May 17, 2013
The greening of the oil sands

Presentation to the Sunrise Rotary Club of Edmonton

by Graham Hicks

Thanks so much for the invitation to speak to your club this morning.

Since retiring from the Edmonton Sun as “Hicks on Six” two years ago, I  embarked on a second career, of business journalism.

That new focus rapidly read to a new obsession: Studying and reading everything I can get my hands on about the oil sands, pollution and technology. Given the oil sands are the single greatest driver of our economy, the obsession has been a good fit.

I think there’s a crying need out there: To have non-partisan, independent, plain-speaking journalists not only defending the oil sands, but extolling its virtues. 

In short, I hope to be an evangelist for the GREENING OF THE OIL SANDS.

Our detractors, such as the Keystone XL pipeline protesters who call our oil sands bitumen the “dirtiest oil on the planet” or Al Gore claiming there’s no such thing as ethical oil, only “dirty and dirtier oil”, had a case … maybe 10 years ago. 

But not today. 

They have so nailed their colours to their mast, are so emotionally invested in their position that no amount of new information about the greening of the oilsands will ever change their minds. 

After two years of research, that I have reached quite the opposite conclusion of Mr. Gore.

• 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 to the degree they have of late:
• If provincial and federal regulators continue to raise the bar to ensure world-leading environmental standards: 

Then our oil-sands oil will be one of the world’s cleanest sources of energy.

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 -  our 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 – worry 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, technology just can’t keep up.

Yes it can. Think of cities in the developing world that are growing exponentially, yet, thanks to technology, have  become far cleaner places in which to live. 

The same principles apply.
So I want to be one of those journalists telling this story.  

Let me give you just a partial list of the new bitument extraction technologies making an environmental difference. 

But first, a quick review. 

The Athabasca oil sands, a region about the size of Greater Toronto, produce a  thick, heavy molasses-like oil, called bitumen.

Back a few hundred million years ago when the Rockies pushed up, oil flowed into what’s now Alberta. In the Athabasca region, it came close to the surface. Bacterial interaction, due to this shallower depth, produced this thick viscous oil that chemically bonds to sand.

Bitumen is more complicated to produce than “conventional oil” found underground and pumped to the surface. Bitumen has to be separated from sand and has to be “upgraded” or initially processed to give it the same qualities as conventional oil, hence, after upgrading, bitumen becomes “synthetic” crude oil.

We produce 1.7 million barrels of oil a day from oil sands, about half of Canada’s daily output. By 2018, the International Energy Association forecasts production levels of  3 million barrels a day.

There are two, very different, methods of producing bitumen.

About half our current 1.7 million barrels of oil a day from the oil sands comes from surface mines, where the bitumen is just a few metres underground. 

In mining operations, bitumen and sand must be separated in enormous vats, using hot water and detergents to break a tight chemical bond. 
Five mines operate in Alberta, CNRL’s Horizon, Shell’s Jackpine and Muskeg River, Suncor’s Millenium, Syncrude’s Mildred Lake, and, just coming on stream  Imperial Oil’s Kearl Lake.

“In situ” bitumen extraction, however, is fast becoming the norm. In an in-situ operation, two perforated pipes, one a few metres overtop the other, run horizontally under ground. Into the top pipe is pumped super-hot steam. The steam melts the bitumen, in effect doing the sand separation operation underground. The bitumen then flows into bottom perforated pipe and is pumped to the surface. 

This operation, called SAG-D or Steam-Assisted Gravity Drainage, or SAG-D. Just about all new oilsand operations are SAG-D based, or will use variations on this idea of underground sand separation.

In both processes, the thick, slow-moving bitumen has to be upgraded, or chemically altered through pressure, hydrogen and extreme heat into “synthetic crude.”

Each process has its own environment challenges, which are rapidly being overcome through technologies I’m about to tell you about.

Let’s deal with the mines first. 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, other trace minerals and residue bitumen  that took decades to settle out of the tailings ponds  can now be removed in weeks, or separated from the waste water as it emerges from the bitumen-sand separation plants.

 Suncor is adding gypsum in a patented process to catch and separate clay tailings in weeks rather than decades.

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.

In other words, this vast tailing pond will gradually turn into a lake clean enough to support natural eco-systems.

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 were complete. 

At the Canadian Oil Sands Innovation Alliance – 13 oil sands companies pooling research efforts – the scientists say “dry tailings” are within reach.

With bitumen separation happening underground, SAG-D operations do not need tailings ponds.  With far few moving parts than the surface mines, a SAG-D plant could operate in an Edmonton industrial park, and aside from a large amount of pipes, nobody would notice.

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 needing water and creating CO2 emissions, whether the upgrading is done in Alberta or at the other end of pipelines. To make bitumen flow, it has to be diluted by a third with “diluents” – petroleum liquids that also have to be processed beforehand. 

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!  

Its new bitumen/sand separation techniques will produce a higher-quality bitumen that can go straight to any refinery designed to handle slightly heavier crude oils. 

No upgrading means far less greenhouse gas emissions, less cost, less energy needed to produce energy. No wonder  Suncor, $3 billion into the project,  abandoned its Voyageur upgrader! Upgraders, incidentally, run in the $7 to $10 billion dollar range to build.

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 the expensive addition of diluent. Other companies are experimenting with similar technologies.

Even though several studies – by global warming experts – have concluded greenhouse gas emissions from the oil sands have next to no effect on raising global temperatures, cutting down on CO2 emissions remains a top priority.

The Alberta government 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.  The Climate Change and Emissions Management Corporation (CCEMC), had, by 2012, 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.

Next generation technology will use recyclable 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 showed their vision: They 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.

This should ultimately trump disputed science. One study says cancer-causing polycyclic aromatic hydrocarbons (PAH – cancer-causing pathogens) are approaching warning levels in nearby lakes. Another study said lakes 200 kilometres away were cleaner today than they were 100 years ago. 

I could go on and on, but there’s only so much time, and so much attention span on your part.  

Ladies and gentlemen, thank you for letting me present the case for the “greening of the oil sands.”   

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.”

Thank you