Blog Post

Oil Sands, Technology, and Environmental Risks

Apr 27, 2012 | Alan J. Krupnick

Extraction of oil from Canada’s vast oil sands has a bad environmental reputation. It is worth noting, however, that there are two approaches to extraction, each posing different environmental challenges.

On a recent trip to tour the oil sands, facilitated by the Canadian Embassy in Washington and hosted by the government of Alberta, I observed Suncor’s surface mining operation outside of Fort McMurray and a drilling, or in situ, operation run by Connacher, 45 minutes south of the city. The contrast between these two sites could not be more stark.

Suncor has been operating the sprawling, nearly 100-square-mile complex near Fort McMurray site since 1967. Open pit mines, giant shovels and trucks, huge holding and tailings ponds, water extractors and bitumen upgraders, storage tanks, and masses of heavy equipment and tall stacks are spread across the landscape. The site straddles the Athabasca River, one of only four free-flowing rivers remaining on the continent, as it snakes through the boreal forest of northern Alberta toward the Arctic. Production, after the oil sands are mined and the bitumen (the heavy, viscous oil found with sand, clay and water) is separated and then upgraded (to eventually send to a refinery), is nearly 300,000 barrels of crude per day, but at a cost of only $35 per barrel (compared to the current market price of over $100).  The cost is so low because much of the capital has been amortized.  Seven other surface mine complexes dot Alberta’s oil sands.

Connacher’s Algar in situ operation is tiny and tidy in contrast. Constructed in 2009, it is only tens of acres, with new green and white buildings with spotless floors and gleaming machinery. Steam is injected into a bore hole that goes about a half mile down and a half mile horizontally. The steam melts the bitumen out of the ore deposit, where it collects in slotted pipe underneath the steam pipe. It is then pumped to the surface, where the oil and water are separated (partly using ground walnut shells) and the water is distilled to be used over again in the cogeneration gas boiler to make steam. This bitumen is then transported by tanker trucks to upgraders. The plant produces 6600 barrels of bitumen per day. Average costs for the 61 in situ plants scattered over the deeper oil sands range from $50 to $65 per heavy crude barrel equivalent.

Why such different extraction processes? Surface mining is used when bitumen seams run very near the surface, while in situ mining reaches deep seams. Only 45 percent of Canadian oil sands production currently comes from in situ mining, but 80 percent of total reserves lie where only in situ mining can economically reach them.

From an environmental perspective, the main disadvantage of a surface mining plant is the mixture of liquid and solid waste it produces – the tailings. Tailings pond reclamation is a rightful obsession with the Alberta government and the operators, where First Nations and Métis (of mixed native and white descent) people are convinced that pollution is leaking into the Athabasca (although data are in short supply and evidence is weak). At Connacher’s in situ site, using off-site centralized upgrading facilities means little air pollution at the mining site. And water withdrawals are very low compared to surface mining. In addition, the land footprint is far smaller for in situ mining, reducing wildlife and habitat disturbances. Yet biologists seem most concerned about caribou population losses (the east Athabasca herd is down 65 percent in 16 years) thought to be caused by the sight lines created from seismic testing, which is necessary for continued in situ development, but largely complete for surface mining. These lines permit predators, such as wolves, to locate their prey more easily. On our flyover, this gridded landscape seemed very prevalent. Making jagged lines in the landscape and killing wolves are approaches being discussed to help protect the caribou. Yet, any comments about land and habitat disturbance need to be kept in perspective. The undeveloped landscape in northern Alberta is vast—an area the size of Florida with, at most, 3 percent surface mining development possible. And caribou populations are not in any danger over the vast boreal populations of northern Canada.

Beyond caribou impacts, the main disadvantage of in situ mining is that all of the energy (from natural gas) needed to make steam causes the lifecycle GHG footprint to be larger than when the crude is obtained from surface mining. But, according to the Albertan government, this difference could be as small as seven percent. And planned technologies could lower or eliminate even this difference.

The bottom line is that in Northern Canada, human population densities are low, undisturbed land is plentiful, the land is flat, and a large fraction of the population of the province seems to be solidly behind the growth that oil sands development brings. Ultimately, the U.S. view of the oil sands risks should be more nuanced to distinguish between the alternative extraction approaches and to keep the damages in perspective. For Alberta’s part, they need to collect more data on water pollution and its impacts, gear up for an explosion in in situ development, and effectively address the caribou issue.