U.S. taps Canada's oil sands — but at what cost?

McClatchy NewspapersOctober 12, 2008 

FORT McMURRAY, Alberta — For decades, the U.S. has vowed to reduce its dependence on imported oil and to find a reliable source to meet the nation's growing oil needs.

Now, Canada offers a solution.

While oil supplies are dwindling in some places, or disrupted by hurricanes, threatened by terrorist attacks or controlled by hostile governments, Alberta's oil sands — a patch of forest about the size of Florida with a sea of oil beneath it — produce more crude than all the wells in Texas or Alaska.

With more than 170 billion barrels, the oil sands are the second-largest proven reserves in the world after Saudi Arabia.

Because of the Alberta oil sands, Canada has become the largest supplier of crude oil to the U.S. The oil sands are booming, and production is expected to triple in a little more than a decade.

Also growing are the environmental costs — higher greenhouse gas emissions than conventional oil and long-term destruction of a swath of deep forest. In the past few months, Alberta officials have announced new environmental policies and plans to invest $4 billion Canadian ($3.7 billion U.S.) to cut emissions. What's clear so far is that they're facing an environmental problem — supersized.

"We're an energy province. We're now producing record amounts of oil. We have the potential to actually increase our production of oil," said Alberta energy official Christopher Holly.

"So one of the things that's beginning to happen," Holly said, "is we're beginning to recognize the need to take a look at the entire energy framework . . . to look at the balance between being a supplier and also being an environmental steward."

The Alberta government controls the rights to this oil and is in charge of environmental protection. This year, the western Canadian province of about 3.5 million has an estimated $7.9 billion surplus.

Demand for fuel in North America will keep oil sands production growing from 1.2 million barrels a day in 2007 to 3.5 million to 4 million barrels a day by 2020, said Alberta Oil Minister Mel Knight. "I don't see anything on the horizon that would indicate that isn't a target that's doable."

Oil companies are expanding so fast in Alberta that the three big players — Suncor Energy Inc., Syncrude Canada Ltd. and Albian Sands Energy Inc. — have built their own airstrips to ferry in temporary construction workers. Exxon Mobil Corp., Royal Dutch Shell PLC and many other companies have investments in the big operators.

Workers from all over Canada, plus miners from South Africa and oil workers from Venezuela, have moved to Fort McMurray. Housing costs are sky high. The boomtown of 65,000 has an additional 27,000 temporary workers living in camper trailers and motels.

From a helicopter, the view of this growth begins with a forest of spruce, pine, poplar and aspen spotted with ancient bogs under a summer cover of bright green algae. That landscape suddenly gives way to miles of black strip mines, brownish settling ponds with a rainbow sheen, and beyond the mines, well pads amid grids of roads and cuts from geological seismic surveys.

Some of the world's biggest trucks — two-story tall Caterpillar 797Bs that carry 400 tons — haul the black sands through strip mines. Scarecrows with orange cloth bodies and blue hardhats surround huge ponds of mining residues.

About 200 square miles have been mined, close to the Athabasca River.

But most of the thick crude oil lies farther from the river, too deep to be scraped off. Here the thick oil is heated by steam piped underground so that it can be pumped.

The sands contain a form of crude oil called bitumen that's as thick as peanut butter. To remove the sand and clay to turn the bitumen into heavy crude that can flow to refineries takes a lot of energy.

For that reason, greenhouse-gas emissions from production are three to five times those of conventional oil.

Another way to measure these emissions is to consider the full "life cycle" of the oil from extraction to final use, such as gasoline in a car. By this measure, fuel from the oil sands produces 10 percent to 15 percent more greenhouse gas emissions than conventional oil. That's because about three-quarters of the emissions come when the fuel is burned to drive. Scientists have determined that heat-trapping gases from fossil fuel burning are largely responsible for the major climate changes of recent decades.

Alberta's environmental officials forecast that with the new policies in place, the province's emissions will increase until 2020 and then decline to 14 percent below 2005 levels by 2050. Global targets based on the 2007 findings of the Intergovernmental Panel on Climate Change are 50 percent to 85 percent reductions from 2000 levels.

Other environmental concerns are with the Athabasca River and the forest.

Preston McEachern of the province's oil sands environmental management division said oil sands production has not harmed the river.

David Schindler, an ecology professor at the University of Alberta, said it's not true that no mining pollution reaches the Athabasca. He challenged the government's handling of its data and said new studies are under way about pollutants in the river and whether the mining companies draw out too much water when the river is naturally low.

Canadian First Nations people living downstream of the oil sands report an unexplained cluster of rare cancers. This summer, a two-jawed fish washed ashore.

Canada needs the oil, but the people need clean water, said Patrick Mercredi, the medical director of Athabasca Tribal Council, who grew up downriver learning to hunt and trap as his ancestors did. He said people are worried about contaminants in fish and game.

Schindler said that the woodland caribou would be extinct in this part of Alberta in 20 years, because when they're calving and rearing young they're easily disturbed and avoid industrialized areas.

In addition, the seismic lines — created with explosive charges that flatten trees — become paths for animals and off-road vehicles. Wolves, hunters and caribou use them, "and things like caribou really take a licking," he said.

Schindler said other species also are losing habitat, including migratory songbirds like warblers who nest here in summer.

Oil companies are required to restore the land. They must let the tailing ponds dry out when they're no longer in use, stabilize the sediment, restore topsoil and replant trees. But oil sands operations use the land for many years, and restoration requires decades.

"If there was a Guinness Book of Records for unsustainable development, this is it," Schindler said.

Canada has been fighting back against the dirty oil image. Officials are particularly concerned about a sentence in the 2007 U.S. energy bill that said the federal government wouldn't buy unconventional fuel that produces more greenhouse gases than conventional oil. Some members of Congress have proposed repealing it.

"The message we have for the United States is we're a secure, reliable and environmentally responsible producer of oil," said Alberta Deputy Premier Ron Stevens.

Alberta aims to reduce emissions mainly by capturing carbon dioxide, the main greenhouse gas, from facilities that turn the bitumen into upgraded crude oil and then burying the carbon permanently underground. But carbon capture is still years off.

The government of Alberta in July announced it will spend $2 billion Canadian ($1.86 billion U.S.) on mass transit and an equal amount on four or five pilot projects for carbon capture and storage, including probably one in the oil sands.

No other government has put up that kind of money, said Holly, the provincial energy official. "What you're looking at is a very significant effort toward addressing some of the concerns with oil sands."

Alberta charges big polluters $15 a ton of emissions that is then deposited into a technology development fund. Estimates of the cost of burying the emissions underground range up to $100 a ton. But officials say the levy on emissions and the $2 billion from the government will help early carbon capture and storage projects work out problems and could bring down costs.

Other policies:

  • A Canadian federal climate plan is expected to set carbon capture and storage requirements for oil sands processing plants and wells that start up in 2012 or later.
  • Alberta's climate plan started last year with "practical, achievable objectives," said Shannon Flint, an official with the province's environmental management office.
  • Large industrial plants are required to reduce their emission intensity — or amount per barrel of oil — by 12 percent. They either actually reduce the emissions through greater efficiency and other changes, or they can buy credit from emissions reductions made elsewhere in the province, or they can pay into the technology fund.
  • Alberta officials are writing a new land use plan. An early draft acknowledged that past developments were approved on a project-by-project basis and promises a shift to a cumulative assessment.

ON THE WEB

Facts on Alberta's oil sands

>More on the Caterpillar 797B mining truck

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McClatchy Newspapers 2008

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