Two energy realities face the United States
in the 21st century: worldwide demand for
energy is forecasted to grow 50 percent by
2030 and fossil fuels will continue to be the
dominant energy source, accounting for over
two-thirds of global consumption decades
Canada is positioned to play a major
role in supplying the U.S. and other energyhungry
nations with the fuels they need to
power their economies. Th e western province
of Alberta ranks second only to Saudi Arabia
in proven energy reserves. Most of these
reserves are found in the oil sands.
Until recently, Alberta’s northern oil
sands near Fort McMurray were considered
too remote, too diffi cult to extract, and
too expensive to produce. However, new
technology and higher oil prices have
transformed these massive deposits into
economically viable fi elds that may hold the
key to North American energy security.
Developing this resource, however,
has released a wave of controversy and
concerns about the environmental impacts
of development on such a large scale. The oil sands are receiving international scrutiny
as governments consider adopting climate
change regulations and treaties. Th e Alberta
government and industry are well aware of
the strong opinions in the U.S. and around
the world on development of the oil sands
and understand that energy resources must be
produced in a responsible manner.
RDC Deputy Director Carl Portman
recently visited the oil sands with
Commissioner Larry Hartig of the Alaska
Department of Environmental Conservation
and 30 others from western states to learn
about the oil sands, what they mean for U.S.
energy security, and the steps Alberta and industry are taking to mitigate impacts.
The visitors were exposed to Alberta’s
vision for developing one of the world’s
largest deposits of oil. They also learned
about legislation and policies that protect
water, air, land, and ecosystems in the oil
Canada is the top supplier of oil to the
U.S., supplying more than 2.4 million barrels
per day. Of this, more than 1.3 million
barrels of crude oil comes from the oil sands.
Canada’s oil reserves are the second largest in
the world. Of 178 billion barrels in reserves,
97 percent are located in the oil sands.
Alberta contains the largest concentration
of oil sands in the world. Three major areas
in the province contain approximately 1.7
trillion barrels of bitumen in place. Proven
measures indicate there are 173 billion barrels
of recoverable oil in the sands. However,
technological breakthroughs could increase
the reserve base to more than 500 billion
barrels, putting Canada above Saudi Arabia
in oil reserves. In 2008, production reached
nearly 1.5 million barrels a day through 87
producing oil sands projects in Alberta. By
2020, production could increase to 2.5 to 3
million barrels per day.
In comparison, North Slope production
has fallen to 650,000 barrels per day from
a peak of 2.1 million barrels in the late
1980s. Alaska production is expected to fall
more than six percent annually over the next
several years before stabilizing, then falling
sharply in the latter part of this decade. A
U.S. Department of Energy report estimates
the ultimate recoverable oil reserves on
the North Slope to be 22.2 billion barrels,
including reserves from existing fields as well
as undiscovered resources. Offshore in the
Chukchi and Beaufort Seas, the Minerals
Management Service estimates there is up to
an additional 27 billion barrels of oil.
The government of Alberta owns the oil
sands resource, while industry purchases
the right to explore for, extract and develop
the resource. Industry pays royalties back to
Alberta and in recent years the province has
collected approximately $2.4 billion annually
in royalties from oil sands production.
From oil sands to consumer
Oil sands are a mixture of bitumen, sand,
water, and clay. Bitumen is a heavy type
of petroleum that will not flow unless it is
heated or diluted. At room temperature it
acts much like cold molasses. Because it does
not flow like conventional crude oil, it must
be mined or heated underground before it
can be recovered for processing.
Bitumen is recovered in two ways. For oil
sands near the surface, about 500,000 tons
are mined each day using huge mechanized
shovels with buckets that hold 100 tons.
The ore is transported in some of the world’s
largest trucks, carrying 400 tons per load, to crushers and sizers, which break up the ore
for delivery to the extraction plant. At this
facility, the sand is mixed with warm water
to separate the bitumen and prepare it for
upgrading. The tailings (water, clay, and sand)
are pumped to holding ponds where they are
treated and prepared for reclamation.
For oil sands further beneath the surface,
extraction occurs by in-situ methods. The
most common separates the bitumen from
the sand underground using steam to heat it
to a point that allows it to be pumped by a well
to the surface. In-situ processes have a much
smaller surface footprint, as they use about
15 percent of land disturbed by mining and
do not produce tailing ponds. Approximately
80 percent of Alberta’s recoverable oil sands
will be extracted through in-situ production.In the in-situ process, the recovered bitumen
is sent by pipeline to the upgrading facility.
The process does not require extraction as
separation occurs in the ground.
During the upgrading process, the
bitumen is heated and sent to drums where
excess carbon is removed. The superheated
hydrocarbon vapors are sent to facilities
called fractionators where vapor condenses
into naphtha, kerosene, and gas oil. These
products are then blended into synthetic
crude oil and diesel fuel. The synthetic oil
is then shipped by pipeline to refineries
throughout North America where it is further processed to produce a range of consumer
and industrial products.
