Once considered too expensive and damaging to the land, exploitation of Canada’s oil sands is now a venture worth billions. The country has proven oil reserves of more than 170 billion barrels—second only to those in Saudi Arabia. Much of this crude lies beneath the boreal forest of Alberta in a thick oil, sand and water mixture, better known as oil sands.
As with many of Canada’s natural resources, oil sands were discovered by Aboriginal people who used the tar-like substance that flowed from the banks of the Athabasca River on hot summer days to waterproof their clothing and canoes. Commercial development of the deposits commenced in the 1960s, when Suncor Energy Inc. (then Great Canadian Oil Sands) constructed a mine and a refinery or “upgrader” north of Fort McMurray. In the 1970s Syncrude Canada Ltd. commenced operations. In situ production commenced in 1985 when Imperial Oil Limited started the Cold Lake project and Petro- Canada began operations at Wolf Lake.
The potential of this resource has become even more attractive since the future of offshore drilling seems uncertain due to BP’s oil spill and since both foreign investors and energy companies are securing their stake at Alberta’s oil sands with millionaire acquisitions. One of the most recent deals, reached in December 2009, gave Asia’s largest oil company PetroChina, 60% control of Athabasca Oil Sands Corporation’s MacKay and Dover oil sands deposits in Alberta. In April this year, Sinopec, China’s largest refining and chemical company, subsidiary of China National Petroleum Corporation, paid a whopping US$ 4.65 billion for ConocoPhillips’ 9% stake in Syncrude Canada Ltd, signalling even deeper Chinese commitment to the Canadian oil sands. And experts agree that this is only the beginning.
“A lot of major players were taking the ‘we’ll believe it when we see it’ approach, so when the PetroChina deal went off without a hitch, it was a good sign for other Asian oil companies who wish to invest in Canada’s oil sands to move forward with their plans,” says Sarah Kutulakos, executive director of the Canada China Business Council, Canada’s bilateral trade and investment facilitator.
Kutulakos says that although China doesn’t need Canada’s oil per se, the country is looking at the oil sands from a commodity perspective in that it is a large energy resource in a country with low political risk. It requires little effort to see what analysts are talking about. Nowhere on the planet is more earth being moved these days than in the Athabasca Valley, where three big names can be found on the map of oil sands mining operations: Syncrude Canada Limited, Suncor Energy and Albian Sands, owned by Shell Canada, Chevron and Marathon Oil Corp.
The above mentioned companies cannot be in a better place. Canadian oil sands are expected to become America’s top source of imported oil this year, surpassing conventional Canadian oil imports and roughly equalling the combined imports from Saudi Arabia and Kuwait, according to IHS Cambridge Energy Research Associates, a consulting firm. In a new report, it projects that oil sands production could make up as much as 36% of United States oil imports by 2030.
‘’The uncertainty and the slowdown in drilling permits in the gulf really underscore the growing importance of Canadian oil sands, which over the last decade have gone from being a fringe energy source to being one of strategic importance,’’ says Daniel Yergin, an oil historian and chairman of IHS CERA. ‘’Looking ahead, its importance is only going to get bigger.’’
Despite its key part in the global energy supply, serious environmental problems and risks come with producing oil from oil sands.
Most of the biggest production sites are huge mine pits, accompanied by ponds of waste that are so toxic that the companies try to frighten birds away with scarecrows and propane cannons.
Extracting oil from the sands produces more greenhouse gases than drilling, environmental groups say, and the process requires three barrels of water for every barrel of oil produced because the dirt must be washed out. Already, tailing pools cover 50 square miles of land abutting the Athabasca River.
The mines are also carving gashes in the world’s largest intact forest, which serves as a vital absorber of carbon dioxide and a stopover point for millions of migrating birds. Proponents of oil sands acknowledge the dirtiness of the extraction process. They say, however, that newer projects are using more efficient technologies.
To extract each barrel of oil from a surface mine, the industry must first cut down the forest, then remove an average of two tons of peat and dirt that lie above the oil sands layer, then two tons of the sand itself. It must heat several barrels of water to strip the bitumen from the sand and upgrade it and, afterward, it discharges contaminated water into tailings ponds like the one near Mildred Lake. In 2008, some 1,600 migrating ducks mistook one of those ponds, at a newer Syncrude mine north of Fort McKay, for a hospitable stopover, landed on its oily surface and died. The incident stirred international attention; Greenpeace broke into the Syncrude facility and hoisted a banner of a skull over the pipe discharging tailings, along with a sign that read “World’s Dirtiest Oil: Stop the Tar Sands.”
In June this year, the company was found guilty in the deaths of the ducks. The ruling stated that the company should have had deterrents in place and Syncrude faces maximum penalties of $500,000 Canadian dollars for provincial charges and $300,000 Canadian dollars under federal charges in the case.
