Oilsands in Canada - Image problem or real problem?

[SK_in_AB]

The Canadian Oilsands represents a significant and growing source of petroleum for N. America, and other world markets. The resource is featured in this months National Geographic with an article critical of the einvironmental and other impacts of this resource development.

 

I work not in Ft. McMurray, but in Calgary at the head office of a major oilsands company - directly on climate change issues. I respect the views on this board regarding a wide variety of subjects. and would like to get some feedback on this industry.

 

In short: Based on the N Geographic article linked below, and other information you already have lets hear what you have to say.

 

Is Oilsands petroleum better/worse than other sources like conventional oil, Mexican, Nigerian or Saudi sources?

Is the price for a polically stable source too high?

Are Oilsands companies mistreating the environment?

Is the GHG footprint a real or perceived issue?

Do the major consumers in the marketplace even care or do they just want cheap gasoline?

 

I plan to provide some comments, and perhaps some facts that are not widely known in the public, but first I'd like some views from the site.

 

National Geographic

 

 

 

[Woodie]

Interesting article. Certainly paints the companies as "meeting the requirements" (mostly), while at the same time pointing out that environmental requirements are so minimal as to be non-existent.

 

With my almost complete lack of knowledge of other oil-producing areas...

Q1: I would say that this source is significantly worse than other sources. I'm guessing that this area while not tundra, has similar problems in terms of the forest and eco-system recovering on its own. Also, the apparently very high energy cost of making the oil usable. (Steam, heat, strip mining, etc.)

Q3: I would say "yes". The ponds are a disaster, starting to happen. Leaking, leaching, open/exposed and horribly toxic. Right next to a running river?? What were they thinking?

Q5: I'm not a major consumer. Just a minor one, and doing my best to reduce my oil-based fuel consumption - motorcycle, bus, reduced commuting.

 

I do think that articles like this will help spur alternative energy use. Hopefully to the point that sources like this don't become viable (economically) until oil is over $200/bbl.

 

A big concern (along those lines): If the company says it will "clean up" at the end...what happens when oil prices drop off as oil is replaced by a cheaper alternative? The company then has a significantly reduced revenue stream, and faces huge cleanup costs at the same time. That leads to shoddy or undone work, and mess for "someone" to clean up and pay for.

[Ken H.]

Is Oilsands petroleum better/worse than other sources like conventional oil, Mexican, Nigerian or Saudi sources?

Worse. In particular due to the massive amounts of water required for oil sands extraction.

 

Is the price for a polically stable source too high?

Economically or environmentally? Economically, probably no, environmentally, yes, but it wouldn’t have to be. IMHO the oil sands companies are taking the quick and dirty (literally) approach.

 

Are Oilsands companies mistreating the environment?

Absolutely. They don’t even water recycle. The tailing ponds alone are a gigantic future environmental liability, let alone the carbon footprint created.

 

Is the GHG footprint a real or perceived issue?

It’s real. How can you do something as massive as that without having a large carbon footprint? Even in best-case effort, and we’re far from that, the impact would be huge.

 

Do the major consumers in the marketplace even care or do they just want cheap gasoline?

Is that a rhetorical question? Of course cheap gas is the priority!

 

 

The thing that grips me the most is that it wouldn’t have to be this way. In today’s technology world it should be possible to refine the oil sands in a more responsible manner. Instead Alberta has taken a ‘don’t look, don’t see’ approach. For the longest time Fort McMurray was so remote and generated so much ‘blind’ revenue that quick fast was the mantra. Now they are starting to get called on the carpet for it and everybody is ripe with indignation. E.g. – Stelmach, Rex Murphy, and just about every editorial page in the whole darn province!

[David]

I need to say at the outset that I have NOT read the article. But my impression is that the oilsands are merely a short-term fix, and make about as much sense as ethanol.

 

In other words, things would have to be much more dire for it to be a policy I'd pursue. I'd rather we develop alternative energy sources.

