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Fuel Sustainability Brief: Petroleum

Tuesday May 5, 2015


#Energy and Extractives, #Future of Fuels,

Why Petroleum?

Diesel derived from petroleum comprises over 90 percent of the commercial and freight transport fuel used in North America. Petroleum has superior energy density compared to other commercially available fuels, and it is part of a mature and low-cost distribution system with applications across most vehicle types. Oil is expected to continue to dominate the fuel market for years, but it will cede share to alternatives.

Petroleum causes a wide array of sustainability impacts, including a large share of global greenhouse gas (GHG) and other emissions from transportation. It has also been associated with wider environmental and human rights impacts during drilling and refining, and occasional but destructive toxic releases from spills and accidents.

Market Outlook

Oil is a fungible global commodity, making it rare among fuels in being traded as essentially the same product worldwide. The United States produces about 14 percent of global supply and consumes about 21 percent of global demand.1 The main sources of U.S. oil imports are Canada (31.9 percent), Saudi Arabia (13.5 percent), Mexico (9.3 percent), and Russia (4.7 percent).2

Petroleum demand remains strong, though it is beginning to cede share to alternatives for several reasons, including rising public concern and regulation of high-carbon energy sources; reduced potential for producing fuel from inexpensive, conventional supplies; and the increasing viability of alternative technologies. However, there is considerable uncertainty about this projection, with estimates ranging from just under 15 percent to around 95 percent of market share. 3

Average price of diesel for the past five years is 57.4 percent higher than averages for the previous 10 years. The price has increased 113 percent since 2000.4

The price of oil has a strong, albeit complex, impact on the competitiveness of alternative fuels. Low oil prices curtail short- and medium-term investments and returns on alternatives like natural gas, but are unlikely to be sustained in the long term. The rise of carbon regulation and the increased costs associated with developing unconventional petroleum sources point toward a long-term trend of higher oil prices, while costs fall for alternatives.

Vehicle Applications

Diesel derived from petroleum generally works with any diesel internal-combustion engine (ICE) vehicles. It performs well in virtually all conditions, is ubiquitous and dependably high quality, and works with virtually all engines that are designed to use it. Therefore, it is the baseline fuel of choice for most medium- and heavy-duty applications.


Key Issues

Key Feedstock and Process Choices

Diesel is produced through a series of activities that start with drilling or mining (generically called “production”), followed by processing through fractional distillation in refineries (there are about 130 in the United States) before being distributed locally via pipelines or trucks (and barge or rail to a lesser extent) to terminals near regions of demand.5 6 There are over 150 standard regional blends of oil (“benchmarks”), which can be themselves blended together before or at a refinery to create the end fuel.


Conventional production by drilling produces oil with natural pressure during “primary recovery,” after which pressure is induced by water, steam, or chemicals in “secondary” and “tertiary” recovery. New “unconventional” sources include: oil sands and other extra heavy oil, oil found in ultra-deep water formations and in the far North, and oil produced using high volume, horizontal fracturing (“fracking”).


One of the most important of these for North American fuel users is fracking, where fissures are created in rocks by pumping high-pressure fluids down a wellbore to stimulate flow. Fluid, known as “produced water,” returns to the surface with recoverable quantities of oil in addition to brines, metals, and injected chemicals.7 Another is oil from oil sands: oil that was mined (generally open-pit) and separated from the clay, sand, and water in which it is found and “upgraded” to produce a refineable product.8

Key Sustainability Opportunities and Impacts

Impact: Climate Change

Transportation fuel creates around 25 percent of global GHG emissions, and oil represents over 90 percent of that share. Diesel and gasoline from petroleum sources create around 98.0 gCO2e/MJ in the United States, three-to-four times higher than many alternatives.9 Total annual emissions from petroleum are projected to grow from 11.1 GtCO2e in 2011 to 12.5 GtCO2e in 2035, due principally to increased transport demand.10 Furthermore, studies show up to 80 percent difference in upstream GHG emissions from different types of oil, with “extra-heavy,” “high steam,” and “high flare” oils producing significantly higher emissions.11

