Unconventional Oil - Opportunities and Risks
On 12 September 2012, a Transatlantic Breakfast was held in the offices of Ecologic Institute, Berlin, on unconventional oils and their sources and the related impacts on climate change and supply security. The event, which was held in cooperation with the US Embassy in Berlin, featured Deborah Gordon, Nonresident Senior Associate in the Energy and Climate Program at Carnegie Endowment for International Peace. Deborah Gordon painted an insightful picture of the variety of oils, the many uncertainties surrounding their chemical composition and associated environmental impacts, as well as their potential ramifications for US and global energy markets.
Main aspects are summarized in this 5-minute video, in which she talks on unconventional oil:
Deborah Gordon provided a comprehensive background to recent and current developments in the exploitation of new oil reserves, driven by the increase in the global price of this commodity. She explained the problems associated with defining and distinguishing different types of oils and gases, pointing to a lack of publicly accessible and verifiable information, and the impacts of this information imbalance.
Unconventional oil and gas resources have been an unexpected game changer in resource supply in North America in the last decade. The United States has managed to lower energy resource imports by using domestic shale gas. Additionally, Canadian oil sands could play an important role in covering crude oil demand in North America.
The effect unconventional resources have on greenhouse gas emissions is a central part of the debate surrounding their exploitation. Shale gas can replace coal in electricity production, reducing greenhouse gas (GHG) emissions but thereby also making investment in renewable energy sources appear less pressing. At the other end of the spectrum, heavier oils extracted from new types of geological formations have a higher carbon content, leading to greater GHG emissions upon combustion.
Moreover, the processes used to extract these fuels from unconventional sources have led to public and political controversies. Tar sand oil extraction, for example, requires additional energy input, and proposals to label fuel from such processes as highly polluting in Europe led to a confrontation between Canada and the EU. Similarly, environmental concerns about “fracking,” the high-pressure injections used to extract gas or oil from shale formations thousands of meters below the earth's surface, have prevented the unconventional energy resource revolution to repeat itself in Europe – thus far.
Some of the recent developments in this area may already now have established certain pathways that will be hard to divert from without concerted and targeted policy intervention. Deborah Gordon pointed out, for example, that US refineries have made significant investments in refining heavy oil (to diesel) and are not equipped to deal with some of the lighter crude oil now being found (which would be more climate friendly). The existing infrastructure may therefore be locked in to favoring high-carbon heavy oil, leading to more GHG (and other) emissions.
Deborah Gordon also noted that the new North American oil boom is producing largely diesel and petroleum coke as final products (the latter being a waste byproduct that can be burned or liquefied), and both of these for export, meaning that contrary to conventional wisdom the new oil exploration does in fact not alleviate US oil import dependency.