Are Oil Sands Companies Pushing a Technology Solution to a Policy Problem?

Companies involved in Canadian oil sands have been boasting recently of new technologies that can reduce the environmental damage caused by extraction.

But only strong environmental regulations will push the industry to actually invest in such remedies, critics say, instead of just talking about them.

“There’s a bit of a focus in the industry on talking about technology as a solution, but talking about technology without talking about policy is naive,” said Simon Dyer, Oil Sands Program Director at Pembina, a sustainable energy think tank based in Calgary.

Canada has 173 billion barrels of crude in oil sands, the second largest petroleum reserve in the world after Saudi Arabia. Output is expected to triple to more than 3 million barrels a day in the next 20 years.

But getting the semi-solid black tar out of the ground, and processing it so it can be refined into motor fuel, is far more energy-intensive and environmentally destructive than conventional oil.

In a process that could be seen as analogous to mining, the oil sand, also known as bitumen, is either scraped from the surface or steamed out of cavities underground, then washed in hot water to remove dirt and other particulates.

The waste water from that process ends up in toxic tailing ponds that now cover approximately 50 square miles in the northern province of Alberta. In 2008, 1,606 ducks died after landing in a tailings pond operated by Syncrude Canada.

Companies have floated various proposals to reduce the emissions or environmental impact of oil sands extraction, but many of them seem unrealistic in the near or medium term.

Shell Oil recently touted plans for a pilot project to use Carbon Capture and Sequestration to capture emissions from the extraction process. But CCS technology is still in the experimental stages, and would be extremely expensive to implement.

“The industry talks about CCS, but the investment dollars just aren’t there,” said Andrew Logan, director of Oil & Insurance Programs at Ceres, a sustainable investment consultancy. “If they have plans not to just talk about these technologies but deploy them, we would like to see that.”

Ceres released a report this week, “Canada’s Oil Sands: Shrinking Window of Opportunity,” which argues oil sands investments are riskier than they may first appear, in part because of potential environmental liabilities.

Meanwhile, both the local Alberta government and the Canadian government have been reluctant to impose stricter regulations on the industry, which has turned into a major source of jobs. “Alberta is taking a very hands off approach to regulation,” said Logan.

Last year Alberta did start requiring companies to submit firm dates for the closing of their tailings ponds, following the Syncrude duck debacle. Suncor, one of the first companies involved in oil sands, has developed a process to speed the closing of tailings ponds, which both Dyer and Logan praised.

But the company that seems most motivated to clean up its act is Norwegian oil company Statoil, which has pledged to reduce emissions from oil sands extraction 40 percent.

Not coincidentally, Statoil is one of the few companies feeling government pressure over oil sands — from its majority shareholder, the Norwegian government.

An oil sands industry association, Canada’s Oil Sands, did not respond to requests for comment.

BC (Ben) Upham is a freelance writer based in Los Angeles. He has written for the New York Times, and was a writer and editor for News Communications, Inc., a local paper consortium serving Manhattan. When he's not blogging on green issues -- and especially renewable energy -- he's hiking in the Angeles Mountains or hanging out at El Matador.

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