The holy trinity for energy is cheap, reliable and clean, but science has yet to unlock a source that provides all three without limits. In the meantime, the challenge for energy producers, consumers and regulators is to negotiate tradeoffs between these ideals in order to find the most acceptable energy solutions for modern society. There are few places in the world where this delicate negotiation between environmental cleanliness, affordability and reliability is more pronounced than in Canada’s oil sands producing region.
Canada boasts the world’s third largest proven oil reserves, which are primarily attributed to the oil sands, located in Northern Alberta. Oil sands are a natural mixture of sand, water, clay and heavy oil referred to as bitumen. Alberta contains 170.8 billion barrels of proven oil reserves – 169.3 billion barrels of bitumen and 1.5 billion barrels of conventional oil. The province is about the size of Texas and produces approximately 1.6 million barrels of crude oil per day from the oil sands, which accounts for about half of Canada’s total crude oil production.
Breaking Energy recently attended a tour of the oil sands region organized and partially paid for by the Government of Alberta in conjunction with the Canadian Consulate General in New York. This is the first in a series of articles inspired by the trip; keep reading Breaking Energy for additional coverage of the environmental issues, market dynamics and the cutting edge technology associated with oil sands development.
Knowledge of the oil sands resource dates back to the 1800’s and some commercial extraction dates back as far as the 1960’s, but it was not until around 2001 when commodity price increases and technology coincided to make oil sands development economically viable on a much larger scale.
The two main commercial oil sands development methods employed today are surface mining – which takes place in areas where the resource is located roughly 200 feet below the surface – and in situ production which takes place in areas where the bitumen is located much further below the surface. The in situ production – based on the Latin term for “in site” – allows for the bitumen to be accessed without mining; the earth is heated up using steam and the resulting viscous energy material is extracted, upgraded and refined.
Shifting Trend and Issues at Stake
Oil sands underlie about 55,000 square miles of Alberta, but the portion accessible via surface mining covers only about 1,853 sq. miles. Oil sands production is currently split about 50% mining and 50% in situ, but this is set to change dramatically in the coming years, with the trend being toward in situ operations.
The main environmental impacts associated with oil sands development affect air, water, land and biodiversity or species habitat. Greenhouse gas emissions have become a major concern as Alberta and Canada seek to address climate change. The use of surface water and potential contamination of both surface and groundwater are important issues stakeholders are working to address. Returning mined areas to their natural state – much of which deals with tailings pond reclamation – is another high priority. Maintaining the integrity of native species’ habitat during and after mining is another area where industry, government, local communities and environmental groups are learning from experience and working to reduce the environmental footprint of oil sands operations.
Gaining access to high-value export markets into which oil sands developers can sell their product is the number one priority producers currently face, industry representatives told Breaking Energy. Canada supplied the US with 25% of its 2011 oil imports – taken alone, Alberta supplied 15% – but with recent increases in US domestic oil and gas production, along with flattening US oil product consumption, companies producing oil in Canada are increasingly looking to markets overseas, particularly in Asia.
Keep reading Breaking Energy over the coming days and weeks for articles covering these issues and other exclusive content like slideshow presentations of photos taken during the Alberta oil sands tour.