Canada is digging itself a dirty energy destiny in the Athabasca oil sands.
After the BP oil spill in the Gulf of Mexico and now the nuclear meltdown at
the Fukushima reactors in Japan, it should be clear that oil and nuclear power
are not benign forces in our world. Both are toxic, dirty, and insecure forms
of energy. It is thus astonishing that the Canadian energy industry proposes
combining the two.
The boreal forest of northern Alberta sits atop one of the largest fossil fuel
deposits in the world: the Athabasca bituminous sands. Energy insiders call
it oil sands, while environmentalists prefer tar sands—each side seeing
what it wants. At room temperature, raw bitumen has the consistency of asphalt
and won't flow through a pipeline without being diluted
or upgraded
into synthetic crude oil.
Underground, the bitumen exists in a mixture with sand and clay, and there
are two techniques for extracting it. Surface mines have been the predominant
method since commercial production began in the 1960s. At the Suncor Energy mine, for
example, the native forests, topsoil, and muskeg bog were cleared, and 50 meters
of "overburden" earth was removed to expose a tar sand deposit itself
about 50 meters thick. The bitumen is mined 24 hours per day with massive electric
shovels that fill dump trucks three stories tall.
The dump trucks haul the tar sands out of the mine to a separation unit where
it is mixed with hot water. The bitumen floats to the top and is skimmed off,
while the wastewater slurry—containing sand, clay, salts, polycyclic aromatic
hydrocarbons, arsenic, naphthenic acid, and other substances—is pumped
into large, open-air
tailings ponds where it is left to evaporate. The problem with tailings
ponds has been that the finest clay particles take decades to settle into sediment.
To accelerate reclamation of the land, some companies are now experimenting
with adding polyacrylamide flocculant, in a process similar to municipal waste
treatment, to help separate the solids from the water.
Mining for deeper deposits is uneconomical, so the industry also employs in
situ drilling. In a typical setup, two horizontal wells are drilled, one above
the other. The top well injects steam into the sands, melting out the bitumen,
which is then pumped out through the lower well in a process called Steam-Assisted
Gravity Drainage, or SAGD. The well pads of these SAGD installations dot the remote boreal landscape in a network of roads, pipelines, and seismic cutlines.
Mining and in situ operations both consume a lot of energy. The advantage of
in situ is that the land is much less disturbed, making it easier to return
it to a natural state. SAGD also separates the sand and bitumen below the surface,
requiring significantly less infrastructure. Of the total Athabasca deposit,
80 percent is thought to be recoverable through in situ and 20 percent through
mining.
CREDIT: Evan O'Neil. Primary separation of bitumen at the Suncor Energy oil sands mine.
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SAGD requires a lot of natural gas to make steam. The ratio of steam injected
to oil extracted is what determines a project's carbon emissions as well as
its profitability. Mining and SAGD together consume hundreds of billions of
cubic feet of natural gas per year, a substantial fraction of Canada's entire
demand.
That's where nuclear power enters the picture. As bitumen production in Alberta
is slated to expand over the next several decades, gas production will be in
decline. This means that eventually producers will have to either burn part
of their bitumen, thus eating into their profits, or find new power sources
to generate heat and electricity.
Nuclear power has been mooted to fill this gap. Japan, of course, turned
to nuclear power during the 1970s oil shocks to offset its dependence on foreign
oil. Now, in an ironic twist, Canada is considering nuclear power so that
it can expand its oil exports. Most of the tar sands oil is sold south of the
border through a pipeline network to meet American demand, while Canada still
imports foreign oil to its eastern provinces.
One has to wonder why Canada would burn so much of its natural gas, a relatively
clean fossil fuel, to extract an even dirtier energy. The answer is, of course,
to make money. Most of the world's oil is controlled by
national oil companies, making Canada one of the only remaining patches where
the energy industry can really play in the sandbox.
And the Athabasca deposit is a big sandbox. The area is roughly the size of
New York State. It contains an estimated 1.7 trillion barrels of bitumen,
of which about 170 billion barrels are extractable with current technologies.
Multiply by $100 per barrel and pretty soon we're talking real money.
But it is capital intensive to slurp these heavy, unconventional dregs of the
global oil barrel. Hundreds of billions of dollars have already been invested
in the Alberta tar sands, where it takes an oil price of $65 to 85 per barrel
to recuperate costs. As recently as 2009, oil was back down in the $40 range,
slowing or canceling many projects.
So is tar sands oil dirty oil? Of course it is. All oil is dirty. But is it
dirtier than other sources? On average, yes. According to
Cambridge Energy Research Associates, oil from Alberta tends to be about
5 to 15 percent more polluting than the average oil consumed in the United States
when compared on a well-to-wheels basis. Twenty-five percent of oil's emissions
occur during the production phase, while 75 percent comes from combustion in
a vehicle.
CREDIT: Evan O'Neil. Wellhead at the Cenovus Energy Christina Lake SAGD project.
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Industry insiders often repeat the following argument: It's the consumer's
fault, whether they mean car owners or America in general. "If you would
stop driving so much, we would stop digging up all this oil and pumping it in
your direction," goes the typical line. Then whenever the United States
wavers in its affection for Canadian energy, the argument becomes a threat:
"We'll just sell it to the Chinese instead."
This argument is nonsense on the individual level. American consumers aren't
presented with a significant choice at the pump. They get to decide between
three octane ratings with maybe a dash of dubiously
efficient ethanol in the blend. The only real power a person has to reduce
oil consumption is in deciding where to live. Ditching the car and moving to
a dense, pedestrian- and bicycle-friendly community with access to mass transit
is the most effective solution. For those who cannot or do not wish to move,
the alternative is to work through the local political process to redesign your
community.
