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Oil Sands Greenhouse Gas Emissions are Lower than Commonly Perceived, IHS CERA Analysis Finds

Accounting for all emissions, from fuel production through to final combustion, is essential for making comparisons to other sources of crude oil, study finds

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Tuesday, September 21, 2010 7:00 am EDT

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CAMBRIDGE, Mass.
"Seventy to 80 percent of the GHG emissions come from the combustion of the fuel in an engine so the vast majority of emissions remain the same whether the oil comes from West Africa, Latin America or Canada."

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Fuels made from Canadian oil sands result in significantly lower greenhouse gas (GHG) emissions than many commonly cited estimates, according to a new comprehensive analysis by IHS Cambridge Energy Research Associates’ (IHS CERA). Oil sands products imported to the United States result in GHG emissions that are, on average, six percent higher than the average crude consumed in the country. This level places oil sands on par with other sources of U.S. crude imports, including crudes from Nigeria, Venezuela and some domestically produced oil, the report finds.

The report, Oil Sands, Greenhouse Gases, and U.S. Oil Supply: Getting the Numbers Right analyzed the complete “well-to-wheels” life cycle—the extraction, processing, distribution and combustion of the refined fuel—to provide a comprehensive assessment of where oil sands fit in the spectrum of U.S. crude imports.

Complete Report Available for Download

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The analysis, drawn from the results of 13 publicly available studies from government, academic and industry sources, found that the total emissions from refined products wholly derived from oil sands are five to 15 percent higher than the average crude consumed in the United States. The average for oil sands products processed in the United States is only six percent because those products are often blends of oil sands and lower carbon products as opposed to being wholly derived from oil sands.

“Taking into account the complete well-to-wheels life cycle is crucial for making comparisons between sources of crude oil,” said Jim Burkhard, IHS CERA managing director, Global Oil. “Seventy to 80 percent of the GHG emissions come from the combustion of the fuel in an engine so the vast majority of emissions remain the same whether the oil comes from West Africa, Latin America or Canada.”

Other commonly cited estimates assert that the GHG intensity of oil sands is many times higher than conventional crudes. Many reasons can account for these gaps, including that some assessments are based on comparisons of GHG emissions from only part of the lifecycle—such as only the extraction phase—rather than the complete process. Other studies focus only on certain specific oil sands operations—such as insitu facilities with higher-than-normal energy use—rather than taking into account the average of all oil sands operations as a whole, the report notes.

“In order to have a true comparison between sources of crude oil it is necessary to account for the industry average as a whole rather than any single operation,” said IHS CERA Director Jackie Forrest. “Certain operations have higher carbon intensity, while others are lower. You must account for the entire spectrum.”

Oil Sands, Greenhouse Gases, and US Oil Supply: Getting the Numbers Right also examines the potential implications of lifecycle-based regulation on petroleum fuels, including those produced from oil sands. Lifecycle-based policies, such as the low carbon fuel standards (LCFS) adopted by California and British Columbia, present a challenge for any petroleum fuel since the 70 to 80 percent of emissions occur in the vehicle engine – out of the control of the fuel producer, and are thus non-accessible with respect to LCFS compliance. Compliance will require the addition of lower-carbon fuels, such as biofuels, electricity, or natural gas, to the transportation mix.

“This is a tough mandate for all oil producers and refiners because together they account for only 20 to 30 percent of the overall carbon emissions of the fuel,” said IHS CERA Director, Samantha Gross. “A full one-half to one-third of emissions from producing and refining oil would have to disappear. Bringing lower carbon alternative fuels into the mix is the only viable compliance strategy.”

Oil Sands, Greenhouse Gases, and US Oil Supply: Getting the Numbers Right is the second report from the IHS CERA Canadian Oil Sands Dialogue, which brings together a wide variety of stakeholders to participate in an objective analysis and open exchange on the benefits, costs, and impacts of various choices associated with Canadian oil sands development. The dialogue addresses a range of topics that have the potential to shape the future growth of oil sands. The report is the second of four to be released as part of this year’s research agenda

The complete report is available for download at the dialogue’s homepage, www2.cera.com/oilsandsdialogue

About IHS CERA (www.ihscera.com)

IHS CERA is a leading advisor to energy companies, consumers, financial institutions, technology providers and governments. IHS CERA (www.cera.com) delivers strategic knowledge and independent analysis on energy markets, geopolitics, industry trends, and strategy. IHS CERA is based in Cambridge, Mass., and has offices in Bangkok, Beijing, Calgary, Dubai, Johannesburg, Mexico City, Moscow, Mumbai, Oslo, Paris, Rio de Janeiro, San Francisco, Tokyo and Washington, DC.

About IHS (www.ihs.com)

IHS (NYSE: IHS) is a leading source of information and insight in pivotal areas that shape today’s business landscape: energy, economics, geopolitical risk, sustainability and supply chain management. Businesses and governments around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS employs more than 4,200 people in more than 30 countries around the world.

IHS is a registered trademark of IHS Inc. CERA is a registered trademark of Cambridge Energy Research Associates, Inc. Copyright ©2010 IHS Inc. All rights reserved.

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