Thanks so much for the invitation to speak to your club.
Let me tell you why I’m here.
Two years ago, I retired as a full-time columnist at The Edmonton Sun newspaper. Not to go golfing, but to do something different, something meaningful with the 10 to 15 productive years I may have left in me.
What to do? Looking around, an obvious theme emerged.
Nobody was speaking with a clear, objective voice about the oil sands.
Vilifying the “tar” sands are those convinced beyond reason that fossil fuels will be the death of us all due to Greenhouse Gas Emissions causing global warming and pollution. Since Al Gore’s terribly misleading documentary An Inconvenient Truth, the oil sands became a symbolic, easy target. All that is wrong with man’s abysmal treatment of Mother Earth can be summed up with bitter disgust in THE TAR SANDS.
But those defending the oil sands are suspect as well. All have a vested monetary interest in this black gold, be in the Canadian Association of Petroleum Producers, companies like Cenovus, or governments desperately dependent on oil sands royalties and taxation to maintain social programs.
I saw an opportunity, the need for non-partisan, independent, plain-speaking journalists to look at both sides of this Great Debate, to arrive at conclusions based on reality, not on ideological zeal or who was footing the bill for the latest study.
(As the company accountant said to the CEO behind closed doors, ‘How much is two plus two? What do you want it to be?”)
For the past two years, I’ve been studying and reading everything I can get my hands on about the oil sands, pollution and technology. I’ve been writing steadily on the subject in my once-a-week business column, Hicks on Biz, in the Saturday edition of the Edmonton Sun.
While the Keystone XL pipeline protesters believe our oil sands bitumen to be the “dirtiest oil on the planet”, while Al Gore still proclaims there’s no such thing as ethical oil, only “dirty and dirtier oil”, I have reached a very different conclusion.
• If the technological advances in the oil sands continue at the current pace:
• If energy producers continue to invest in oil sands research and development at today’s levels or better.
• If provincial and federal regulators continue to raise the bar to ensure world-leading environmental standards:
Then our oil will become one of the cleanest sources of energy on the planet.
If a new factory wanted to be powered by the most environmentally friendly fuel source possible – be it wind, solar, hydro, nuclear, natural gas or oil - oil-sands oil today would be a few steps behind, but still much closer in environmental purity than anybody realizes … at a tiny fraction of the cost of any “alternative” energy source.
And in 10 years time, our oil will be fully competitive.
More moderate environmentalists – like you and me – have a legitimate concern about the “cumulative effects” of ever growing oil sand production: Producers may be cleaning up their acts, but with a doubling of production expected in the next decade or so, there’s a worry that technology just can’t keep up.
It’s a judgement call. And nobody can say for sure that as oil sand production doubles or triples, water use, greenhouse gas emissions etc. will actually drop. But science and research dollars are a potent combination. Think of cities in the developing world that are growing exponentially, yet, thanks to technology, have become far cleaner places in which to live.
Let’s begin with undisputed facts.
We produce 1.7 to 1.8 million barrels of oil a day from oil sands, about two-thirds of Canada’s daily output. By 2018, the International Energy Association forecasts oil sands production levels of three million barrels a day.
The need for oil isn’t going away. In 2012, the world used 90 million barrels a day. By 2035, the IEA says, demand will slow, but will still grow to 99 million barrels a day.
About half our current 1.8 million barrels of oil a day from the oil sands comes from surface mines, which look – in National Geographic stories – like mining pits from Hell.
“In situ” extraction, where hot steam melts and extracts the bitumen underground, is fast becoming the norm. Apart from mining operation expansions, all new oil sand production will be variations on in-situ, which has far less environment impact than mining.
A SAG-D plant could operate in a Red Deer industrial park, and aside from a large amount of pipes, nobody would notice.
Speaking of the speed of technology, in-situ was an experimental process 12 years ago. Today it’s the norm.
Each process has its own environment challenges, which are rapidly being overcome through new or refined technologies .
The biggest environment challenge the mining operations face are their enormous tailings ponds, the great artificial lakes surrounding surface mines that can be seen from space.
This is the discharged water used to separate bitumen from sand. In it are fine clay particles, which, if left to mother nature alone, would take some 50 years to settle out.
But by the end of my life the ponds will be rapidly shrinking. By the time my kids are my age, they will no longer exist.
The clay particles can now be removed in weeks, or separated from the waste water as it emerges from the initial on-site bitumen processing plants.
Suncor is adding gypsum in a patented process to catch and separate clay tailings in weeks rather than decades, the 30 year time span for tailing ponds to settle and be reclaimed has been reduced to 10.
Syncrude has spent $3 billion developing a centrifuge that can “spin” the water out of the effluent emerging from the separation process. They say it will be operational by 2015.