Impact: Air Pollutants

Transportation-related emissions are estimated to be responsible for about half of deaths from outdoor air pollution, which is now the biggest environmental cause of premature death, resulting in an estimated 110,292 deaths in the Unites States in 2010.12 These impacts are largely the result of tailpipe emissions that include suspended particulate matter, nitrogen dioxide, benzene, and other pollutants.13

Impact: Human Health

Prolonged worker exposure to diesel exhaust from drilling, completion, trucks, and equipment such as pumps can result in chronic health effects. Refining also contributes to air pollution that includes criteria air pollutants, volatile organic compounds, and hazardous air pollutants.14

Impact: Biodiversity

Open pit mining, tailings ponds, and groundwater contamination can pose serious threats to fresh water and marine environments. Depending on timing and location, a spill can cause significant harm to individual organisms and entire ecosystems, such as in the Exxon Valdez spill of 1989 and the 2010 Deepwater Horizon spill.15 The frequency and volume of oil spills have declined in almost every year since 1973, primarily due to reduction in spills from barges and tankers.16

Key Uncertainties and Unresolved Issues

Uncertainty: Climate Change (Unconventional)

Generally speaking, oil sands and heavy oil have greater processing requirements than conventional oil, which leads to additional GHG emissions.17 While the California Air Resources Board puts a figure for unconventional GHG emissions around 101-123 gCO2e/MJ (compared to 98.0 gCO2e/MJ for conventional), other studies suggest emissions from unconventional could be twice conventional production.18

Uncertainty: Water Availability (Unconventional)

Largely a consideration for unconventional production methods, energy growth is projected to increase freshwater withdrawals from 85-165 percent by 2025.19 Drilling operations create “produced water,” which may contain arsenic, cadmium, mercury, and lead. Additionally, fracking for oil and upgrading oil sands uses more water than conventional systems, including some alternatives such as some biodiesels.20 More study is needed to determine definitive impacts.

Uncertainty: Arctic and Ultra Deep Ecosystems (Unconventional)

Exploration is growing rapidly in the Arctic as melting sea ice makes coasts and waterways more accessible. In addition to the environmental and social vulnerability of the region, its remote location makes mitigation and cleanup operations difficult. There is also concern about the heritage and symbolism of keeping this area pristine. The current and potential impact on ecosystems is not well understood.


Sustainability Potential

Best Case

Lowest emissions from diesel are associated with relatively light blends with the least energy-intense methods of conventional production. For petroleum to be sustainable long term, solutions would need to be found to remove or capture carbon. Zero-emissions controls can eliminate air pollution during vehicle operation. Applying best practices for drilling and mining drastically reduces potential water, human health, and ecosystem impacts from production.

Best Practices

Apply Fleet Efficiency and Emissions Control

Since the introduction of catalytic converters and improved fuels to enable them in the mid-1970s, there have been significant reductions in tailpipe emissions. Risks to human health from diesel exhaust in North America have been drastically reduced as a result. New telematics enable fleet efficiency, while numerous innovations in vehicle design have increased fuel economy, and built-in technologies help capture tailpipe emissions.

Minimize GHG Emissions from Production, Refining, and Distribution

Promote production and distribution practices that reduce methane emissions leaks from natural gas (such as widespread adoption of “SMART” leak detection and repair), reduce venting and flaring, expand use of CO2-enhanced oil recovery, and minimize emissions during refining. Applying these across unconventional production sites will significantly reduce their sustainability impacts.

Reduce Wider Community Impacts of Production

Many petroleum producers are in a position to proactively improve impacts. However, because of the large environmental and security externalities involved, markets alone are not equipped for comprehensive response, and government policies will be needed to create a transportation fuel system that makes use of oil more sustainably.21 Widespread adoption of environmental and social management systems, especially in unconventional production, will greatly improve practices. Ensure “produced water” is treated or injected into confined aquifers.

Apply Standards in Unconventional Petroleum Production

Adopt best practice environmental standards for “tight oil and gas,” especially around water and chemical management and transparency. Improve production impacts of oil sands and heavy oil, which includes (1) water reduction and the use of dry tailings (for mining) and (2) greater energy and water efficiency. Improve oil sands footprint management by making seismic lines and road access more benign.

