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Oil Sands Frenzy in Canada

by JOHN HOLT

Record profits coupled with little or new regulation on an industry gone venally berserk and it’s off to the races once again in Canada as far as natural resources versus the health of the environment are concerned. This time the triggering mechanism is the tremendous oil reserve contained in Canada’s oil sands (or tar sands if you’re a traditionalist) deposits. Fueled by the US’s insatiable desire for gasoline, and its historical dependence on Canada, the current boom is only expected to escalate in profit-taking frenzy.

Skyrocketing prices for crude oil have started a rush that has turned the sands profitable. The industry has been producing oil for as little as $24 a barrel, creating huge profits when prices hit $70 a barrel or $60 or even $50.

The oil industry demanded, and was given, major tax breaks and sweetheart royalties by the provincial and federal governments for oil sands development. Under a new royalty schedule recently announced by the Alberta, companies will pay a minuscule one percent on oil sands production.

A report by conservation biologist Brian Horejsi of Western Wildlife Environments Consulting covers the magnitude of habitat fragmentation currently in Alberta from oil and gas development: over 225,000 wells have been drilled; one-million miles of seismic road access and over 300,000 miles of pipeline right-of-way have been cut; 450,000 of all-weather road access have been built. None this construction is or was subject to environmental assessment. Reserves at or near the surface are recovered through large-scale strip-mining. Huge mounds of oil sand are excavated and moved by trucks weighing 240 tons and standing three stories high. Two tons of sand produce one barrel of oil.

US officials have turned their attention to northern Alberta’s oil sands. Vice-President Dick Cheney had planned to visit Canada’s sands in September 2005 until Hurricane Katrina forced him to postpone the trip. The recently passed energy bill calls for research and the start of a commercial leasing program on federal lands to speed up the nation’s own development of oil shale reserves in Colorado, Utah, and Wyoming, in part by tapping into Alberta’s expertise. Oil shale is similar to oil sands, but the process of extracting crude is more difficult. Oil sands are impregnated sands that yield mixtures of liquid hydrocarbon and require further processing other than mechanical blending before becoming finished petroleum products.

Until recently Alberta’s bitumen deposits were known as tar sands but are now called oil sands. Oil sands are deposits of bitumen; viscous oil that must be rigorously treated in order to convert it into an upgraded crude oil before it can be used in refineries to produce gasoline and other fuels. Bitumen is about 10-12 percent of the actual oil sands found in Alberta. The remaining 80-85 percent is mineral matter, including clay and sands, and around 4-6 percent water. While conventional crude oil is either pumped from the ground or flows naturally, oil sands must be mined or recovered in situ. Oil sands recovery processes include extraction and separation systems to remove the bitumen from the sand and water. Oil sands currently represent 40 percent of Alberta’s total oil production and about one-third of all the oil produced by Canada.

Although tar sands occur in more than 70 countries, the two largest are Canada and Venezuela. The majority in Canada is found in four different areas of Alberta: Athabasca, Wabasha, Cold Lake and Peace River. The sum of these regions covers an area of nearly 30,000 square miles. The reserve that is deemed to be technologically retrievable today is estimated at 280-300 billion barrels. This is larger than the Saudi Arabia oil reserves, which are estimated at 240 billion barrels. Total reserves for the province, including oil not recoverable using current technology, is estimated at 1,700- 2,500 billion barrels.

Concerns over environmental damage from mining and processing the material are varied and on the rise. Huge amounts of natural gas and water are used to extract and upgrade the crude, greenhouse gas emissions are high, and in mining operations, environmentalists worry that the land, which companies are required to restore, may never come back to a “natural state.” The process also turns large amounts of water into a toxic mixture, forcing companies to create large lake-like impoundments.

”We’re dealing with a form of oil extraction where the intensity of environmental impacts is at an order of magnitude greater than any other form of oil extraction we have seen on the planet,” said Dan Woynillowicz in a recent article in The Boston Globe. Woynillowicz is an environmental policy analyst with the Pembina Institute for Appropriate Development, a nonprofit group. Companies that mine oil sands say that while production is, by necessity, intensive, they have had some success in lowering the amount of natural gas and water used to produce a barrel of oil, and officials say they are seeking further reductions.

A barrel of oil sands crude can be refined to produce gasoline and diesel fuel. At Syncrude, which spent $15 million on restoration of former mining land last year, a 10-year-old reclamation project at a former mining site shows the beginnings of a viable ecosystem, with tree saplings, sedges, and wildflowers growing, but it will take years to know if it will truly be sustainable.

”The oil sands industry has focused on three major environmental areas — air, water, and land,” says Greg Stringham in the same Boston Globe story. Stringham is vice president of the Canadian Association of Petroleum Producers. ”One of the key [ways] is increasing efficiency.”

With the sands, Canada has the second largest reserves of crude in the world behind Saudi Arabia. Investors have pledged more than $70 billion to triple output to 3 million barrels a day by 2020. Riverbanks near Fort McMurray seep with what locals call “black gold,” the tar-like amalgam that is bitumen. Demand for this oil has increased the city’s population by nearly 75 percent in the last decade, to 60,000.

And so it goes on the oil industry front.

(This little ditty originally appeared in slightly-altered form in E: The Environmental Magazine)

JOHN HOLT is the author of numerous books, including the gripping novel Hunted, and Coyote Nowhere: In Search of America’s Lost Frontier. He lives in Livingston, Montana and can be reached at: hunted@wispwest.net

 

 

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