Reclaimation technology is moving ahead by leaps and bounds. Syncrude is commercially testing, on an eight-square-kilometre tailing pond, a process of reclaiming existing tailing pond lakes by adding clean water on top and letting natural bacteria eat the bad stuff at the bottom. This vast tailing pond will gradually turn into a lake clean enough for swimming, boating and fishing.
Both Syncrude and Suncor, as the original oil sands mining operations, now have thousands of hectares of land fully returned to its nature state after mining operations are complete.
Both mining and SAGD operations, however, are working on reducing water use, and CO2 emissions coming from the need to heat that water.
Upgrading is another part of the bitumen process. To make bitumen flow, it either has to be chemically altered in an upgrading process, or be diluted by other petroleum-based liquids to flow to refineries.
Here’s a serious game-changer for the mining operations. Bitumen coming from Imperial Oil’s brand-new Kearl Lake mine WILL NOT NEED upgrading! It will produce a higher-quality bitumen that can go straight to any refinery designed to handle heavier crude oils.
No upgrading means far less greenhouse gas emissions, less cost, less energy needed to produce energy.
Meanwhile MEG Energy has come up with a “mini-upgrader” that can take bitumen at its source and “lighten it up” enough to flow down pipelines without diluent. Other companies are experimenting with similar technologies.
Even though it’s moot - greenhouse gas emissions from the oil sands have next to no effect on global temperatures as it is tiny compared to global coal-burning. But cutting down on CO2 emissions remains a top Alberta/Canada priority.
The Alberta government already has CO2 emissions rules. If any plant pumps out more CO2 than they are allowed, they are penalized with a $15 a tonne fine. That fine goes straight into a fund that allocates those dollars to clean energy projects. That fund has a kitty of $312 million and had dispensed $167 million to 31 clean energy projects.
Cenovus Energy, for instance, is working on producing heat from oxy-fuel, a flame consuming pure oxygen rather than air. The CO2 produced is apparently easier to capture.
The largest CO2 sequestering project in the world is happening on our doorstep. At the Shell refinery and upgrader near Fort Saskatchewan, 1 million tonnes of CO2 now going into the air will be captured, liquified and pumped 80 km to Thorhild to be injected 2.3 km into ground.
Oil sands company CNRL is a partner in $19 million pilot project at Bonnyville where algae, fed with captured C02, is made into biofuels, livestock feed and fertilizer.
SAGD operators are thinking about alternatives to the use of super-hot steam – which needs lots and lots of water and CO2 from heating that water. Imperial Oil says its next generation of in-situ wells will use no water at all, only recyclable solvents.
Next generation technology will use organic solvents, underground burning, electrical currents, all technologies dramatically reducing water and energy use, hence less CO2.
Just one year ago, the 12 major oil sands companies agreed to cooperate and share in most oil sands research and technology. No more secrets, no more exclusivity. On the one hand, they were turning over patents and potential income from licencing of patents. On the other, instead of one patent, they would have access to many. The Canadian Oil Sands Innovation Alliance has looked at 440 new technologies, and have taken 180 of them into the next stage.
Equally important is the acceptance - finally – by all oil sand players of independent state-of-the-art oil sands environmental monitoring run jointly by the provincial and federal environmental departments. No more there-is-a-problem there-isn’t-a-problem. And if there’s unacceptable air/water pollution, it’ll have to be fixed, pronto.
Meanwhile, the anti oil sands movement will keep looking for excuses, any they can find, to back their ever-thinning case. This past week, after much opposition prodding, the government of Alberta released its pipeline safety report. The report said, all things considered, Alberta’s pipelines are safe – and new surveillance/testing technologies are making them safer.
There was nothing to attack. The environmentalists and the opposition moved on.
I could go on and on, but there’s only so much time, and so much attention span on your part.
Thanks for letting me present the case for the “greening of the oil sands.”
Indeed, my biggest concern is not about oil sands and the environment, it’s about the price of oil, period. Oil has always been boom and bust, and we’ve had some five or six years of international oil hovering around the $100 mark. More and more “new” oil is coming on around the world. Natural gas is dirt-cheap in North America. Something has to give.
And if we should be worrying about GHG emissions – please, please, please environmentalists, put the heat on coal-burning electricity plants the world over, especially in China.
That’s where the vast majority of CO2 emissions are coming from. Our contribution is tiny and it keeps getting smaller.
In a best-case scenario, all the improvements above will keep improving our environmental track record for all forms of energy extraction and processing. The militant environmentalists will never acknowledge such improvement of course, but they will quietly move on to other targets, as they should.
Let me conclude by quoting reporter Jameson Berkow in the National Post, on much the same subject.
“Although it remains largely dispersed and undiscussed, Canadian energy innovation is accelerating to the point where within a single generation, the oil sands could go from being among the world’s most widely criticized resource plays to being among the most admired.”
Thanks … I’m delighted to take questions .. and any suggestions as to spreading the word through non-partisan commentators is much appreciated!