Wednesday, June 4, 2014

Tar Sands Development Killed by the Absence of New Pipelines

A huge tar sands development project has been cancelled because there are no new pipelines. Led by the tar sands, fossil fuels are the leading cause of climate change.

The cancellation of the $11 billion Joslyn tar sands mine suggests that building pipelines like the Keystone XL, (the Northern Gateway, Trans Mountain and the Energy East) will increase the amount of oil being mined in Alberta. Conversely, not building such pipelines will reduce the expansion of fossil fuel development in the province.

French company Total SA, is the company behind the mine, they had planned to ship the tar sands bitumen by pipe. The absence of a new pipeline system has forced Total to abandon the project.

Another related part of this equation involves declining margins as costs increase and the price of oil remains stable. Shipping oil by pipe is the most cost effective transportation medium.

Despite the cancellation of the Joslyn mine, other oil sands developments are still going ahead. Canadian Natural Resources Ltd. recently said it plans to spend an additional $400-million on its Horizon oil sands expansion project in 2014.

Without a pipeline, a significant expansion of tar sands development is financially untenable. The inference is clear, preventing new delivery systems has curtailed expansion.

The cancellation of the Joslyn project lends credence to the argument that opposing pipelines like the Keystone XL will put downward pressure on tar sands expansion.

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