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As oil gushes in Gulf, eyes are on sands to north in Alberta
News Articles | Missoulian | Kim Briggeman | June 20, 2010
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The potential is staggering, the implications mind-bending.
Even as millions of gallons of oil billow into the Gulf of Mexico from the BP spill, trillions lie in wait beneath the surface in northeastern Alberta and western Saskatchewan.
America long ago swung its petroleum-thirsty snout northward to Canada and away from overseas producers.
Now, as President Barack Obama wrestles with the Gulf disaster, while a national energy policy keeps bumping its head against the U.S. Senate, as new pipelines from Canadian oil fields are championed and excoriated, and as activists introduce Montana and the rest of the nation to a list of environmental transgressions in what they call the “tar sands,” the door appears wide open to expedited mining and drilling by our neighbors, friends, partners and allies to the north.
“I know there are some folks who are concerned about coal because of CO2 (carbon dioxide emissions) and I appreciate that,” Gov. Brian Schweitzer said. “There are some people who are concerned about oil and gas because they know they can’t last forever, and I agree with that. But we need all energy sources if we’re going to break this addiction to oil that’s delivered best by petro dictators.”
Canadian oil and government officials fervently deny they’re trying to capitalize on the Gulf crisis. But neither do they shy away from shilling their oil sands to the United States, their chief customer, and to nations beyond the oceans.
In a speech in Ottawa on June 8, Imperial Oil chief executive Bruce March outlined ways the disaster in the Gulf might help Canadian oil production. It could trigger an easing on some of the restrictions placed on less risky land and near-water exploration, March said. If the United States bans or restricts deep-water development, it’ll face a supply problem that Canada can help out with.
Alberta Premier Ed Stelmach decried the Gulf disaster in a visit last month to Washington, D.C. But he also tried to convey the message that oil sands projects are safe, dependable and even clean.
Opponents paint a very different picture.
“We would argue that because it’s so water-intensive and because of the way they do the extraction in Alberta, there’s actually far worse water pollution issues going on there than in the Gulf. It’s just slower and not quite so dramatic,” Josh Mogerman of the Natural Resource Defense Council, a U.S. group, told the Missoulian.
Some 7 billion barrels of oil have been extracted from the tar sands since production began in 1967. There remain proven recoverable reserves of 170 billion barrels, or 714 trillion gallons, according to an Alberta government report. That’s enough to meet Canada’s current oil demand for almost 400 years if that nation wanted to keep it all for itself.
As you read this, 31 companies from around the globe are operating 154 active oil-extraction projects in the sand fields. That’s up from 91 projects 18 months ago.
They’re extracting 1.5 million barrels a day, an average that is expected to nearly double to 2.9 million in 10 years and to 3.5 million by 2025. So says the 2010 Crude Oil Forecast by the Canadian Association of Petroleum Producers.
The report, released June 9, is based on a survey of CAPP members, who produce 90 percent of the crude oil and natural gas in Canada.
“While the economic downturn in 2009 saw many projects deferred, a stabilizing investment climate, more robust commodity prices and market demand for Canadian crude have provided the foundation for several projects to return to active development,” CAPP vice president Greg Stringham said in a release announcing the forecast.
Stringham didn’t mention the impact of the United States’ catastrophic oil spill, which most agree will dramatically change the face of domestic oil production.
“The thing with the oil sands is that they have momentum,” Travis Davies of CAPP said. “Once you start the process, you’ve got several years’ and millions of dollars’ worth of environmental assessments to go through before you even get to design.”
The process is so long and capital-intensive, Davies said, “topical events like we’re seeing in the Gulf don’t have immediate impact on oil sands production. There’s no snap decisions that are going to be made in the oil sands.”
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In fact, the Gulf spill could have adverse ramifications for Canadian producers, an Alberta journalist noted last week. While there’s “quiet and guarded optimism among domestic stakeholders,” they should remain very guarded, wrote Peter Tertzakian of the Calgary Herald.
Potential increases in safety measures and insurance rates, stricter regulations and the drilling moratorium in the Gulf could all translate into higher costs in the sand fields, Tertzakian wrote. Those costs might lead to a “diversion of exploration dollars to other free market jurisdictions where there is oil to be found.”
At least one investment firm isn’t so guarded. Singapore-based Denko Group said last week it’s advising investors to hitch their stars to the tar sands wagon.
It’s a steady and reliable North American producer, and several companies are poised to expand into production volumes “that will take full advantage of economies of scale within their operations,” Denko chief Andre Garnau said at a luncheon of business leaders.
“Prior to the Gulf oil spill, we were directing our clients to diversify their oil holdings with oil sands stocks,” Garnau said. “Now BP’s risk exposure is growing exponentially on a daily basis, and by association other offshore drilling stocks are under the gun. Due to these factors, we are now advising our clients to focus the majority of their resources on oil sands projects.”
