Alberta Oil/Tar Sands:
(2003 production of) almost 1 million barrels of crude or refined oil each day. Production is expected to reach 1.8 million barrels a day by 2010, with known recoverable reserves of 315 billion barrels, comparable with Saudi Arabia. ...Production costs now range from about $7 to $11 a barrel, depending on the project...
Scientists figured out as early as 1920 how to mix the black, sticky oil sand with hot water and caustic soda, then shake it up to separate the components, with the heavier sand sinking to the bottom and the bitumen rising to the top. It took until 1967, though, for Suncor to develop the first major project, and others including Syncrude, ExxonMobil, Imperial and Shell have since put up money to get huge operations going, with a boost from government incentives that helped write down the investment more quickly
nctimes.net
In recent years, investors' negative views about oil from tar sands have largely faded as technological improvements have pushed production costs down sharply. When the construction cranes come down next summer from the upgrading units of the Millennium Project of Suncor Energy, costs will be around $9 a barrel, roughly one quarter of 1970's levels... With much of North America's low-hanging energy fruit already culled, mining existing oil sand deposits is now less expensive than searching for new oil fields and pumping it from deep-water platforms off the coasts of Newfoundland or Louisiana. 1/01 spaceship-earth.org
Alberta has huge deposits of oil sands that underlie about 77,000 square kilometres (30,000 sq. miles ) of the province. The tar (oil) sands contain about 1.7 trillion barrels of oil in place, of which approximately 300 billion barrels are ultimately recoverable. The Government of Alberta has played a major role in encouraging and promoting the development of the tar sands through technology and research programs. The two most common methods of extracting bitumen from the oil sands are surface mining and in situ ("in place") extraction. The reserves that are economically mineable from the surface lie under less than 75 meters of overburden.
To date, over 1 billion barrels of synthetic crude oil has been recovered from western Canadian oil tar sands... The industry is currently concentrated in the Fort McMurray areas of northern Alberta, where Syncrude Canada and Suncor, the country's two big oil sands producers, are located.
Much of the energy used to extract tar sands oil is from using natural gas. Natural gas is closely tied to the price of conventional oil, on a BTU basis. So when the price of oil zooms up, the price of natural gas raises accordingly. In fact, today, it is possible that the price of natural gas could increase more than conventional oil due to its environmental benefits over burning coal for generating electricity. This would leave tar sands production in an even worse economic situation. It appears that in order for tar sands producers to even make a profit, they need tax breaks and other subsidies from the provincial and federal governments. Here are the economic and environmental down sides to tar sands:
1 uneconomical: tar sands oil is hard to unstick from the trillions of grains of sand and costs too much in money and energy to do so.
2 Huge energy requirements: tar sands extraction is much more energy-intensive that the extraction of conventional reserves of oil and natural gas, thus it never escapes the oil-energy cost cycle, and it generates many times more greenhouse gas emissions than conventional oil and gas.
3 large greenhouse gas emissions: the greenhouse gas emissions from uncovering, extracting, refining, upgrading and transporting tar sands oil is many times more than that associated with extracting refining and processing either conventional oil & gas, and even coal.
4 tar sands strip mine: tar sands is a stripmining operation; it requires of the stripping of hundreds of thousands of acres of fertile ground to get at the bitumen 40 feet under the surface; forests, wildlife habitat; and water sources are ruined. Some operations are using underground, in-situ extraction methods that don't require stripmining, however they pose their own set of groundwater contamination problems
5 severe water pollution: tar sands extraction and processing requires massive amounts of water for steam-stripping and sand washing; groundwater and surface water
(quantity) takings are enormous; resulting oil and phenol contamination are serious for large areas outside just the area of the tar sands stripmine.
6 severe air pollution: direct discharges from the processing and refinery upgrade facilities, and fugitive emissions, generate major amounts of toxic and carcinogenic cancer-causing) contaminants which spread for miles over human and animal populations.
csf.colorado.edu
Production:
138,000 b/d 1980
345,000 b/d 1990
645,000 b/d 2001
almost 1 million b/d 2003
1.9 million b/d 2010 (expected)
energy.gov.ab.ca
Economically recoverable proven reserves
(in 11/02 with oil at 30$/b):
180 billion barrels of oil from Canada (oil + tar sand) (#2 in world)
260 billion barrels of oil from Saudi Arabia (#1)
30 billion barrels of oil in U.S.
energy.gov.ab.ca
When Great Canadian Oil Sands, Ltd. the predecessor to Suncor Energy Inc., began commercial production in 1967, its cost was more than $23 per bbl. When Syncrude Canada Ltd., a joint venture, opened a larger open-pit mine nearby in 1978, its cost was similar. But by the late 1990s, according to the Calgary-based Petroleum Communication Foundation, costs had fallen to around $8.70 per bbl, competitive even with the $10-per-bbl low reached by world oil prices in 2000. Investors took notice.