Avoid and Effectively Prepare for and Manage Spills and Accidents

Improve emergency preparation and response for production in extreme environments, such as (1) the Arctic and other far north regions and (2) deepwater, subsea response, and capping/containment.

Promote a Culture of Accident Prevention

Improve environmental health and safety in operations, including increasing safety of sour oil and gas production and oil and gas refining, reducing toxic releases and pipeline and shipping spills, and investment in training and education. Towards this end, integrate lessons learned around enabling a corporate culture to prevent accidents, and apply the lessons to the context of the Arctic and deepwater.


Join Us

This Fuel Sustainability Brief was researched and written by BSR’s Future of Fuels Collaborative Initiative.

  1. U.S. Energy Information Administration (2014). “Short-Term Energy and Winter Fuels Outlook: Table 3a: International Petroleum and Other Liquids Production, Consumption, and Inventories.”
  2. U.S. Energy Information Administration (2014). “Petroleum and Other Liquids: U.S. Imports by Country of Origin.” Data: Total Crude Oil and Other Products, Annual Thousands of Barrels.
  3. National Petroleum Council (2012). “Advancing Technology for America’s Transportation Future.” NPC.
  4. Based on BSR analysis of US DOE Clean Cities Alternative Fuel Price reports. Data available at:
  5. U.S. Energy Information Administration (2014). “Diesel Fuel Explained: Where Our Diesel Comes From.” Available at:
  6. U.S. Energy Information Administration (2014). “U.S. Energy Mapping System.” Available at:
  7. U.S. Environmental Protection Agency (2014). “The Process of Hydraulic Fracturing.” Available at:
  8. U.S. Department of the Interior, Bureau of Land Management (BLM) (2012). “About Tar Sands.” 2012 Oil Shale and Tar Sands Programmatic EIS. Available at:
  9. From (1) British Columbia Ministry of Energy and Mines (2013). “Determination of Carbon Intensity for the Renewable and Low Carbon Fuel Requirements Regulation.” Available at; (2) California Air Resources Board (2012). “Carbon Intensity Lookup Table for Gasoline and Fuels that Substitute for Gasoline.” Available at; and (3) Oregon Department of Environmental Quality (2011). “Lifecycle Analysis Approach of Transportation Fuels.” Available at
  10. International Energy Agency (2013). “CO2 Emissions from Fuel Combustion: Highlights. International Energy Agency.” Available at
  11. Gordon, Deborah et. al (2015). “Know Your Oil: Creating a Global Oil-Climate Index.” Carnegie Endowment for International Peace.
  12. Organization for Economic Cooperation and Development (2014). “The Cost of Air Pollution: Health Impacts from Road Transport.” Accessed on October 21, 2014. Available at
  13. Environmental Protection Agency (2014). “Air Quality and Public Health.” Accessed on October 21, 2014. Available at
  14. Environmental Protection Agency (2011). “Addressing Air Emissions from the Petroleum Refinery Sector” Presentation. /
  15. Environmental Protection Agency (2014). “Threats from Oil Spills.” Accessed on October 21, 2014. Available at
  16. Ramseur, J. L. (2012). “Oil Spills in U.S. Coastal Waters: Background and Governance.” Congressional Research Service.
  17. AR Brandt and AE Farrel (2008). “Scraping the Bottom of the Barrel: Greenhouse Gas Emission Consequences of a Transition to Low-Quality and Synthetic Petroleum Resources. Climatic Change.” Available at
  18. AE Farrel and AR Brandt (2006). “Risks of the Oil Transition.” Environmental Research and Letters.” Available at
  19. Asian Development Bank (2013). “Thinking About Water Differently: Managing the Water-Food-Energy Nexus.”; World Economic Forum Water Initiative (2011).”Water Security: The Water-Food-Energy-Climate Nexus.”
  20. Jackson, R., et al. (2014). “The Environmental Costs and Benefits of Fracking: Annual Review of Environment and Resources.”
  21. AE Farrel and AR Brandt (2006). “Risks of the Oil Transition.” Environmental Research and Letters. Available at

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