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“Nowhere on Earth is more earth being moved these days than in the Athabasca Valley,” Robert Kunzig wrote in National Geographic last year after a visit to the tar sands.
Kunzig described the Mildred Lake Settling Basin in Alberta, “a four-square-mile lake of toxic mine tailings.”
The sand dike that contains it, built with material removed to get to and extract from bitumen reserves, is “by volume one of the largest dams in the world.”
Environment Canada reports that 2.74 million gallons of toxic tailings leak from such tailing ponds into the vast Athabasca watershed each day. In 2008, 1,600 ducks died when they landed in a Syncrude pond. Federal and provincial charges were brought against the company and a 2 1/2-month trial wrapped up in May. A verdict is expected this week.
Shortly after the “dead duck disaster,” 11 Greenpeace activists were arrested after they entered the Syncrude operation. They unfurled a large banner that read “World’s Dirtiest Oil: Stop the Tar Sands” before being hauled off by the Royal Canadian Mounted Police.
In a time of heightened awareness of climate change and a worldwide call to arms to address it, the environmental shiner the Canadian oil sands bear is not 2010 fresh. Neither are the dire health issues percolating among First Nations communities downstream, where elevated levels of rare cancers and auto-immune diseases have been recorded for years.
The industry points to an increase of “in situ” drilling, which has less impact on the Earth’s surface than does strip mining, but requires enormous volumes of water to create steam enough to separate bitumen from the sands.
It’s helped reduce the CO2 gap between oil sands and conventional fuel by 39 percent since 1990, according to the government’s Environment Canada. What’s still unknown, said the National Resource Defense Council’s Mogerman, is what effect it’s having on the water table.
“There’s this ongoing debate on carbon pollution: What’s more carbon-intensive – the tar sands or conventional mining? That debate is one where Canadians have asserted there’s really only 15 percent more than typical petroleum,” Mogerman said.
“A lot of independent science” maintains that tar fields mining is still two to three times dirtier, he added. “I’m not a scientist, but I really don’t understand how that can change if you’re using a far more energy-intensive way to extract.”
“I think it’s important to point out that currently we are very competitive with other sources that have been going to the U.S.,” said Davies. “Oil sands is clean if not cleaner than oil from Nigeria, Venezuela and Mexico.”
Even domestic supplies such as California thermal aren’t any cleaner than the Canadian crude.
“Not only are we competitive now with other sources coming into the U.S., but we will become even more competitive,” Davies said.
Last year, the Alberta provincial government soaked $25 million into a public relations campaign for the oil sands industry, with the slogan “Freedom to create, spirit to achieve.”
“It’s worth more than $25 million, protecting a $40 billion revenue stream,” Stelmach claimed.
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Montana’s attention was jerked toward the Canadian oil fields late last year, when representatives of Imperial Oil showed up at the Missoula County Courthouse. They informed county and city officials of plans to move some 200 oversized loads of equipment through the county over the course of a year, beginning in the fall of 2010.
The modules, fabricated in South Korea for $250 million, will be trucked from the Port of Lewiston in Idaho to the company’s leases near Kearl Lake in Alberta to use in an operation that will go online in 2012.
The Kearl Module Transport Project required an environmental assessment through the Montana Department of Transportation. If the MDT approves the plan, Imperial Oil will need to buy permits for each load. The company is still assessing public comments from the assessment process.
A vocal and somewhat coordinated opposition has risen in both western Montana and in Idaho. The concerns envelop not only the transport project, but the proposed Keystone XL pipeline that will run from Canada through part of eastern Montana, as well as the broader ethics of oil production in the tar sands and elsewhere.
“If you look at the totality of what’s going on to accommodate the ramp-up of tar sands in the U.S. market, it’s breathtaking in scope,” said Mogerman. “It hugely
impactful and we’re not talking about it enough.”
But talk won’t stop the oil companies, he admitted.
“I’d love to see Canada shifting to a cleaner energy economy that doesn’t require this sort of damaging extraction and doesn’t flood our markets with this exceedingly dirty oil. But that’s not going to happen,” he said.
Mogerman works out of Chicago for NRDC, but he spends his time on both Montana issues and the tar sands. Because of the nature of the latter, there is a constant demand for new parts and equipment, he said.
“There’s just a never-ending parade of industrial equipment going up to Alberta, and that’s going to grow rather than shrink,” he said.
“I think these are real legitimate questions the people in Montana need to be asking. Is this the camel’s nose? Is this the thing that opens an opportunity and creates a precedent that you now have to deal with for decades to come? Exxon, two years ago, had the best profit year in American corporate history. Do we need to be doing favors for Exxon?”
Reporter Kim Briggeman can be reached at 523-5266 or at kbriggeman@missoulian.com.
Tagged with: oil demand, gulf oil spill, missoulian
