Opponents of switching Yukon Energy’s power plant from diesel to natural gas have raised some interesting questions about whether the gas will come from fracked or conventional wells.
I pondered this as I recently poured go-juice into my outboard. Where does that miracle fluid come from? What about the gas in my truck or my home heating fuel? The avgas that keeps my friend’s plane in the air?
It’s a big-dollar question, since Statistics Canada estimates that the Yukon burned 96 million litres of refined petroleum products in 2011, including personal, commercial and government use. That’s about eight litres per Yukoner per day.
The Yukon fossil fuel supply chain turns out to be a fascinating beast. And – spoiler alert – if you don’t like fracking and the tar sands, you’re probably not going to like where this article is headed.
Not so long ago, we got our gas and heating oil from conventional oil wells. In a remarkably short period – we’re talking years, not decades – this has shifted dramatically.
I don’t have the science skills to test the gas in my outboard to see where it’s from. But looking at production figures and supply lines, I can make a guess.
Most of the Yukon’s fossil fuels probably come from Western Canadian sources. The Canadian Association of Petroleum Producers puts out a crude oil report every year. In 2013, about 60 per cent of Western Canadian crude came from the oil sands. Since crude from many different sources gets mixed together as it is refined and shipped to market, it is probably safe to assume the Yukon’s petroleum consumption breaks down the same way.
This means that if you use gas or diesel in your vehicle, heat your house with oil, or fly in a plane, you can be confident that a good chunk of your energy comes from the two million barrels that Canadian oil sands producers pump to markets every day.
Fort McMurray thanks you for your support.
Your energy demand also supports expansion of the oil sands. CAPP predicts oil sands production will more than double by 2030, when it is expected to make up three quarters of Western Canadian output.
The story is a bit different if you travel in Alaska or the Pacific Northwest. Washington State has a cluster of refineries, including some just south of the Canadian border in Bellingham. Oil tankers from Alaska have been passing Victoria on their way to Bellingham for more than 40 years. I was recently on a whale watching tour in the San Juan Islands, and annoyed my children by distracting them from the orcas and pointing out tankers, oil refineries and other points of economic interest.
Alaska used to supply around two million barrels a day to the Western U.S. refineries, including the ones in Washington. As Alaskan production has declined to about half a million barrels a day, these refineries have taken to shipping in huge trainloads of fracked oil from the Bakken Shale in North Dakota and other unconventional sources. An industry watcher I met from Seattle told me that the fracked oil is cheaper to refine than Alaskan crude, which makes it popular with oil executives.
One of the Washington refineries claims to be the biggest supplier of jet fuel to Vancouver airport. So if you fly through Vancouver, you are quite likely flying on either fracked fuel or energy drilled from Alaska’s Arctic coast.
While it is an interesting theoretical question as to whether your car is burning conventional oil, Arctic oil from Alaska, fracked oil or Fort MacMurray’s finest, in practical terms it doesn’t matter. All the crude gets blended together in the supply chain. That’s why they call oil a commodity, and why your gas station doesn’t advertise as many local varieties as the wine store or Starbucks. Alaskan Amber is a beer not the kind of gas you brag about putting in your snowmobile.
The same point applies to the debate about whether Yukon Energy’s new power plant will burn conventional or fracked gas. The power station will increase demand for natural gas, which will draw from the pool of natural gas in Western Canada. Even if Yukon Energy buys a truck load from a conventional well, it just means there will be more fracked gas available for other users. Gas is fungible, as economists say.
Our current dependence on fossil fuels has four strikes against it. First, it is expensive. That eight litres per Yukoner per day works out to well over $100 million a year. Second, importing energy creates lots of jobs in Alberta and Alaska but not in the Yukon. Third, burning non-Yukon fuel creates zero royalty revenues for the Yukon government and Yukon First Nations. Fourth, burning fossil fuels pumps carbon dioxide into the planet’s atmosphere.
It may be hard to find an energy source that is cheaper than oil, creates local jobs and royalty revenues and doesn’t produce carbon dioxide. But perhaps we could do better than zero out of four.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. You can follow him on Channel 9’s Yukonomist show or Twitter @hallidaykeith