Aware not only of the environmental concerns raised by its oil sand mining operations but also of the social impact of these activities, the Alberta Government has taken several restrictive and preventive measures. It recently published and is working on “Responsible Actions,” a 20-year strategic plan that aims to provide an integrated and coordinated policy approach to responsibly managing the oil sands areas. With this strategic plan, Alberta’s premier, Ed Stelmach, has said that Alberta hopes to optimize development of and economic revenue from the oil sands, while minimizing the environmental footprint. At the same time, the government is trying to ensure necessary investment in social and physical infrastructure, and innovative technology.
Another authority, Canada’s National Energy Board released in 2004 an Energy Market Assessment (EMA) entitled Canada’s Oil Sands: Opportunities and Challenges to 2015. It contains an assessment of the major aspects of the oil sands industry, including the opportunities and challenges involved in the development of the resource. Environmental concerns are acknowledged among the uncertainties associated with the development of this resource.
The Board concludes that oil sands mining operations use a significant volume of water and the limited available supply from the Athabasca River could be a constraint on future expansion plans. On the same note, regions associated with oil sands development enjoy several economic benefits but at costs to the social well-being of the communities, including a shortage of available housing and stress on public infrastructure and services.
Measures to prevent greater damage are in place and the truth is that the oil sands are still a tiny part of the world’s carbon problem; they account for less than a tenth of one percent of global CO2 emissions. However, to many environmentalists they are the thin end of the wedge, the first step along a path that could lead to other, even dirtier sources of oil: producing it from oil shale or coal.
“Oil sands represent a decision point for North America and the world,” says Simon Dyer of the Pembina Institute, a moderate and respected Canadian environmental group.
“Are we going to get serious about alternative energy, or are we going to go down the unconventional-oil track? The fact that we’re willing to move four tons of earth for a single barrel really shows that the world is running out of easy oil.”
Not so long ago, the areas where the most rich oil sands deposits in Alberta are now found were just empty lots. For instance, what is now Gateway Hill, was a defunct section of a surface mine in the Athabasca Oil Sands Deposit, which lies just northeast of the centre of Alberta.
Restored by Syncrude, Gateway Hill is today the only location that Alberta Environment — the provincial government’s overseer of oil sands reclamation — has certified to be equivalent to its pre-mine condition, but many other oil sands surface mining reclamation projects are under way. At other sites where active mining is no longer occurring, Syncrude is building a lake and a type of wetland known as a fen. Other oil sands mining companies have their own projects as well.
Reclaiming the oil sands surface mines is not a matter of a project here and another one there. By law, after the oil is extracted, each section of a mining company’s lease must be returned to a state equivalent to that in which it was before a tree was cut or the first shovel hit the dirt. It does not have to be identical, but it does have to represent the boreal ecosystem. The mining companies are required to make the mines and everything associated with them disappear, so that you would never know a mine had been there. The goal is to achieve, as much as is possible, the same natural ecosystem that existed before anyone ever uttered the term “oil sands.”
Mining and Production
If you walk along the bank of the Athabasca River and pick up a handful of the dark sand, it feels oily. That is not due to pollution; the oil is naturally bound to the sand.
Indeed, Alberta’s crude oil feels and flows like asphalt or molasses. That is why in the industry people often refer to it as tar. The highly viscous black matter or bitumen is a thin coating wrapped around a layer of water that envelops a grain of sand. Separating that thin coating from the sand and water is the primary objective of oil sands mining and extraction.
Production-quality oil sands are not found on the surface. Those accessible by surface mining are found about 50 to 75 metres under the surface in large underground deposits. To reach deposits deeper than that, “in situ,” underground-only methods must be used. The deposits in the Athabasca region are known as the McMurray Formation, a Lower Cretaceous oil-bearing quartz sandstone, thought to have formed 130 million years ago. The deposit lies below marine clays of the Clearwater Formation and above Devonian limestone of the Beaverhill Lake Group.
To get to the oil sands, mining companies take away all the timber at a mining site, remove the top meter or two of topsoil and clear away the “overburden” — the mix of sand and clay that lies directly atop the oil sands. Then extraction begins.
Producing the oil is a lengthy process in which huge trucks and shovels dig up oil sands in big chunks. Those chunks get crushed, become a slurry with the addition of water and are piped to an extraction facility. Bitumen separation begins in the pipeline and finishes at the extraction facility, where hot water and soapy catalysts wash the bitumen free of the sand and water. This separation is the sole purpose of the entire extraction process.
Process water, sand and clay are piped to tailing ponds. In the case of some of the oil sands mining companies, the bitumen then travels to the upgrader, where the bitumen, which is still thick and viscous, is converted into a higher-quality crude oil that can more readily be sold on the global market.
Last year, Alberta produced about 1.3 million barrels of oil a day from oil sands. There is plenty more. The province has 170 billion barrels of proven, recoverable oil reserves in the form of the oil sands, which are retrievable by current ethods, but another 315 billion barrels may be recovered from the oil sands by advanced technologies.
With the potential for more than 100 years of oil sands production in Alberta, new extractive technologies and reclamation techniques are by necessity a broad endeavour. Much of the work is still experimental, which is the reason academics are heavily involved. Their help is needed to ask the right questions and to find the right answers. Alberta’s government is there to ensure that the mining activities adhere to soil, water and air quality requirements.
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