Canada oil sands emit more CO2 than average: report

NEW YORK Mon May 18, 2009 6:19pm EDT

NEW YORK (Reuters) - Canada's oil sands emit more carbon dioxide than average crude so developers need a clearer picture of where greenhouse gas regulations are headed to find the best way to tap the giant resource, experts said.

"The future regulation of greenhouse gas emissions in the United States and Canada will influence the pace of development," of the oil sands, said James Burkhard, an analyst at the energy consultants Cambridge Energy Research Associates, Inc.

"Clarity on carbon regulation in both Canada and the United States would help regulators and investors to make decisions."

The U.S. House of Representatives has begun debating a climate bill that could regulate emissions of greenhouse gases from economy-wide sources. The United States is the largest consumer of oil exports from Canada, which is developing its own federal policy.

Green groups, church leaders and some scientists have slammed the oil sands, the largest deposit of crude outside Saudi Arabia, for polluting water and air.

Greenhouse gas emissions of the oil sands have come into focus especially because developers must blast the gooey crude with large amounts of energy-intensive steam to separate the oil from sand. They burn large amounts of natural gas, emitting volumes of carbon dioxide in the process.

A CERA report on the oil sands released on Monday found that the resource emits about 5 percent to 15 percent more carbon dioxide, over the "well-to-wheels" lifetime analysis of the fuel, than average crude oil.

Burkhard said drilling conventional oil also can emit large amounts of carbon dioxide as traditional oil fields age. Young oil fields generally are easy to pump as gas within the field pushes out the fuel. But after years of drilling a conventional oil field, companies must pump more water or steam into it to keep output high. This can quickly boost the amount of carbon dioxide the drilling process emits.

Oil sands developers are getting more efficient in producing the tarry crude. Burkhard said they use far less steam than they did just eight years ago. They are also learning how to use solvents to ease the flow of crude to the well head.

It is also more expensive to melt crude from the oil sands, and developers need a crude price of at least $50 a barrel to make a profit.

"We are still going up the learning curve in improving efficiency of oil sands," because production of the resource is comparatively young compared to traditional oil drilling, said Burkhard.

Producers would still be forced to deal with emissions under climate regulation and could either buy permits to pollute or invest in clean energy projects, also known as offsets, under any cap and trade plan.

(Reporting by Timothy Gardner; Editing by David Gregorio)