By: Michael Connors Issue: Resource Management Section: Business
An Energy Journal
The United States gets 20 percent of its energy from Canada, and of the 18 million barrels of oil Americans use every day, approximately 1.4 million barrels comes from the Canadian Oil Sands of Alberta. Demand for oil is expected to double by the year 2035, and oil sand production is expected to more than double in the next 10 years. Most Americans want to see more Canadian oil in the United States since Canada is a long-standing ally with many shared cultural and historic traits and is a stable, free-market economy; but there are many misconceptions about the oil sands here in the States. For every oil sands job, there are three more created in Fort McMurray, the nearest municipality to the oil sands, two in Canada and one in the U.S. At a time when people, communities, states and countries are struggling, development of the oil sands fulfills many needs. But to do so recklessly and without concern for the environment is in no one’s interests. I have heard stories about the oil sands of Alberta, namely that they are environmental nightmares and that the oil sands themselves are a gooey mess that sticks to anything it touches—in short, an environmental, political and social "tar baby." So naturally I jumped at the opportunity to visit the mining and extraction sites in person and speak with those directly involved with the oil sands. Sponsored by the Canadian government, this tour was intended to expose people like myself to the realities of the oil sands and oil sand development and help dispel the myths and preconceptions that seem to consume the topic. We met with representatives from the government of Alberta, Syncrude, Connacher, CAPP (Canadian Association of Petroleum Producers), Woods Buffalo Environmental Association, the Pembina Institute, Shell and Suncor. In many ways I came home more conflicted than when I left, but I feel much more qualified to discuss the topic and to introduce a general audience to what the oil sands are, how they are developed, the challenges surrounding this development and the collaborative highlights that give me hope that this resource will be handled in a responsible way.
The oil sands are essentially a large deposit of a mixture of sand, water, clay and a heavy oil known as bitumen that lies under 55,000 square miles of land situated in north eastern Alberta. The bulk of the mining and extraction takes place in the Woods Buffalo region, an area northeast of Edmonton, and the hub of the activity lies in Fort McMurray, a small community of 80,000 which is undergoing a boom that is as dynamic as it is intense. Needless to say, the resource is vital to Canada’s and the United States’ national interests, and as the government of Alberta notes, “Alberta has proven oil reserves of 171.3 billion barrels, consisting of bitumen (169.9 billion barrels) and conventional oil (1.4 billion barrels). These reserves make up the third-largest proven crude oil reserve in the world, next to Saudi Arabia and Venezuela.” Expectations are that both demand and production will double by 2035 and this expansion means that cities like Fort McMurray are fast becoming a flash point where environmental, economic, social, technological and political interests converge and, is in many ways, a proving ground for regulatory, environmental, municipal and economic policy.
Processes
Extracting the oil out of the bitumen is accomplished primarily by two processes: surface mining and a heat extraction method known as in situ (Latin for “in place”). Our first tour was of the open pit mine and processing facility owned by Syncrude, one of the largest and oldest producers in the Fort McMurray area. This operation extracts about 300,000 barrels a day, and I can attest to the fact that these open pit mines are massive in scale and are nothing like the smaller coal and gold mines I am familiar with in Colorado. Essentially, a fleet of 400-ton haul trucks are loaded by enormous shovels and then they truck the oil sand to a large crusher that begins the process of separating the bitumen from the sand and prepares it for further processing. Most bitumen in the area needs to be processed to a heavy crude state so that it can be piped to refineries in Canada and the United States. There are currently four upgraders in the region that help process the bitumen and make it suitable for pipeline transfer; a fifth is under construction. Interestingly, surface mining of the bitumen is actually required further north of Fort McMurray because the resource is only a few hundred feet from the surface—in situ steam would only punch through the ground. Only 20 percent of the recoverable oil in the region is accessible through open pit mining because south of town, the bitumen deposit moves deeper into the crust, necessitating in situ recovery. The advantage of open pit, however, is that 90% percent of the resource is recovered versus 30 percent from in situ. In situ mining is a technologically advanced method of extraction using a process called SAGD (steam-assisted gravity drainage) where steam is used below ground—ideally around 800 feet—to heat the bitumen to a viscous state that is then recovered by a second piping system and brought to the surface for separation and further processing. The Connacher plant that we visited produces about 10,000 barrels of oil a day. While there is less obvious damage to the surface, some argue that the overall land disturbance is about the same as open pit when seismic lines, drill pads and roads are taken into account. The advantages are that these smaller operations are easier to finance and build, but they typically only recover up to 30 percent of the oil. However, due to the absence of tailings ponds and relative ease of construction and financing, many believe that open pit mining will eventually be phased out completely in favor of in situ operations.
