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Tar Sands Oil: Pros and Cons

RP Siegel | Monday April 16th, 2012 | 7 Comments

There is no perfect energy source. Each and every one has its own advantages and compromises. This series will explore the pros and cons of various energy sources.  Learn about other forms of energy generation here.

You might not know this, but Canada has oil reserves of 170 billion barrels, more than Iran and Nigeria combined. This fact is not widely known since much of that oil has been considered “not economically recoverable,” lying deep underground in a mixture of bitumen, a thick, tarry substance, sand and water known as oil sands or tar sands. Development of these tar sands, located near the Athabasca River, by Suncor Energy, began in the 1960s but has been conducted at a relatively small scale because of the costs involved. Only recently, with declining supplies and increasing prices have attempts begun to try and ramp up production, especially after PetroChina acquired a 60 percent interest in two major wells in Alberta in 2009. This was followed in 2010 by Sinopec paying $4.65 billion for a 9 percent stake in Syncrude Canada Ltd.

Chinese investors find this resource to be attractive, since Canada is considered to be a low political risk when compared with, say, the Middle East. As of 2010, the three biggest of many players were Syncrude Canada, Suncor, and Albian Sands, a joint venture of Chevron, Shell Canada and Marathon Oil. BP also has a substantial stake, with a 75 percent interest in Terre de Grace, which it also operates.

Projections made after slowdowns in offshore production show that as much as 36 percent of American oil could be coming from Canadian oil sands by 2030. According to oil expert Daniel Yergin, “Canadian oil sands…have gone from being a fringe energy source to being one of strategic importance.’’

Sounds good so far, but not so fast; there are numerous major environmental problems and risks associated with this technology.

For starters, extracting this oil requires a good deal more energy than conventional drilling, which means more greenhouse gases before the oil even reaches the pump. The net energy return on energy invested ratio of tar sands oil by the time it is converted to gasoline is roughly half that of the equivalent process for conventional crude oil. It is the largest source of carbon emissions in Canada, making Alberta, with only 10 percent of the population, the highest emitting province.

The Canadian government has invested heavily in the use of Carbon Capture and Storage (CCS) for the tar sands recovery process, but this technology is yet unproven. The process requires also vast amounts of water and chemicals to wash the sands. Anywhere from 2 to 4.5 times the amount of water is required for each barrel of oil produced. The discharge that accumulates in highly toxic waste ponds pose a huge threat to wildlife. In one incident, a flock of 1,600 ducks mistakenly landed in one of these ponds and they all died. Now, propane cannons, using even more energy, are used to frighten away wildlife. Tailing pools now cover 50 square miles adjoining the Athabasca River, in the middle of the world’s largest intact forest, a key absorber of CO2 and wildlife habitat. The projects have also been a mixed blessing for the numerous First Nations people living in the area. While it has brought a significant number of jobs and economic activity, the developers not only pollute the area, but they don’t take First Nations’ interests into account, destroying hunting and fishing, habitat and bringing a number of health risks to the region.

Recently, a number of environmental groups and 23 First Nations groups have asked for a moratorium on new tar sands development. They are also asking to halt the Keystone XL pipeline which would strongly encourage further development of the Tar Sands, by allowing the oil to be shipped from Texas to China, where most of it will be used.

Pros

  • Very large supply. Second largest oil field in the world.
  • Economically recoverable at today’s oil prices
  • Will help keep oil prices relatively low
  • Enormous growth potential. Less than 5 percent has been produced.
  • Big economic driver in Alberta. Jobs for Native Americans.
  • Stable source country (a rarity for oil)
  • GHG emissions could potentially be minimized through CCS

Cons

  • Enormous GHG emissions. Oil sands are already Canada’s largest source of CO2 emissions.
  • Relatively low net energy return compared to other sources
  • Alberta, with only 10 percent of the population, emits the most GHG emissions of any province. Provincial government has been slow to respond.
  • Large amounts of water required: roughly 3:1
  • Water pollution. Roughly 3 million gallons of toxic runoff per day. Fifty square miles now covered in toxic pools
  • Destructive to major boreal forest, an important carbon sink
  • Widespread habitat destruction, both on land and water
  • Destructive to ancestral lands
  • Requires expensive and risky pipeline to reach faraway markets

In summary, tar sands oil has a cost/benefit profile that is similar in many ways to coal, except that coal is used for electricity while oil is used for transportation. At the present, there are probably more alternatives for electricity than there are for transportation. This could begin to shift if we see tractor-trailers trucks being converted to natural gas, as T. Boone Pickens predicts. Of course, the current historically low natural gas prices, combined with high oil prices has, at least for the moment, rearranged the whole energy picture.

The similarities between tar sands oil and coal are the large supply on the one hand and the massive environmental problems on the other. I would have to say that, as bad as the environmental impacts of coal are, these tar sands might even be worse, despite what the developers might say. There is no question that the approval of the Keystone XL pipeline will encourage expansion of this resource, while bringing questionable benefits to the US, since most of the oil will be shipped to China. Mostly though, I think the whole conversation is really about price and Americans’ desire to live in a world where gas is cheap and no one bothers them to worry about global warming. That world may have existed in the 1950s and 60s, but it certainly doesn’t exist anymore.

