a has one of the world's largest supplies. So, it’s basic supply and demand. Those new consumers are going to want to get that Canadian oil, and one way or another, analysts agree, and State Department agrees, that oil is going to get produced and shipped to consumers.
CURWOOD: So the analysis of the State Department says that the oil coming out of Alberta is about 17 percent more carbon intensive than traditional crude oil, what do you think about the Keystone’s impact on climate change?
MCNALLY: Well, the State Department also concluded that the oil in Canada will get produced with or without the permit. If the Keystone permit is rejected, and the pipeline is not built, the oil sands will come to market via other pipelines and rail, which emit more than the Keystone pipeline would. So that’s why I think the State Department concluded, despite the increase in carbon emissions from oil sands relative to conventional oil, that since the oil in the oil sands is going to be consumed anyway, the cleanest way to get it out was to put it through the Keystone Pipeline.
CURWOOD: So you’re saying that, say, putting it in trucks or putting it on rail would be 20 percent more emissions related to this source of crude?
MCNALLY: Right. The State Department concluded that for other pipelines and rail transport options compared to the Keystone Pipeline.
CURWOOD: How viable are those options though? We’ve seen all kinds of problems with trains, a number of deadly derailment accidents, and as far as an alternative pipeline going through British Columbia, there seems to be all kinds of problems there - local politics and treaty rights with first nation groups.
MCNALLY: Well, I think there’s no question in Canada and the United States, we’ve seen concern about the costs and risks associated with energy production and transport, and those are going to be addressed. But even taking on board the regulatory changes that will be coming, the view of the State Department and most energy analysts that I’m aware of is that at the end of the day, that oil will still flow. Canada is already working on other options, mainly pipelines from the west out to the east to the maritime provinces, possibly pipelines to the west coast and then to Asia and other rail and pipeline options if the Keystone XL Pipeline is rejected.
CURWOOD: Now, some scientists like former NOAA scientist James Hansen say if the carbon in the Alberta tar sands gets into the atmosphere, it’s game over for the climate. What would it take for the Alberta tar sands to become the first major fossil fuel reserve in history to be left in the ground?
MCNALLY: I think in order to imagine a scenario in which the oil sands in Alberta was not produced in the coming years, I think the most likely scenario would be a global recession and a huge drop in the price of oil below the cost of what it would take to invest and produce in Canadian oil. So were we to have a worldwide recession, which would, of course, create other problems, then I could imagine a delay in investment in both the production and transport options for that oil. Second, it’s, I guess, possible that global concern about global warming will rise strongly enough in Canada and other countries to block the production of that resource. But I think that’s very unlikely. When I look around the world and look at Europe and look at Australia and look at Japan, I see areas that have been at the forefront of carbon policies and climate change policies pulling back and stepping back as they’ve encountered economic difficulties, not the least of which are high energy prices, particularly in Europe and Japan. So I don’t see any sign of the kind of resurgence and concern about global warming that would translate into public policies that would block the oil sands from being developed in the next few years.
CURWOOD: Now, by your estimates, you say that the world is going to consume a third more oil in the years ahead. What about concerns by those who talk about what’s happening with the climate that we really can’t afford to do that, and that’s