The Canadian oil sands have been a
target of environmental groups for years,
but Alberta is working hard to prove that
environmental protection and economic
development can occur at the same time. The
provincial government has passed legislation
and implemented policies involving land
reclamation, water use, air quality, and
ecosystem health. Current production
methods mean that more energy is needed
to extract oil from the sands compared to
conventional oil. But the gap is closing
with technology, reducing the energy and
environmental impact of oil sands recovery.
Yet the perception of oil sands
development is one of massive emissions nd land disturbance. In reality, the oil
sands account for less than five percent of
Canada’s greenhouse gas emissions and less
than one-tenth of one percent of total global
Overall, the oil sands carbon footprint
is only about 5 to 15 percent higher than
most crude imports consumed in the
U.S. On a “wells-to-wheels” basis, the life
cycle emissions from oil sands crude are
comparable to the average imported crude
oil consumed in the U.S. In the case of
Venezuelan crude, Canadian oil sands crude is actually less carbon intensive.
With regard to land disturbance, the
potentially mineable area in the oil sands
represents only a small fraction of the
boreal forest, where the sands are located.
In more than 40 years of oil sands mining,
only one-hundredth of one percent of the
Canadian boreal forest has been disturbed.
This disturbance is equivalent to an area
approximately the size of the Kennedy
Space Center in Florida. Meanwhile, strict
reclamation standards require the land to be
able to support a range of activities similar to
its previous use before oil sands development. Work is underway to return disturbed land to
a natural state and companies have planted
more than 7.5 million seedlings toward their
In 2007, Alberta became the first in North
America to legislate mandatory greenhouse
gas reductions for large industrial facilities.
Carbon dioxide emissions have been reduced
by 45 percent per barrel of oil since 1990.
In 2008, the Alberta government laid out
a new climate change plan for the province.
The plan’s target is to reduce greenhouse gas
emissions 50 percent from expected levels
by 2050 and will lower emissions to an
equivalent of 14 percent below 2005 levels.
The plan recognizes that emissions will rise
in the short term until 2020, but as new
technology is employed, emissions will fall.
By 2050, Alberta’s climate change plan will
reduce projected emissions by 200 million
tons, which is the equivalent of taking 42
million vehicles off the road each year. So
far, industry has reduced emissions by 2.6
million tons, equivalent to taking 550,000
cars off the road.
Carbon capture and storage, energy conservation, and greening energy
production are keys to the reduction plan.
Carbon capture and storage, which is at the
heart of the plan, is a process that captures
carbon dioxide emissions and stores them in
geological formations deep inside the earth.
The same unique geology that developed the
abundance of hydrocarbons in Alberta also
makes it ideally suited to permanently store
In July 2008, Alberta committed $2
billion to kick-start carbon capture and
storage projects in Alberta, and wide-scale
implementation is anticipated as technology
advances. Up to five million tons of
carbon dioxide per year is expected to be
captured and permanently stored by 2015.
Meanwhile, industry is contributing more
than $40 million into a research fund to
advance technology and reduce emissions.
Politics & energy security
Some western states such as California
are pondering measures to penalize Alberta’s
crude under a low-carbon fuel standard,
including threats to ban imports of crude
from the oil sands. The Canadians strongly
object to such barriers, warning they would
amount to unjustifiable discrimination
against Alberta energy. Provincial government
officials insist that attacks on the oil sands
have been wildly exaggerated by people and
groups who have their own agenda.
The Alberta government has been hosting
delegations from across the U.S. to get the
message out about the enormous economic
and energy potential of the oil sands, as well
as the major steps government and industry
are taking to responsibly develop the
resource. They emphasize there is no need to
make a choice between energy development in the oil sands and the environment.
If the U.S. rejects oil sands energy, the
Canadians are prepared to send their oil to
other nations like China, which has everincreasing
interest in oil sands projects.
With its enormous potential, the oil
sands are a geopolitical game-changer for
both Canada and the U.S. The recoverable
reserves alone are enough to supply every
drop of oil the U.S. needs for the next 23
years – if the sands could be fully developed
over that period of time, which is not
practical. However, when combined with
new potential production from the OCS
and Alaska, the oil sands could free America
from its reliance on oil imports from overseas.
Strategically, the sands could hold the key to
North American energy security, providing a
safe, stable, secure supply of energy.
Economically, every dollar invested
in the oil sands creates about $9 worth of
economic activity globally. Over the next
five years, oil sands production could create
an estimated 343,000 new jobs in the U.S.
Oil sands demand for American goods and
services could contribute $34 billion to the
U.S. Gross Domestic Product in 2015 and
up to $42 billion by 2025.
In 2007, industry invested $16 billion in
oil sands projects. Since 2000, $87 billion
has been invested in developing the sands.
Given the strides Alberta and industry
have made in oil sands development and the
major efforts underway to further mitigate
environmental impacts, Canadians point
out that it would defy reason for the U.S.
to block or limit energy from the oil sands,
when the nation is so heavily reliant on
imports from overseas.
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