***

What about other energy sources?

[Image credit: 4Blue Eyes Pete Williamson: Flickr Creative Commons]

RP Siegel, PE, is the President of Rain Mountain LLC. He is also the co-author of the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water. Now available on Kindle.

Follow RP Siegel on Twitter.


▼▼▼      7 Comments     ▼▼▼

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  • Brad Arnold

    I know this is hard to believe, but oil-sands (as well as coal) will soon be obsolete because there is a new clean energy technology that is one tenth the cost of coal. LENR using nickel. Incredibly: Ni+H(heated under pressure)=Cu+lots of heat.

    This phenomenon (LENR) has been confirmed in hundreds of published scientific papers: http://lenr-canr.org/acrobat/RothwellJtallyofcol.pdf

    “Over 2 decades with over 100 experiments worldwide indicate LENR is real, much greater than chemical…” –Dennis M. Bushnell, Chief Scientist, NASA Langley Research Center

    “Total replacement of fossil fuels for everything but synthetic organic chemistry.” –Dr. Joseph M. Zawodny, NASA

    By the way, here is a survey of all the companies that are bringing LENR to commercialization: http://www.cleantechblog.com/2011/08/the-new-breed-of-energy-catalyzers-ready-for-commercialization.html

    • RP Siegel

      @Brad Arnold.
      LENR is a form of cold fusion, which is still very much is the experimental stage. I will cover the pros and cons of this technology in a future edition in this series on energy.

    • http://www.facebook.com/people/David-Austin/620969991 David Austin

      I’d bet on lftr before I’d be on lenr.  The problem is that in either case you have a stubborn industry that refuses to change that will only look at either technology once they’ve finally all been fired from their pre-existing lucrative positions.  Until all lobby efforts are out to put such proposals to rest.

  • http://www.facebook.com/people/David-Austin/620969991 David Austin

    You missed the part about cancer rates (from the toxins) having soared for those tribes to 300% higher vs. their neighbors and themselves from 20 years ago.  Although it’s made many of them rich most of the native Americans there are trying to cap a lid on tar-sands production.

  • John Jeffreys

    Fuck the first generation…the first generation needs to get with the program and catch up with what’s going on in the world. It’s all well and good wanting a million square miles to catch some rabbits, but while the rest of the world is being plunged into darkness, i don’t think hunting and fishing holds that much importance!

  • SumYunGai

    I do believe efforts have been made to be fair, but there are some oversights that have been made in this section. I do live in Alberta, but am not directly involved in oil sands. The first generation surface mines do require a lot of water for production, however, that water is reused many times before ending up in the tailings ponds. Government has mandated that industry start reducing the size of the tailings ponds. Complaining about the emissions from the air canons used to scare birds away from those ponds is like complaining about running a lightbulb when trying to keep your house cool on a hot day. (Although I do grant that emissions are emissions no matter what).

    Most new oilsands projects are not in the form of mines, (the sands are often too deep to mine in that fashion economically), but are in the form of “in-situ” extraction. As I understand it, the oilsands (hundreds of feet below the surface) are actually somehow heated in place, thus releasing the oil from the sand before it is piped to the surface.

    The oil production from the oilsands is nearing (I believe) 1 million barrels a day. The currently existing pipeline network is at our near capacity, and thus the desire to expand the existing Keystone pipeline, in the Keystone XL project. Half the project is approved and either under construction or already complete (the portion from Oklahoma to Texas). The portion from Hardisty, Alberta to Oklahoma crosses an international border and therefore must be approved by the state department. Because this approval has not been forthcoming, more and more oil is being shipped by rail. Overall, rail transport is safe, but barrel per barrel, pipelines are orders of magnitude safer. Also, any new pipelines are not likely to travel through towns and cities, whereas rail lines often travel directly through the center of towns.

    It was stated that the oil on Keystone XL would be destined for China, but that is not immediately true. Texas has many refineries geared for processing heavy crude, of which is now in lower supply at those refineries. Those refineries are having to ramp down or adapt to light set crude, which is a waste of infrastructure already in place. Oilsands crude is the perfect supply for those refineries. Once American salaries have been paid refining that crude, it may be possible that some of that production might be sold to China. However, China does want that oil, and there are currently two proposed pipeline projects to carry oilsands oil directly to the Pacific coast so that we can finally get a good price for our oil.(America gets it at a discount as they are or only real customer). Until any of those pipeline projects go ahead, rail shipments of oil will continue to rise.

    Finally, the carbon footprint. The oilsands of Alberta may be the largest single producer of CO2 in Canada, but its total is less than 1% of Canada’s total CO2 production, which is less that 0.1% of global CO2 production. Nonetheless, Alberta was the first jurisdiction in North America to put a price on carbon emissions, and has increased that price. The CO2 produced pureed barrel has steadily improved, and oilsands producers are one of the most aggressive employees of engineers in Canada (if only I had gone to university).

    Is oil dirty? Yes. Is oilsands oil dirtier than conventional oil? Yes. But conventional oil stocks are starting to decline, and the world demand for energy continues to increase. There are other options on the horizon, but for decades to come, like it or not, oil will be very important to our two (partnered) countries.

  • drt5rt6

    ttyttfty