[Hermes]

 

Q1: much worse

Q2: for whom? Globally speaking, YES.

Q3: Duh

Q4: It is scary real.

Q5: They care, and they want realistically and stable gasoline prices, eg, no gauging as we have in in 08.

 

Stephen,

 

just for interest sake and to frame your excellent questions more realistically and perhaps to get a more cautious and balanced reply, it may serve well to know, how many of the Oil companies doing this irreparable environmental damage in the Canadian tarsands, its aquafiers and rivers, and the global air quality, are wholly or partially foreign owned. And whose environmental laws do these companies have to respect during and after the production cycle?

 

Just wondering if NG left something out and if some countries are calling the kettle black and all that......

 

I am with David on exploring alternative sources of energy....real soon.

[T.M. Roe]

Including the Oil Sands dramatically increased Canada’s perceived Oil Supply so listing it helped keep the people who worry about such things happy. You see the commercials on the tube about how NORTH AMERICAN has XX years of oil.

Cheap, easy, oil is gone now (see Peak Oil) we now have to spend more to get it out of the ground. The remaining Oil is further off shore, deeper into the wilderness, or in politically sensitive regions and it will cost more to extract. It’s a fact of life.

I worry about running out of clean water. Ask me about the 65 million gallons a day a reactor uses.

 

[Hermes]

.............Ask me about the 65 million gallons a day a reactor uses.

 

 

Ok, I'll bite, what about them?

All I know is they are being dumped back in the lake/river etc as good, albeit warmer, as before. I know, I lived/ swimmed/ fished and sailed right next to one of the biggest plant, in NA, Pickering.

 

btw. Peak oil is a term used to indicate that we have reached the peak as far as finding 'new' oil is concerned. We are past the peak now and as you say, we have to venture into more sensitive areas, both, politically and environmentally (P&E). But the costs are too high (P&E) and that's why we must crank up efforts to find alternative solutions. In fact, we have to, before we run out of oil to satisfy the energy required to find and implement such alternatives.

 

[rfc1992]

Alberta has been promoting the exploration and exploitation of the oil sands for fifty years (source, the NG article). Alberta is not only a prime energy supplier to the US, they also distribute throughout Canada.

 

The economy of Alberta, and Western Canada, is largely impacted by the NG and Oil industries.

 

As far as "better" or "worse" than other sources...

 

Nigerian sweet crude is almost refined right out of the ground, this is arguably the best oil. The political instability of the region and oligarchy that controls the profits is politically poor.

 

Saudi oil is good light sweet crude, very high quality. The fact that it seems to finance extremist islamic groups is bad politically.

 

Oil sands oil requires major refinement and preprocessing is enourmous - not a good product by comparison. The Canadian government is friendly and the product promotes the Canadian economy - politically very good.

 

All sources have their trade-offs. I think that that exploration and exploitation of U.S. natural resources is a good measure to reduce our dependance on foreign sources of oil. I also believe our use of natural gas to produce electricity is idiotic.

 

My opinion.

[SK_in_AB]

OK after 2 days I expected a bit more dialog on this topic – perhaps that tells me it is a much lower profile issue than I sense being so close to it. In any case I thought I would provide answers to my own questions for your education, and critique/feedback.

 

Is Oilsands petroleum better/worse than other sources like conventional oil, Mexican, Nigerian or Saudi sources?

 

From a strictly GHG perspective Oilsands synthetic crude is a bigger emitter up to the refinery gate especially from projects that are in-situ – where we use steam to extract the bitumen from the ground rather than mining. This is also where 80% of the resource lies and most of the future growth exists. But you have to remember that >75% of the CO2 emissions happen when the fuel is used, not in its extraction and production. On a full “wells to wheels” analysis Alberta Synthetic is 10-20% more GHG intensive than conventional crudes. But the world has found most of those easy petroleum sources, most of the new reserve discoveries are coming from heavier deposits in Brazil, Mexico and Venezuala or in politically unstable regions. The graph below (I hope my file attachment works) puts the range of emissions in perspective (Our Synthetic is the Canadian SCO Blend). This is a study that is 8 years old, but an update is underway which will feed into the California clean fuel standards methodology and we don’t expect the results to be that much different.

