LOBBYING:

Alberta works quietly to improve image of oil sands

This story was updated Wednesday, March 3.

South Carolina Gov. Mark Sanford (R) talked about tires on a recent Saturday. An Indiana congressman heard about engines days later. And in Wisconsin, the discussion centers on monster shovels that trundle through pit mines on tank treads.

These aren't masculine chats about molded metal and mechanics. The unpublicized conversations are about oil. A specific sludge of lampooned and coveted crude: Canada's gooey bitumen from the Albertan "oil patch."

The forested province is undertaking a remarkable effort to expose connections that states, cities and congressional districts share with the often maligned petroleum resource, whose scalded landscapes and carbon output have become a favorite target of climate champions.

Tracing economic umbilical cords between places like Milwaukee and the oil sands epicenter, Fort McMurray, Alberta, 1,793 miles away, could make a difference when local lawmakers consider restricting refined Canadian crude from being hosed into Dairyland gas tanks.

Wisconsin is one of nearly 20 states trying to reduce the amount of carbon that's released from family sedans and delivery trucks. For Canada, it's a personal blow. The United States is a massive market, both nearby and with lenient access. Now, that might be changing. In the Midwest, that's especially important. The heartland uses more Canadian crude than any other region in the nation.

But the benefits flow both ways. And Canadian officials are making sure that local leaders around the country know that if they slap the cheek of Canadian crude, they might feel the pain themselves.

"Wisconsin's imprint on that industry is huge," state Sen. Jeff Plale, a Democrat who co-chairs the committee that's overseeing debate on a major energy bill, said of the oil sands.

Plale lives six blocks from the South Milwaukee headquarters of Bucyrus, a major employer that manufacturers the swiveling shovels that can scoop 100 tons of sandy bitumen from the Albertan mines with every bite.

"When I'm talking a shovel, I'm talking, like, a $40 million shovel," Plale said. "This isn't something you have in your garage. Those are made ... by my neighbors."

How much is that tire?

Wisconsin is one of the newest states to propose a low-carbon fuel standard, a policy requiring gasoline providers to reduce the amount of "life cycle" carbon in each gallon of gas. Oil sands crude is targeted because the emissions related to its extraction, production and refining tend to be higher than those from purer oil from the Middle East.

The policy's goal is to dilute gas with biofuel blends from soybeans, corn, sugar cane and other lower-carbon sources. That could have positive effects on the climate. California, which is preparing to launch the first fuel standard anywhere, produces 40 percent of its emissions from cars and trucks. In Wisconsin, it's 24 percent. Both plans propose cutting carbon intensity 10 percent by 2020.

The rising tempo worries Canada. Hounding criticism around the oil sands has prompted officials to undertake an aggressive lobbying effort to reshape perceptions of the vast reserve, which is second only to Saudi Arabia.

Gary Mar, Alberta's top official stationed in the Canadian Embassy in Washington, has visited more than 20 governors to emphasize the economic importance of the oil patch. He enters armed with local statistics: 70,000 employment hours from pipeline work around Peoria, Ill.; engines for the world's largest dump trucks are made in Lafayette, Ind.; and the truck's 12-foot tall tires, at $60,000 apiece, are made in South Carolina (each truck has six).

California, Colorado, both Dakotas, New Hampshire, New Jersey, Maine, Massachusetts, Tennessee, Vermont, West Virginia, Wisconsin, Wyoming and more -- Mar has visited with the governors of them all.

He also sees members of Congress, asking them to highlight the benefits of oil sands in floor speeches, inviting them to tour the Rhode Island-sized oil patch, and reminding them that policies hurting Canadian crude can also hurt their constituents.

"We're trying to predict as best we can how this will roll out," Mar said of state plans for low-carbon fuel standards. "We're putting our case before the jurisdictions that would be the most receptive to our message and would understand the importance of Canadian oil supply in their jurisdictions."

Midwest is soaked in bitumen

The effort comes as more and more states consider cleaning up their transportation fuel. Michigan, Minnesota, Oregon and Washington state have seen bills introduced in their legislatures. Eleven states, from Maine to Maryland, are farther along. They plan to complete a regulatory framework for a regional effort by early next year.

More than half of the oil sands crude imported daily into the United States goes to the Midwest, which receives more than 800,000 barrels of Canadian oil every day. Minnesota, for example, relies on its northern neighbor for 83 percent of its transportation fuel.

The Midwest is by far the largest user of bitumen. The Mountain West region is a distant second. California uses none, or a trace, for cars and trucks, and the East Coast receives about 175,000 barrels of Canadian crude a day, a small amount compared to other foreign sources it relies on.

Minnesota's Republican governor, Tim Pawlenty, attacked proposals in his state to develop a low-carbon fuel standard last week as "very ill-advised." Pawlenty is exploring a presidential run in 2012.

"We have a very large need for Canadian crude in Minnesota," Pawlenty said at a meeting in Washington between governors and six Canadian premiers.

The effort there appears to have stalled. The same is true for a bill introduced in Michigan.

"Out of the gate, this has created a lot of controversy with the petroleum industry," said Michigan state Rep. Lee Gonzales, the Democrat who introduced the measure. "At least we've started a conversation."

Cabinet hears Canadian concerns

One of the biggest complaints about the low-carbon fuel standard proposals is that they tend to lean heavily on California's research and regulatory framework. That measure "discriminates" against oil sands crude by placing a higher bar on bitumen than on California heavy crude, which generates a comparable level of emissions, opponents say.

Canada's environment minister, Jim Prentice, discussed how state plans are producing "a lack of continental harmony in terms of an energy policy" when he met this week with several top administration officials, including President Obama's climate change chief, Carol Browner, and U.S. EPA Administrator Lisa Jackson.

"Our recommendation has been that we examine a solution to that," Prentice said in an interview. "Is there a continental fuel standard, for example, that we should examine?"

That appears to be a distant goal. The cap-and-trade legislation approved by the House in June, introduced by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), does not contain a low-carbon fuel standard.

So states are determined to lead the way, forcing Congress to act. No one knows for sure what the impacts on gas prices would be. California's analysis estimates that "consumers should see no significant changes in fuel prices," or perhaps a small savings.

The state's energy sector, meanwhile, could see a savings of $11 billion over the next decade as less oil is used and biofuel producers go online, the analysis found.

Throwing LCFS overboard?

But prices at the gas pump will depend on the availability of new fuels and the price of oil. If biofuel supply is tight and oil prices are low, that could "result in overall net costs, not savings, for the LCFS," California cautioned.

Opponents of low-carbon standards say the programs won't stop oil sands development, which is expected to triple to more than 3 million barrels a day over the next 20 years. That means China, India and other booming nations could import Canadian oil, and greenhouse gases will be released unabated, opponents argue.

Many of those questions are now being debated in Wisconsin.

Plale, the key Democrat whose district is home to the shovel maker, said the low-carbon fuel standard is "untenable."

There is perhaps worse news for climate advocates. The measure is included in a sprawling piece of legislation that would gradually increase the state's renewable portfolio standard to 25 percent, spur clean power projects and finance energy efficiency programs, while potentially creating thousands of jobs.

The fuel standard imperils the entire bill, said state Sen. Bob Jauch, another key Democrat.

"Right now, these issues are anchors to any possibility for this ship to sail," he said.

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