reduce its environmental footprint.
Extraction firms are investing money in managing tailing ponds to avoid seepage and prevent animals from interacting with the dirty mixture. Stringham said Alberta's government has established benchmarks for the industry to reduce greenhouse gas emissions.
Forrest said U.S. refiners still are concerned about whether the Environmental Protection Agency will create rules later this year that eventually could restrict their carbon emissions.
Potential pipeline corrosion also worries local community groups concerned about the safety of increasing the amount of heavy Canadian crude coming into the region, said members of the Calumet Project, a small Hammond-based nonprofit environmental organization.
"We should be asking the question, 'Is this safe enough to do that?'" said Steve Kozel, president of the group.
Kozel said the country should be turning to renewable sources of energy instead of increasing reliance on what he described as "the bottom of the crude oil barrel."
Daniels: Energy plays are real deal
At a conference sponsored by the American Petroleum Institute in Indianapolis last month, Gov. Mitch Daniels said increasing the use of Canadian oil and exploring offshore energy resources is "an obvious and straightforward set of no-brainer decisions."
Daniels said projects such as BP's investment in Whiting have shown the potential to hire people and ensure domestic energy security, but they can fall prey to "bogus arguments" from people who want to make fossil fuels more expensive and stunt economic growth.
In July, the Canadian Energy Research Institute, a nonprofit research group, said Alberta oil sands supported more than 80,000 U.S. jobs last year and could support up to 600,000 in 2035. One of the mining trucks used in oil sands extraction, a Caterpillar 797, has an Indiana-built engine and a cab that was fabricated and installed in Illinois.
"We have the options available to us, but it's going to take some change and it's going to take some clear thinking," Daniels said.
XL dreams deferred
Days after environmental activists protested outside the White House against the proposed continent-spanning Keystone XL pipeline, the Obama administration made the call on Nov. 10 to delay a permit decision until an additional assessment could be completed to search for alternate routes, avoiding a key water supply for Nebraska. The State Department's assessment could be done as early as the first quarter of 2013.
The 1,700-mile Keystone XL, proposed in 2008, has been the cause célèbre in the oil sands extraction battle.
Danielle Droitsch, Canada program director for the Natural Resources Defense Council, said the pipeline is risky, and people living along the proposed route don't want to put their land or water supply at risk.
"Looking at the balance sheet, the downsides of that pipeline far outweigh the benefits that it would provide, whether it be jobs or oil," Droitsch said.
"Reckless policy" is how the American Petroleum Institute described the Obama administration's decision to delay approving the Keystone XL pipeline after three years of review. TransCanada said it plans to work with Nebraska state and federal officials to develop a new pipeline route.
Regardless of what happens with the proposed transcontinental pipeline, the industry will find a home for its products in the U.S. and abroad, Stringham, Canadian Association of Petroleum Producers vice president, said.