 

 

Is the price for a politically stable source too high?

 

I think it isn’t. We are providing an essential fuel for today, and one that will be needed for at least 50 years as the world develops low carbon fuels and improves its energy efficiency. We are following rules established in a developed country which include rigorous environmental standards for air water and GHG emissions, and land use and ultimate reclamation. Remember that the next incremental source of petroleum is likely much more difficult to access than the average source used today. If you factor in environmental practices, and the cost borne (primarily by the US) in military spending to protect international oil supplies from countries with questionable human rights and other policies, the scale tips even further in favour of oilsands development. Obtaining the largest volume of imported energy from a northern neighbor who is friendly, politically stable, and close seems a wise choice.

 

Are Oilsands companies mistreating the environment?

This is where the National Geographic article is weak – let me put some of its chosen facts in perspective:

 

Land use: The total oilsands area is 0.1% of Canada’s Boreal Forest

Only 20% of that is mineable, the rest is too deep and will be accessed through drilling

The mineable area at 3500 Km2 is 1/10 of the amount of forest protected from development within Alberta – so the impact on the boreal forest ecosystem is very small

The mines are reclaimed back to similar landscape after closure – that hasn’t been done much yet because reclamation takes 10 – 20 years after a 20 year mine life and the first mine opened in 1967.

 

Water use: Oilsands water use is limited to 2.2% of the flow of the Athabasca river.

Operators recycle as much of this water as practical – in the range of 80-90%+ depending on specific process.

Bitumen has contaminated the Athabasca River for 1000’s of years – the deposits were first discovered by Aboriginals seeing pitch leaking into the river centuries ago.

 

Tailings Ponds No doubt these ponds are huge, and are there primarily to allow for the years of settling that has been needed to separate the clay, sand mixture from water and remaining trace bitumen. In fact 80% of the water used in the process is recycled over and over to avoid the huge cost of getting the tailings water clean enough to meet discharge regulations. We are looking at different technology to address this in a better way, but it takes time.

 

Is the GHG footprint a real or perceived issue?

I believe it is both – but the real issue is much smaller in magnitude than most people think. Oilsands activities emit 30 MT/yr of CO2. That is 4% of Canada’s total and 0.08% of the world’s total. Even with the ultimate expected increase in this by 2 or 3x the actual volume of GHGs pales in comparison to that from US coal fired power plants which emit >2100 MT/yr of CO2.

 

Do the major consumers in the marketplace even care or do they just want cheap gasoline?

In the past we have seen consumers only interested in cost, but I believe that is changing. Some people (including me) are voluntarily paying more for “green electricity” (in Alberta that means wind energy). Others pay to recycle or pay a mileage premium to use ethanol blended fuels which are perceived to be environment friendly (a whole separate debate). But consumers who might reject gasoline if they think it came from Oilsands must consider where the alternative source is from, and how much better it is.

 

Wrap up:

 

Don’t get me wrong – I’m not trying to greenwash the issues, and I know that the Canadian Oilsands industry has to do a better job of resource development. That means more efficient designs (both water and fuel use), technology to reduce GHGS (lower carbon fuels or CO2 Capture and Storage) and faster land reclamation practices. One benefit of the current commodity price meltdown is that most new or expansion projects have been put on hold so we have a ‘breather’ to address some of these concerns. I am spending most of my time working the issue of GHG emissions through technology like CO2 capture and storage and other approaches. We also have to do a better job of getting the right information out to the public and the environmental commmunity, and that is also tough slow work.

 

Thanks for the input, and I’m happy to read more in response to this post or take direct questions from the board.