enr.construction.com
Factors Common To All Petroleum Projects:
All petroleum development projects face risk, which must be assessed by decision-makers in industry and government. Categories of risks include:
• Technological risks
• Construction cost risks
• Market risks
• Regulatory risks
• Financial and fiscal risks
• Political risks
• Environmental risks
• Legal risks
• Terrorism risks
All engineers are sensitive to the presence of technical problems which are associated with projects which have not been undertaken before. If innovation is required, the new technology must be proven in a sequence of experiments at small, medium, and large scale levels, before it can be confidently incorporated into a major project. There is the probability of “negative geotechnical surprises”, a term coined by the Chief Engineer of the trans-Alaskan Pipeline Project to explain construction cost over-runs. Many factors can contribute to such over-runs. There is always a difficulty in predicting the price which a petroleum product will bring over a 25-year period in a free market, and in the case of petroleum, in a market which is only
partially controlled by OPEC and other major producers. Regulatory risks can come from the various governments which control the region of petroleum production and transportation. Pipelines crossing the territory of more than one country are a typical example, as are political upheavals which install new governments, new laws, and new regulatory agencies to enforce these laws.
Financial risks include the interest rates prevailing at the time of construction of a project, the expectation of a rate of return to equity shareholders, and the threat of new taxation by national, regional, and local governments.
Political risks include, in some regions, rebellion, guerrilla warfare, civil war, strikes, and war between countries, as well as international treaties and cartel arrangements which can be created after a project is in place, which might adversely affect a project.
Environmental risks include dramatic effects such as hurricanes, tornadoes, floods, lightning, fires, earthquakes, volcanoes, moving sea ice, thaw-subsidence of frozen ground, and many other possibilities.
Legal risks include the initiation of legal action by concerned special-interest groups to cause curtailment of a project or adverse economic burdens, at any time during the life of a project. These may be at the national level, and although petroleum production is not included under the WTO, there may be bilateral treaties (such as NAFTA) which add risk related to the evolution of the enforcement of treaty obligations.
Terrorism has emerged as a new risk, in recent years, and the design of a petroleum project must take into account reasonable protective measures, both by way of construction and in the manner in which responsible government authorities deploy protective forces.
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Even without the strip mines that stretch to the horizon, the steaming ponds brimming with byproducts, and the absence of any living thing save big black ravens and the occasional bird of prey, the landscape surrounding the giant Syncrude facility in northern Alberta would be forbidding. Carved out of 14 square miles of birch and pine forest some 400 miles north of Calgary, near the town of Fort McMurray, Syncrude is the world's largest producer of oil from tar sands. Getting the oil-bearing, gravel-like material out of the ground and turning it into something resembling conventional petroleum--and making a profit--is a formidable challenge. But thanks to $4 billion in investments from Canadian companies and U.S. giants like Conoco and Exxon Mobil, Syncrude is doing it, producing 250,000 barrels a day of high-quality, low-sulfur crude.
When you figure it takes two tons of oil sand to make just one barrel of oil, you begin to comprehend the vast scale of the operations here. As 30-foot-high Caterpillar trucks haul nearly 400 tons of rock out of the pits every few minutes, mining team leader Pat Crisby notes that at 25 degrees above zero, today's weather is rather mild for his workers--the 3,800 Syncrude employees routinely work at temperatures approaching minus 40 degrees for much of the winter. Since 6 a.m. Crisby's men and women have processed some 41,000 tons of rock, removing not just tar sand but tons of soil and stone as well. The oily grit is heated to 176 degrees and mixed with hot water before being thrown into the equivalent of a giant washing machine that separates the oil from the sand. Then the slurry is upgraded and refined until it reaches its final form--a tan, viscous liquid resembling motor oil.
Very expensive motor oil. While it costs the Saudis about $1 a barrel to get their oil out of the ground and into the hands of customers, Syncrude spends roughly $12 to make a barrel of crude. With oil prices at $21 a barrel, the company's margins are "decent right now,'' says Syncrude President Jim Carter. But if oil drops back into the mid to low teens, as it did in the late 1990s, Syncrude's profits will get hammered. Nevertheless, says Carter, "we see this as the logical alternative to declining conventional reserves in the U.S. and Canada. Similarly, this can replace imported oil from OPEC.''
Several factors make oil sands an important part of the equation if the U.S. is to reduce its dependence on Middle Eastern oil. For starters, they're close to home, with major deposits in Canada and Venezuela. They're also abundant--300 billion barrels of recoverable oil is estimated to be in the tar sands in northern Alberta alone--about 30 times the maximum amount of oil thought to lie in Alaska's Arctic National Wildlife Refuge. Venezuela could possess up to 400 billion barrels in its sands--more than the entire proven reserves of Saudi Arabia.
The problem is that making oil from tar sands isn't just expensive. It's also really messy. Not far from the sprawling pit mines, a 600-foot smokestack spews a white cloud of steam tinged with brown and yellow. "We create our own weather,'' one worker says proudly. "When it's cold, the steam turns into snow. But I wouldn't make a snow cone out of it.'' In fact, Syncrude emits roughly 240 tons of sulfur dioxide every day, nearly 25 times what a conventional refinery of similar size in Texas would release. Although Syncrude is spending hundreds of millions to reduce emissions and lessen the facility's environmental impact, one glance at the yellowish cloud over the lunar landscape illustrates the tradeoffs in moving away from cheap Mideast oil.
fortune.com |
