SHAWN MCCARTHY
GLOBAL ENERGY REPORTER
 
OTTAWA — American refiners are making massive investments to dramatically increase imports from Alberta’s oil sands, even as they face mounting pressure in the United States over the oil sands’ impact on greenhouse gas emissions and other pollution.

U.S. refineries are planning to expand their capacity by 1.6 million barrels a day, and some two-thirds of that is designated to handle production from the oil sands, according to data from the U.S.
Environmental Protection Agency.

As well, refiners are planning to convert 800,000 barrels a day of current capacity from conventional crude to handle the Alberta imports, the EPA figures show.

The data was released yesterday in a study by two environmental groups, U.S.-based Environmental Integrity Project and Canada’s Environmental Defence, who argued the growing reliance on the oil sands would have “catastrophic” environmental impacts. The groups calculated that industry is spending about $53-billion to expand or modify refineries in order to handle the oil sands product.

“It is hard to imagine what else it is that the U.S. oil industry could do to go backwards further and faster than to rely on Canadian tar sands or similar resources in the United States,” Eric Schaeffer, director of the Environmental Integrity Project, said in a conference call with reporters.

“Not only would this mean significantly more pollution over all, but it would substantially boost the greenhouse gas emissions linked to global warming.”

The refinery investments come as American lawmakers grapple with the need to ensure U.S. energy security, while reducing greenhouse gas emissions. The U.S. Senate is debating climate-change legislation that would adopt national standards for greenhouse gas emissions, including caps on refinery emissions.

Both leading presidential candidates, Republican Senator John McCain and Democrat Barack Obama support national emission standards, while Mr. Obama has gone a step further by introducing low-carbon fuel legislation that could penalize refiners who use oil sands crude unless emissions in Alberta are dramatically reduced.
 
The environmental groups say that Alberta’s oil sands represent the second largest oil reserves on the planet after those of Saudi Arabia.
They also say the industry is looking to expand production in Alberta from 1.4 million barrels a day in 2007 to at least 3.5 million by 2020 and eventually as much as five million barrels.
 “However, the environmental consequences of mining and refining tar sands are frankly catastrophic,” the report says.
 
With current high oil prices, the groups warned, U.S. producers could soon be tapping oil from American shale deposits, which are even more difficult to process that Canadian oil sands and would lead to greater emissions.
 
The Canadian government released regulations this spring that would require oil sands projects that commence production after 2012 to dramatically reduce their greenhouse gas emissions by 2018 through technology like carbon capture and storage (CCS), in which CO{-2} is captured and piped to underground storage sites.
 
One industry task force warned last year that oil sands producers would face growing pressure in the U.S. to cut their greenhouse gas emissions, and need to quickly adopt CCS technology.
 
Matt Price of Environmental Defence said CCS could provide significant reductions in greenhouse gas emissions, but criticized the pace at which the government and industry is moving.
 
“The timelines for implementation are far, far too long,” he said.
 
Cindy Schild, refinery issues manager for the Washington-based American Petroleum Institute, said she could not confirm the study’s refinery investment figures, though she said some announced projects may be stalled. She acknowledged, however, that there is a long-term trend for U.S. refiners to expand their reliance on Canada, which is already the No. 1 source of imported oil there.
 
She said the Canadian government has assured U.S. officials that the oil sands producers are serious about reducing their greenhouse gas emissions and face strict targets for doing so.
 
The petroleum industry supports in principle the need for national climate-change legislation, but worries that “some sectors are going to be unfairly targeted,” Ms. Schild said.