Tar Sands on fast track to the UK?!

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Greenpeace and Platform told us awhile ago that there was a small amount of tar sands diesel entering Europe. While worrying, it didn’t seem likely to increase any time soon, as the infrastructure wasn’t developed enough. However, some channels clearly do exist to facilitate the moving of tar sands from Canada to Europe – refineries, ports, ships, pipelines, etc. And in reality, there needs only to be some improved infrastructure and a profit motive, combined with no adequate legislation to stop it, in order for tar sands to enter the UK in full force…uh-oh.

Keystone XL – the infrastructure
Currently a variety of pipelines keep the oil trickling out of Alberta, but not as quickly as the industry would like. But Keystone XL would have it gushing down to the Gulf Coast, where a range of complex refineries are well-equipped to handle the heavier tar sands oil and turn it into diesel (or, with more effort, gasoline). From the Gulf Coast, tankers are easily able to take this diesel to Europe and Latin America, where it is more highly sought than in the US. Even though the pipeline hasn’t been built, Transcanada – the brains behind it – has already signed contracts with six companies planning to use the pipeline. The primary customer is Valero, whose Port Arthur refinery is conveniently located right at the terminus of the pipeline.

Valero – the profit motive
Valero, little known in the UK, is the largest exporter of refined products in the United States. It has signed contracts both to transport 100,000 barrels per day of tar sands oil from Alberta via the Keystone XL pipeline and to ship oil abroad from Port Arthur. Valero has recently purchased its first¹ refinery outside of North America: the Pembroke Refinery in Wales, one of the most complex refineries in Europe (i.e. specifically designed to process heavier gunk like tar sands). This deal also gives Valero 11 terminals to receive and store oil around the UK, (in locations such as Brighton, Cardiff and Plymouth), and 1,000 Texaco-branded petrol stations. This UK presence doesn’t in itself guarantee anything: where Valero delivers its diesel will be heavily determined by what the market is doing, and which terminals are close and cheap. However, the company has told its investors that it sees a profit opportunity in bringing diesel to Europe where it is highly sought,and taking gasoline, which is less in demand here, back to the US. Valero calls it the ‘Margin Optimization Strategy in the Atlantic Basin’. Now, we wouldn’t want to jump to conclusions, but given what we know about the locations of Valero’s refineries and the companies’ deals with tar sands companies, I think we can guess where that diesel will originate from.

The Fuel Quality Directive – the absent legislation
As we’ve been saying for awhile, the FQD, if done properly, could strongly discourage future use of tar sands oil in Europe and set a precedent for similar legislation being passed around the world. Clearly this is not in Canada’s interest: their aggressive lobbying tactics oscillate between stalling, insisting more research be done into other fuel types, and threats, such as that they’ll take Brussels to the WTO, or abandon their trade Canada-EU trade talks. Could this drag out long enough that companies like Valero start exporting significant amounts of tar sands diesel to the UK and elsewhere in Europe?

An Algebraic Atrocity: KXL + V – FQD = TS in the UK?
This isn’t inevitable – it isn’t even confirmed – but it’s a real possibility that can’t be ignored. So to tackle the parts of the equation separately:

• We need to stop the Keystone XL Pipeline from being built. We knew this anyway, but this makes it all the more tangible for us in the UK.
• We need to hold Valero to account for this sneaky strategy. Who in the UK has even heard of Valero, let alone what they’re planning?
• We need to get the Fuel Quality Directive through, with the inclusion of a separate carbon value for tar sands, as soon as possible.

Actions we could take:

• Ride on the glut of excitement surrounding Keystone. Write to Oprah, call Obama, quote Hansen, etc.
• Start thinking of ways we could get Valero. They have a London office (EC3R 6HD), a Welsh refinery, 1,000 petrol stations and various other bits of infrastructure around the UK, from Manchester to Heathrow.
• If you live in Wales, write to your MP demanding they pressure the Welsh Assembly to ban tar sands entering Pembroke (to at least raise awareness of the issue, if nothing else).
• Keep an ear out for action to take on the FQD.

To find out more:

• See how tar sands is already coming to the UK.
• See how Keystone would enhance this.
• See how Valero are going to run with it (especially slides 6, 8, 10, 11 & 12).
• Pretend you’re an investor and email [email protected] or [email protected] asking for more information!
• Have a look at Henry Adams’ website for a wealth of information.

1: Correction: Since 2004, Valero has operated a refinery in Aruba in the Caribbean. Pembroke remains so far its first refinery outside of the Americas.