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Providing coverage of Alaska and northern Canada's oil and gas industry
May 2009

Vol. 14, No. 21 Week of May 24, 2009

Carbon cuts beyond reach

Imperial CEO: Oil, natural gas, coal account for 80% of today’s energy production, will satisfy demand for ‘next few decades’

Gary Park

For Petroleum News

As Imperial Oil gears up for the expected start of construction on its Kearl Lake oil sands project, the company’s Chief Executive Officer Bruce March is turning into one of the most outspoken promoters of the resource.

He told a University of Calgary policy forum on May 14 it is unrealistic to exclude the oil sands from North America’s future energy mix given that the northern Alberta deposit represents 40 percent of the world’s known oil resources that are outside the control of state-run companies.

March suggested that knowledge underpins President Barack Obama’s seeming desire to find solutions to the oil sands’ environmental problems rather than eliminating them from U.S. supply sources.

When Obama visited Ottawa in February “he could have said a lot of different things” about the oil sands, but “he didn’t,” March said.

“His plan will have less reliance on oil in the future, but his plan also has a strong factor of energy security,” he said, suggesting that Obama believes the environmental challenge will “get solved up here in Canada very effectively.”

However, March concedes the greenhouse gas emissions limits being mooted are beyond the reach of current technology and, currently, could only be achieved by lowering living standards.

California standards an issue

He was especially critical of the low carbon fuel standards that are moving towards legislation in California and that could become national U.S. policy, insisting that “no one knows how to make this fuel … that has 10 percent less life-cycle greenhouse gas emissions than the baseline as it’s defined today. You’d have to go close to 100 percent ethanol to achieve that.”

A set of draft standards released by the California Air Resources Board mandating a 10 percent cut in GHGs by 2020 has set off a fruitless scramble in Canada’s petroleum industry to determine whether it can meet the standard, March said.

“Initial work done by industry says it basically takes 100 percent ethanol vehicles — and a cellulosic ethanol; that’s the key. Not corn-based ethanol.”

California is aiming to lead the way in the construction of new biofuel facilities and replace 20 percent of the gasoline used by motor vehicles with alternatives such as electricity, biofuels and hydrogen.

March cautioned that the highly charged debate around the future of energy can lead to untested emotional responses.

He thinks a quick shift towards greater reliance on renewable energy sources is likely, although energy demand will depend on oil, natural gas and coal for the “next few decades,” noting those three sources account for 80 percent of today’s global energy production. However, he said government funding support for technology development might have a way of overcoming even the toughest challenges.

“At the end of the day, we are here to cooperate with the policy-makers,” March said.






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