Most families haven't made the carless choice yet. Instead the typical response
is to buy a bigger car when gasoline is cheap and a more efficient one when
the price goes back up. Without a price floor of some sort, America will never
break its addiction to oil, foreign or domestic. A strong gasoline tax could
serve as a de facto price floor if it were set high enough. Unfortunately the
United States has chosen to set the bar very low: Gas tax is a pittance
relative to the price of gasoline, and it isn't indexed to inflation, meaning
the value has actually declined over the last several decades.
It is an abdication of political responsibility to argue that an unorganized
and reactionary collective such as consumers is at fault for oil consumption.
The essence of ethics is whether our political institutions can make choices
that are in the interest of all affected stakeholders, local and global, regardless
of the political cost. Seen in this light, can the Canadian and Albertan governments be trusted not
to morph into petrostates?
Sadly the outlook is bleak. The federal environment minister recently declared
that Canadian oil is "ethical oil." This concept is drawn straight
from the title of a book by conservative political activist Ezra
Levant, in which he argues that Canada's oil is morally superior to oil
from countries with poor human rights records. Even if Canada and the United
States were to boycott imports from all countries they consider problematic,
an option neither is willing to consider, oil would still remain a globally
priced and traded commodity and the benefits of its consumption would continue
to flow to unsavory dictators.
On the provincial level, the Alberta government is of the opinion that the
tar sands "should" be developed further, despite the fact that a panel
recently found that water and environmental monitoring program has been inadequate.
Alberta's Energy Resources Conservation Board, its regulatory agency for energy
development, has one of the more Orwellian names one can imagine.
Bullish development of the oil sands has also contributed to Canada's violation
of its Kyoto Protocol commitments. The goal was to decrease emissions 6 percent
below 1990 levels. Instead, Canadian emissions have increased by a whopping
24 percent, in great measure due to tar sands expansion. Tar sands emissions
now account for about 5 percent of Canada's total.
Alberta did manage to enact one innovative policy that few other jurisdictions
will even consider:
a carbon tax of $15 per ton. This move should be applauded, but it is unfortunately
accompanied by billion-dollar investments in the unproven technologies of carbon
capture and sequestration—an expensive crutch to help the fossil fuel industry
limp into the future—with minimal focus on renewable energy research, development,
and deployment.
Another concern for Canada's energy future is that the royalty regime [PDF] for tar
sands leases is too weak. The rate is set at 1 percent until a project becomes
profitable, and then it jumps to 25 percent, which is still low compared to
some countries. Alberta risks squandering
an opportunity to build its Heritage
sovereign wealth fund while the people's resources disappear into private
pockets, leaving the province without financial means to transition to a cleaner
economy.
Is America being a good neighbor in this transaction, or merely abetting a
fellow oil junkie? The proposed
Keystone XL extension of the pipeline network that carries Albertan oil
to the United States is currently under consideration, and final approval falls
to the U.S. Department of State because of the international border crossing.
It was announced
on March 15 that a supplemental environmental impact statement will be issued,
followed by a new public comment period, to determine whether the project is
"in the U.S. national interest."
CREDIT: Evan O'Neil. An electric shovel fills dump trucks at the Suncor Energy mine.
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Buying more energy from a friendly neighbor appears like a good idea on the
surface. But while energy security has the ring of a robust and consistent concept,
it is actually a relative one. It wears a false halo of military necessity even
during peacetime. Supplier countries want security of demand, and consumer countries
want security of supply. What the oil industry really worries about is running
out of business. "Producers who seek to maximize long-term revenue will
want to maintain oil prices stable at the highest price that does not induce
substantial investment in substitutes," writes
technology and innovation expert Philip
Auerswald.
Should we be worried about today's high prices? Auerswald doesn't think so.
High prices merely hasten the inevitable transition to a post-oil economy. Estimations
vary on the timing of peak oil, but the finitude of the resource is undisputed
and so is its eventual depletion to a level where the cost of extraction will
equal the value of the product.
Saying that America should be open to more tar sands oil is basically just
another version of the "drill here, drill now" argument for tapping
the Arctic National Wildlife Reserve in Alaska. The Obama administration, it
should be noted, has been a booster of domestic production, and production
has gone up in the last five years. Canadian production has also increased
significantly in the last decade, mostly from growth in the tar sands. But after
two major oil price spikes during the same period, in 2008 and again now, it
should be crystal clear that domestic and Canadian production growth doesn't
control the global price, and that a much better strategy lies in finding replacement
technologies and actively reducing demand.
But this is a tough sell when you think of things like how many Caterpillar
797B dump trucks are needed to mine the tar sands, and how the parts are manufactured
all over the United States, by quite a few workers in quite a few Congressional
districts. Add to that the public's resistance to raising gasoline taxes, and
it becomes quite easy to see why it's politically difficult to enact bold and
necessary energy policy. The hundreds of millions of lobbying dollars the oil
industry spends certainly don't help our Senators see things clearly.
American politicians have been saying we need to get off foreign oil for half
a century. Canadian energy executives and politicians bristle when they hear
things like that. They feel that somehow Canadian oil shouldn't be considered
foreign because it comes from North America. But the ethical thing is for both
countries to pursue energy independence based on clean, renewable sources that
don't pollute the environment, harm human health, and risk massive destabilization
of the global climate.
As it stands, Canada has become a climate change ostrich with its head in the
oil sands.
Evan O'Neil is a program associate at the Carnegie Council for Ethics in International Affairs and editor of Policy Innovations magazine. A version of this article first appeared in the Carnegie Ethics Online column.