Alberta's Oil Sands Heat Up

Technology Review
Oct 25, 2011

Steam solution: Pipes connect the wells at Christina Lake. One pipe delivers steam to the wells; the others return the ­bitumen-water mix and natural gas from the wells. Credit: Kristopher Grunert

For many, images of Canada's boreal forest torn apart by sprawling operations that clear the land and strip off the top layer of earth have come to symbolize the environmental evils of petroleum in the 21st century. The so-called surface mines, which uncover rock-hard deposits of sand and clay rich in the heavy, sticky mixture of hydrocarbons called bitumen, now account for a substantial portion of Canada's oil exports, including much of the petroleum going to the United States. But the face of the industry exploiting northern Canada's oil sands is changing—and possibly becoming even more troubling.

Head south or west from Fort McMurray, the Alberta boomtown hosting many of the strip mines and tailings ponds that have made the province's oil industry infamous, and the mines give way to tidier industrial sites amid boggy greenish-brown muskeg and stands of white spruce, jack pine, and aspen. These forest-ringed facilities have traded shovels and enormous trucks for an extraction process that drills down hundreds of meters into solid ribbons of bitumen and, using vast quantities of steam, melts the tarry petroleum in place. Liquefied bitumen then oozes out through a system of parallel pipes. Such "in situ" extraction operations now account for nearly half the current output of northern Alberta's oil business, and that figure will only increase. Alberta's 1.8 trillion barrels of bitumen may be the world's largest single accumulation of hydrocarbons, but four-fifths of this resource lies deeper than strip-mining can reach.

In situ extraction is expensive—on average, it's not profitable if world oil prices are below $60 per barrel. But with today's prices consistently well above that, the practice is booming. The oil sands will generate over 1.5 million barrels of oil per day this year, according to the Canadian Association of Petroleum Producers, a Calgary-based group. That accounts for more than half the oil that Canada pipes to the United States (Canada is its neighbor's single biggest source of imported oil). By 2025, oil-sands production is projected to more than double, to 3.7 million barrels per day, and in situ operations will deliver nearly two-thirds of that boost.

The catch is that while the drilling might seem on the surface to be less destructive to the environment than strip-mining, in many ways the newer technology is far more damaging. Even though the drilling sites don't ravage the landscape the way the mines do, they use vast amounts of energy and consequently produce lots of carbon dioxide. Using steam to flush out bitumen accounts for 2.7 percent of Canada's total greenhouse-gas emissions, or an estimated 19 megatons of carbon dioxide last year—equal to the annual tailpipe emissions of 3.7 million cars. It creates more than twice the production emissions of conventional oil-sands mining. Independent experts say that by the time the bitumen is refined and delivered to gas stations across the United States, it has already accounted for two or three times as much greenhouse gas per gallon of fuel as gasoline refined from conventional crude.

Most worrisome, the drilling operations in the oil sands are just one example of the increased production of "unconventional" oil, formerly hard-to-exploit sources that recent technological advances have made economically viable. Such resources in the Americas alone include huge amounts of bitumen-like oil in Venezuela, deep undersea oil reserves off the coast of Brazil, and "tight oil" held in shale deposits throughout the United States and Canada. The geological resources and technologies used to produce unconventional oil vary greatly, but they all require extraction processes that are energy intensive and environmentally destructive. Oil sands are the principal reason why Canada's annual greenhouse-gas emissions, which the government promised to cut to 558 megatons by next year, now exceed 710 megatons and are projected to reach 785 megatons by 2020.

The reality is, however, that the world has quickly become reliant on unconventional oil, including the oil sands, as global energy demand has continued to grow faster than supply. And the Canadian economy, particularly in Alberta, has become heavily dependent on the growth of the oil-sands industry. Investments from Canadian firms and global oil giants totaled $13 billion in 2010 and grew to $16 billion this year. The oil sands have made Alberta the hottest place in Canada for jobs, investment, and growth, helping the country avoid many of the economic woes afflicting the United States and much of Europe.

The oil sands mean hundreds of millions of dollars in taxes and royalties, and job creation from Newfoundland to Vancouver. So many Newfoundlanders have come to Alberta to work in Fort McMurray that it amounts to "Newfoundland's third-largest city," says Murray Smith, a former Alberta energy minister. Such economic heft makes it a given that Canada is going to keep exploiting this resource, he says: "We're next door to a customer that has 250 million vehicles driving three trillion miles a year. You can be sure that as long as that demand is there, there will be product to sell. We'll produce the oil sands."
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