Alberta plans to rebut environmental foes of oil sands development

June 20, 2008
Alberta will emphasize the strategic and economic benefits of continued oil sands development in response to environmental organizations' opposition, an official of the Canadian province's government said on June 11.

Alberta will emphasize the strategic and economic benefits of continued oil sands development in response to environmental organizations' opposition, an official of the Canadian province's government said on June 11.

"Alberta's success in developing its estimated 1.7 trillion bbl of oil sands has vaulted it onto the world stage because it is the only non-OPEC government capable of dramatically increasing its production," said Gary Mar, the province's minister-counselor at the Canadian Embassy in Washington.

It also has become the target of groups intent on restricting development as a way to stop the growth of fossil fuels, he told participants at a conference on Canada's potential for reducing US reliance on imports from Organization of Petroleum Exporting Countries members.

Alberta and Canada's democratic governments stand in contrast to those of most other oil-producing nations, Mar said. Canada and the United States developed a close and beneficial trading relationship long before Canada became the largest foreign oil supplier to the US, he noted.

"We also have strict environmental standards. Strict limits are placed on water use and water quality is continuously monitored. Fort McMurray's air quality is better than many major Canadian cities," Mar said. Technology has reduced the amount of water needed to produce a barrel of oil from oil sands to 2-3 bbl from 5 bbl, compared to more than 100 bbl to produce a barrel of ethanol, he noted.

'Tremendous' CCS potential

The province also is moving ahead on developing carbon capture and storage capabilities because its geology, and that of Saskatchewan, are ideal, he said. "CCS has tremendous potential for Alberta as a technology we can market throughout the world. We think it should be impressed on US policymakers that this technology is not new, and that it works," Mar said.

His statements prompted a response from an audience member at the conference sponsored by the Canadian American Business Council during its annual meeting. "In addition to global warming, there are other environmental concerns. Mining will be the primary source of oil sands for some years to come. In-situ processes have impacts from sedimentary fragmentation and pipeline construction. Water impacts also are substantial. More action is needed," said Susan Casey-Lefkowitz, a senior attorney at the Natural Resources Defense Council.

"As we've met with oil companies, we see that many have made commitments to fight global warming but are also investing in higher-carbon fuels. We believe that more investments need to be made in new and developing alternatives," she continued.

Matt Fox, senior vice president for oil sands at ConocoPhillips Co., said that it believes its Alberta oil sands holdings could produce 1 billion bbl of bitumen, 90% of which would come from an in-situ process, steam-assisted gravity drainage, instead of mining. SAGD uses the same amount of land and much less water than a conventional oilfield development. The water comes from underground, it is generally saline and 90% of it is recycled, he said.

Greenhouse gas emissions during production are 3-4 times the amount produced in a conventional oilfield, Fox conceded. "That's an issue we have to look at," he said, adding that Alberta's forthcoming CCS standard should bring the overall GHG footprint closer to conventional oilfield levels. ConocoPhillips is moving ahead on developing its own CCS and alternative fuels capabilities in the meantime, he said. "This is not a bridge where we'll sit back and wait," Fox said.

Issues for pipelines

Pipelines to move the oil sands-derived crude to inland US refineries also face obstacles which could be significant, according to Shirley Neff, president of the Association of Oil Pipe Lines. Many proposed pipelines from Canada involve line reversals and conversion of existing systems, she told conference participants.

Unlike their natural gas counterparts, crude oil pipelines have no federal eminent domain authority but are subject to the same environmental and permit requirements on the state level, she continued. "The politics around some of these projects has been unbelievable," Neff said. Trans-border pipelines also must get a border crossing permit from the US Department of State, which used to be a fairly straightforward process but has recently become more difficult, she said.

Neff noted that the US Environmental Protection Agency is about to issue a notice associated with GHG emissions in various transportation modes. While pipelines' emissions are lower than highway or rail transportation, their pump stations could be monitored. Biofuels pose yet another set of questions, she said.

"The most important issue for liquids pipelines is a stable regulatory environment. Once you've put pipe in the ground, you can't redeploy the asset. The problem is that nothing is ever as straightforward as it seems," Neff observed. Since Canada is the only source for many inland refineries' feedstock except for US Rocky Mountains production, pipelines will be under political pressure to respond, she said. "We're increasingly being asked to address reliability and security issues. All of this will require getting the necessary permits promptly and in a straightforward manner," she said.

The current atmosphere of record high prices in the absence of a significant supply interruption makes wider US recognition of Canada's oil supply role vital, noted Jonathan M. Baron, founder and principal of Baron Communications LLC and a consultant to Securing America's Future Energy (SAFE).

"Not every barrel of oil is created equal. In the current US debate, oil sands oil from Canada is costly to produce and environmentally dirty. But that does not recognize its energy security value. We're not going to have environmental improvements without economic growth to support them. Canada will play a major role in this," he said.

Contact Nick Snow at [email protected]