Canadian oil is boosting Midwest economy, but at what cost?

July 7, 2011

By Dan Bobkoff

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Last weekend, an ExxonMobil pipeline spilled about 1000 barrels of crude oil into the Yellowstone River in Montana. For those in the Midwest, it’s a reminder of last summer’s bigger pipeline break in Michigan. This region’s pipelines increasingly carry a thick, tar-like crude from the oil sands of Alberta, Canada. It’s a booming industry, creating jobs and boosting profits in the Midwest. But some worry about the bigger risk to the region’s health and environment.


 

THE JOBS

You don’t have to tell Detroiters like Jeff Collins that jobs are hard to come by in that city.
“I have been unemployed really since October ’07,” he says.

He’s a construction worker, one of the worst-hit industries in perhaps the worst-hit city.

On a recent Friday morning, Collins and about 50 other Detroit electrical workers are milling about the basement of their union hall. They wait for their names to be called and hope to land something. There are eight openings this day at Detroit’s expanding Marathon oil refinery. The list of guys hoping for work there is 1700 long.

“Well I’m too far back on the book, I probably won’t get that,” Collins says.

He says he’s so far back, he’s just there for male bonding.

A few miles away, that Marathon refinery is a hulking complex of pipes and towers and concrete. And, it’s one of the biggest construction projects in Michigan.

Over the next several weeks the series will be examining critical issues centered on water. The first installment takes a look at how the lakes affect our lives.

Marathon Oil is spending $2.2 billion to expand and upgrade this refinery so it can process more of the sulfur-rich, tar-like crude that comes in by pipeline from the Canadian oil sands. About 1,300 construction workers will be on the job there by fall. The oil industry says this is just one example of the Canadian oil sands creating jobs here, something it’s been promoting heavily in advertisements. One ad says the Canadian oil sands and the supporting infrastructure in the U.S. “could create more than 342,000 American jobs in the next four years.”

Peter Howard of the Canadian Energy Research Institute helped the industry come up with those numbers. He projects the oil sands to create 23,000 jobs a year in Illinois, 8000 in Michigan, and 11,000 in Ohio.

Howard’s numbers include everything from companies like Caterpillar that make the gargantuan trucks used in the oil sands, to food companies that feed the workers. And, there are all the refineries being converted to process the stuff. BP’s Toledo plant is supposed to start an upgrade soon. And, BP’s expanding Whiting, Indiana refinery near Chicago is already employing hundreds of construction workers.

After the expansions are done, it’s not exactly the bonanza promised in those ads. The oil companies say each refinery will create fewer than 100 new full time jobs.

 

THE RISK
The oil comes to the refineries by pipeline. Many are owned by a Canadian company called Enbridge. Penny Miller had never heard of that company or its pipelines until last year. One day, she came home from a lunch and saw a sheen on the creek by her home.

“The next thing I knew is the Enbridge people came up and said they’re trying to hunt this down,” Miller says. “Then, by the time I came home from work that night, it was really thick and really bad.”

A year ago this month, more than 800,000 gallons of heavy Canadian crude spilled from an Enbridge pipeline by her house near the Kalamazoo River. The day after the spill, Penny Miller’s dog died from the fumes.

Nearby, workers are still cleaning up that spill. In one creek, they use rototillers to stir up the oil and bring it to the surface.

That’s because this crude from the oil sands is not like other crude. For one thing, it sinks. That’s a reason this cleanup has already cost more than half a billion dollars, and it’s still going.

"A year ago, there was heavy oil here from bank to bank,” says Ralph Dollhopf of the Environmental Protection Agency, as we go on an airboat ride to survey the Kalamazoo River today. It’s a lot cleaner, but there’s more work to do before kayakers and others who use the river can return.

We get to two airboats parked near the edge of the river. Dollhopf asks the workers how it’s going as they stick long poles called “stingers” into the water.

“The idea is to bring the submerged oil up to the top where they can recover it,” Dollhopf explains.

Not only did the oil sink, but the EPA says this oil sands crude posed health risks unlike more conventional oil. Benzene and other volatile organics were released into the air. Even today, air quality monitors are out at each cleanup site.

Josh Mogerman of the Natural Resources Defense Council says the oil sands are partly to blame for this spill. He says this heavy crude is full of acids and sulfur. And, it travels at a higher temperature and pressure than the conventional crude that used to be the mainstay of these aging pipes. That makes cracks and spills more likely.

“You’re basically sandblasting the pipelines from inside the pipe,” Mogerman says.

The industry contends there is no significant difference between regular and oil sands crude. Peter Howard of the Canadian Energy Research Institute says pipeline companies go out of their way to minimize the risk of spills.

“When you think about the number of barrels of crude that’s shipped around the United States on a daily basis versus the number of spills in the last ten years, it’s just a finite number,” Howard says.

Enbridge, though, has had at least five other spills in the US in the last decade, according to Reuters. During that time, the amount of crude from the oil sands being piped from Canada has increased dramatically. Mogerman of the NRDC says that’s putting this region’s rivers and lakes at risk. He points to areas around Lake Superior, the southern end of Lake Michigan, Lake Huron, and Lake Erie as vulnerabilities.

“Additionally, you have issues where the pipelines actually run underneath Lake St Clair or the St Clair River in Southeast Michigan, and awfully close to the Indiana Dunes National Lakeshore,” he says.

But that’s not front of mind at the union hall back in Detroit.

Ken Wesley walks out of the office with a job slip in his hand. He had been traveling the country for work. Now, he can work in Detroit, his home.

“Going to have a good summer,” he says, smiling. “Family and kids: haven’t seen them in about 8 months.”

And, with the Midwest eager to put guys like Ken Wesley back to work, it’s easy see why cities embrace pipelines and refinery expansions, even if the oil sands crude could be putting our waterways and lakes in peril.