Oil's well with Alberta Energy - Hicks on Biz column from The Edmonton Sun, originally posted Saturday, March 03, 2012
Oil's well with Alberta energy 6
BY GRAHAM HICKS ,EDMONTON SUN
FIRST POSTED: SATURDAY, MARCH 03, 2012 12:29 PM MST | UPDATED: SATURDAY, MARCH 03, 2012 12:39 PM MST
Change text size for the storyPrint this story
Report an error
If you’re going to understand the nature of business in Edmonton, understand just one thing.
All roads lead to energy.
Oil, natural gas, and that poor kid on the wrong side of the environmental tracks, coal.
You likely know the essentials – 300 to 600 million years ago, all things lush and green were deeply buried and eventually decayed into hydrocarbon molecules.
Mother Nature did us a big favour, pushing up the Rockies so those hydrocarbons oozed eastward and were concentrated under what happily happened to be Alberta.
Generally speaking, natural gas is really deep, conventional oil is deep, and heavy oil close to the surface. Alberta sits on top of one of the world’s 40 major oil basins.
Ever since the Leduc #1 oil well hit pay dirt in 1947, we have fretted over oil’s end.
Once the big underground pools of oil and gas were sucked dry, nothing would be left. Prepare ye the end of the Earth.
The oil biz knew of the close-to-the surface oil sands in Northern Alberta – oil has naturally leaked into the Athabasca River for thousands of years – but the cost of separating oil from sand far exceeded market prices.
In the ‘70s and the ‘80s, the big refrain in these parts was always, ‘what will we do when the oil runs out?’
It ain’t gonna happen!!!
There is more oil and gas in this world, in Alberta, than anybody ever dreamed of.
An near-unlimited supply of hydrocarbon energy lies beneath the ground on which we walk.
Not necessarily in the giant underground pools of yesterday, but in smaller “bubbles” or layers, here, there and everywhere in underground oil and gas zones … think of the fizzy bubbles in soft drinks, or the raspberry filling between layers of a cake.
It’s more expensive to extract and process, but as long as the price of oil stays in the $90 to $120 a barrel range, money can be made. The experts agree. Global oil prices – long-term – will stay in that zone.
Amazing technology – much of it developed here – makes the retrieval of such oil/gas cost-effective AND environmentally sustainable.
We used to have just “conventional” oil and gas – punch a hole in the ground, get lucky, hit a rich zone of oil or gas, and up it bubbled.
Now we have what’s left of “conventional” oil, plus “tight” oil, “heavy” oil (Cold Lake and Lloydminster), oil-sand bitumen and the still-untapped shale oil.
In the natural gas world, new ways of extracting the bubbles from “tight” and “shale” gas formations has increased natural gas supplies 10-fold, hence the price of natural gas has spiraled downward.
Horizontal drilling, invented or much improved here in Edmonton, means the rigs return to old, exhausted wells. At pre-determined depths, the drill-bit makes a turn and heads off horizontally rather than vertically. Then, with this amazing new technology, controlled explosions or “fracking” cracks the rock between the bubbles, letting the oil or gas drain into the horizontal pipe.
As for coal, we have oodles of the stuff, but our scientists haven’t (yet) figured out how to make it as clean-burning and as cheap as natural gas. When that happens, we will be again to the races.
As for the environment … technology is our savior. The oil sands are being “greened” as never before. Environmental advances in Canada’s (hence Alberta’s) fossil-fuel system – from extraction to transportation to processing to end-use, coupled with stringent government regulation – are making our fossil fuels as green as green can be, challenging uneconomic “alternative” energy sources for environmental cleanliness.
If the rest of the world followed our lead, carbon emissions would fade as any kind of global threat.
Take comfort folks.
The oil, gas and petrochemical industries that drive our city’s economy will flourish for generations of Edmontonians to come.