FFI Perspectives

The Carbon Underground Tar Sands 20, or The Case of the Misplaced Emissions

Mysterious Missing CO2

My recent blog, Tale of Two Fossils: Why Separate Coal from Oil and Gas, explained the rationale for separating FFI’s Carbon Underground 200 rankings into the top 100 public oil and gas companies and the top 100 public coal companies based on the emissions potential of their unburned proven reserves. In this post I’ll look at another group that warrants a separate category.

The first pre-release calculation of the Carbon Underground Oil and Gas 100 was exciting to produce, but an interesting dilemma quickly came to light upon its examination. Oil extracted from tar sands, which is the most labor- and energy-intensive type of oil to refine, generated less CO2 than conventional oil. We checked the formulas, checked the data and even stress tested the calculations using factors from the heaviest oils to the lightest crudes. The fact remained: burning a barrel of tar sands generates less than half the CO2 as burning a barrel of conventional crude.

Tar Sands Explained

Before going any further, it’s worth understanding the basics about tar sands. Canadian tar sand deposits are vast and almost all located in Alberta, Canada, directly north of Montana and Idaho. About 20% of Canadian tar sands are close enough to the surface to extract with giant shovels and dump trucks. The other 80% of Canadian tar sands is too deep to mine. To extract these deposits, steam is pumped underground to melt the bitumen (the tar part of tar sands) — essentially boiling the deposit in place. The two primary methods of steam extraction, cyclic steam stimulation (CSS) and steam assisted gravity drainage (SAGD) were developed by Imperial Oil (The Carbon Underground Tar Sands 20 #3). The physical footprint of steam-assisted operations is considerably smaller than that of an open pit mine, but the energy footprint is much bigger. At Cenovus Energy’s (The Carbon Underground Tar Sands 20 #7) Foster Creek and Christina Lake facilities, 75% of the infrastructure used to extract tar sands is devoted to water treatment and steam. So, tar sands are energy-intensive to extract. Once extracted, bitumen requires additional refining, called upgrading, before it can be treated like oil.

Lost and Found

The key to understanding the CO2 emissions of tar sands is something called a Life Cycle Assessment. Life Cycle Assessment is a method of calculating fossil fuel emissions similar to the method used for the Carbon Underground 200. Both methods rely on the same scientific principles, but Life Cycle focuses on a burnable fuel, like gasoline, and includes the emissions from creating the fuel: extracting and refining a raw fossil fuel and transporting the refined fuel to where it’s burned. Tar sands require a lot more energy to extract and refine than other fossil fuels. That extra energy is provided by other fossil fuels, so creating gasoline out of tar sands involves burning oil, natural gas and coal. Turning tar sands into gasoline requires so much energy that the overall emissions burden is more than 17% greater than gasoline made from conventional crude oil.

Conceptually, the difference between the reserves methodology of The Carbon Underground 200 and Life Cycle Assessment is not how emissions are calculated (they both use the same calculations), but when the emissions are allocated. The Carbon Underground 200 method allocates emissions at the very start of the process, before the fuels have even been extracted. Life Cycle Assessment allocates emissions at the very end of the process, when fuels are ultimately burned. Between the two methods, emissions are shuffled around like deck chairs on the Titanic: they end up in different places, but the total number is unchanged. The Carbon Underground 200 method allocates the emissions from extracting and refining tar sands to the fuels used, whereas Life Cycle Assessment allocates those emissions to the fuel produced.

Introducing The Carbon Underground Tar Sands 20

While the Carbon Underground 200 methodology doesn’t capture the full tar sands emissions story, it does accurately identify the companies holding reserves in the vast Canadian deposits. Because of the distinct issues described above, we have created The Carbon Underground Tar Sands 20, a new list which ranks the holders of tar sands reserves by potential emissions. We believe that this list will be useful to anyone looking to divest from or specifically target oil extracted from tar sands.

Carbon Underground Tar Sands 20 - Growth

The growth of potential CO2 emissions from oil sands has far outstripped the growth of oil and gas emissions overall. In 2004, 12 companies in Fossil Free Indexes emissions database held tar sand reserves totaling potential emissions of 0.8319 GtCO2. All were part of the Carbon Underground Oil and Gas 100. The most recently calculated Carbon Underground Oil and Gas 100 database counts 35 companies with potential oil sands emissions totally 4.6194 GCO2 – potential emissions growth of 435%. 19 of the Carbon Underground Tar Sands 20 are in the Carbon Underground Oil and Gas 100. The oil sands portion of the total Carbon Underground Oil and Gas 100 potential emissions more than tripled from 0.68% to 3.01%. The startling growth in oil sands reserves is due to a combination of new technologies and persistently high crude oil prices. Proven reserves, the measure of unextracted fossil fuels used in this research, are the reserves most likely to be exploited. Recently falling oil prices will cause proved tar sands reserves to be revised down, as with other high cost projects such as deep water and Artic.

The Carbon Underground Tar Sands 20 is an effective divestment tool for those wishing to focus on public fossil fuel companies with the most carbon-intensive reserves. See additional charts and get more details about The Carbon Underground Tar Sands 20 here.

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