Challenges
The Alberta Oil Sands are a nexus, a focal point of conflicting interests that share in the reality of the costs and benefits that oil brings. While there are certainly legitimate concerns associated with air and water quality and the much larger issue of greenhouse gasses and whether the oil sands should be developed at all are too broad in scope for me to deal with here. The environmental, technical and political challenges associated with tailings ponds make them a useful lens with which to amplify the overall issues associated with oil sands development. With open pit mining, one of the most concerning of the land issues is the creation of the tailings ponds. Tailings ponds can be found in any mining operation around the world, but oil sands tailings are unique due to the fact that the fine clay that is produced is very difficult to break down and integrate into the ecosystem. This fine clay is referred to as mature fine tailings (MFT) and is difficult to break down because the clay is suspended in molecules of water. It takes decades for this material to settle on its own. To this point, only two tailings ponds have been reclaimed -one from the Syncrude site and one from Suncor’s mine. The PEMBINA Institute, a leading third-party environmental think tank, assesses the lack of progress in a current oil sands press release, “Although Suncor’s Pond 1 has achieved a revegetated solid surface, this represents less than 1 percent of the total area occupied by tailings ponds today.” The Alberta government has taken the issues so seriously that they have instituted Directive 74 which mandates a much faster schedule for tailings pond mitigation. David Sands, spokesman for the government of Alberta described the policy as, “A measure implemented by the Energy Resources Conservation Board, aimed at tackling one of the bigger environmental issues that we have with oil sands development, and that’s tailings ponds. Our government directed the regulator to put this measure in place to ensure that all resources are brought to bear on the biggest problem we are facing right now.” The industry responded and has come together to form an Oil Sands Tailings Consortium (OSTC) that works together in collaborative ways to innovate and create new technologies and techniques for ramping up tailings reduction operations (TROs).
Collaborative Solutions
One of the top priorities for the government of Alberta, environmentalists and the oil sands industry is the reclamation of the tailings ponds. Companies like Syncrude, Shell, and Suncor have taken the lead and work together through the Tailings Pond Consortium. As noted in a recent Canadian news wire, “The membership of the OSTC is comprised of Canadian Natural Resources Limited, Imperial Oil, Shell Canada, Suncor Energy, Syncrude Canada Ltd., Teck Resources and Total E&P Canada.” Following a landmark agreement announced in December 2010, member companies pledged to share existing tailings technology and research and to work together to accelerate the pace of reclamation. Suncor even has a trademarked TRO process that implements new technological breakthroughs in order to hasten the breakdown process. As noted in their 2011 Sustainability Report, Suncor states that, “In this process, MFT is mixed with a polymer flocculent, then deposited in thin layers over sand beaches with shallow slopes. The resulting product is a dry material that is capable of being reclaimed in place or moved to another location for final reclamation. This drying process occurs over a matter of weeks, allowing for more rapid reclamation activities to occur.” The benefits, thusly, of the OSTC is that it provides a platform where other producers have access to this technology and can then improve upon it. In a meeting with John Broadhurst, chairman of OSTC and vice president of Heavy Oil Development for Shell, he noted, “We put the Tailings Consortium together because we really wanted to create an environment where we could foster open collaboration... attempting to break down the barriers that existed previously. Finding the best solutions will always involve a partnership of industry, government and academia, and will likely including some of our critics because that’s how you get the best feedback in terms of where people see the best opportunities to improve." Echoing this sentiment was Steve Douglas, VP of Investor Relations at Suncor, “We are able to find common ground without co-opting. I think PEMBINA is the best example because you’ll hear them criticize us quite vocally... You take a step back in your criticism when the relationships are there and when you recognize the good faith in the other party.” So not only are new relationships forged that bring together disparate and diverse viewpoints, there are also opportunities for those involved to help shape and guide future policies, regulations and goals that instruct oil sand development. Therefore, collaborative models like OSTC create a mechanism whereby technological advances, experiential knowledge and a diversity of relationships can benefit all involved in the organization, and by extension, the society at large. In this special place, the Buffalo Woods region, there is a cacophony of voices both for and against the development of this vital resource. They all agree, however, that the resource will be developed to meet demand—ultimately, the question is how. Fort McMurray Mayor Melissa Blake has seen her community double in the last 15 years and expects it to do so again in another 10 to 15 years, and is facing infrastructure challenges rarely seen by most cities. She has been involved in the dissuasion from the beginning and has lived many sides of the debate. Perhaps she says it best, “Above anything, I believe in the human capability of overcoming challenge and in no place is that more prevalent than my community.” Her optimism and hope is emblematic and encouraging, for after talking to even the most pessimistic of environmentalists, they still have great faith in their fellow Canadians to come together and solve some really tough problems.
To learn more about the Canadian Oil Sands: www.pembina.org www.syncrude.com www.junewarren-nickles.com www.alberta.ca www.wbea.org www.suncor.com