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Tag: Athabasca Valley

In two posts (here and here) written several months ago, I discussed once again the unfortunate truth that there remains a determined effort by some to either completely discount the reality of declining oil production, or who skate along the edges of truth by resorting to combinations of disingenuous arguments or incomplete facts.

Three articles in particular from the past week or so jumped out as more evidence that this disinformation campaign continues. One was a piece originally from a right-wing website with its irony-rich title of American Thinker; another, a predictably one-sided article from the Wall Street Journal, and the third an op-ed from U.S. Republican Senator Lisa Murkowski of Alaska.

In a post I wrote last October, I suggested it was important that we continue to call out those in the media, industry, or government whose preferred truth-telling strategies are to … not be entirely truthful.

While very few of them enter into the Senator Jon Kyl fact-free world of blatant lies, I remain puzzled by their continuing unwillingness and/or inability to deal with the facts. It seems entirely logical that if one is attempting to come up with solutions of any kind to deal with specific challenges or problems, it’s much easier to fashion effective approaches if you aren’t making stuff up in the first instance!

The American Thinker author set out to extol us all on the virtues of “recent advances in oil-extraction technologies such as fracking (the high-pressure injection of sand, water, and small amounts of chemicals into rock or other formation to loosen up the oil and separate it from the surrounding rock).” The fact that a new report came out at the same time indicating that carcinogens have been used as part of this wondrous fracking technology never made it into this body of work. But one man’s “large quantities of carcinogens” is probably another’s “small amounts.” As long as it doesn’t affect him personally, does it really matter?

The moratoriums which several states have imposed on fracking until its environmental consequences can be more fully explored (to say nothing of potential earthquake-causing effects some are now worried about) likewise seem to have escaped this author’s attention. Damned facts….But, hey, what are a few silly carcinogens, water-table contaminations, and earthquakes when you’re discussing profits, right?

This author then touted the magic of Canadian tar sands. Correctly stating that Canada is now our biggest supplier of oil, the author then proceeded to misstate by a mere 40% or so the amount of oil we use each day (“eleven million barrels” when in fact we use closer to nineteen million … that’s Jon Kyl-fact territory). He then ramped up by castigating those who oppose a new pipeline project which “would have the capacity to give us yet another 1.1 million barrels a day from our kindly cousins in the Great White North.” Wow! Now I can buy a Hummer!

His objection is straight-forward: “The environmentalist beef with the project is that the oil the Canadians will ship through the pipeline is be extracted from the reserves in their vast ranges of tar sands. These reserves are huge — on the order of 175 billion barrels of oil, which makes for more than two-thirds of Saudi Arabia’s proven reserves. But the environmentalists fear that the after-products of the tar sand oil extraction will harm the environment.”

Nice to just glide over the facts … all of them, about how tar sands production takes place, or the actual environmental degradation which results from production; the immense demands on two other finite resources—natural gas and water—required in the process; the costs, effort, and/or time involved in extracting oil from the tar sands; the fact that production rates aren’t all that impressive—certainly much less than what had originally been envisioned, or the poisonous tailing ponds left behind.

For some reason, the following is expected to be reassuring: “However, it is both presumptuous and silly for American environmentalists to oppose this joint project to ship Canadian oil. First, it is not as if Canada were a corrupt, third-world dictatorship where the leaders are willing to despoil their own country for some low-end cash. The Canadians have a fine record on environmental protection (as good as our own, in fact. And they have gotten the extraction process for tar-sand oil very ecologically safe. Over 80% of the water used in the extraction process is recycled, and the ‘trailing ponds’ [sic] (which contain the remains of the extraction process) are being planted over with trees and shrubbery.” I guess the birds which otherwise die when they land in the ponds will now have a place to roost, until the trees die.

I won’t quibble with Canada’s environmental efforts in general. Canadian environmental standards are indeed quite admirable. And it will be a while before I completely grasp how Canada’s not being a “corrupt, third-world dictatorship” is relevant to consequences already on record. But to lump what happens in and around the tar sands regions of Alberta with the country’s entire enviro protection record is a disingenuous-at-best attempt to skate past the facts about higher cancer rates, afore-mentioned poisonings of water fowl, the water contamination, etc. I guess in a fact-free world, those are all “ecologically safe” outcomes.

Besides, we have good news according to the writer: “[T]hese tar sands are already laden with petrochemicals to begin with!”

And to end his argument on a high note, the writer claims that the “green dreamers” who stand in the way of all the jobs created and taxes to be paid if the pipeline project were to go through (as opposed to alternative energy research and production, which I guess must result from job-free invisible gnomes and benevolent, tax-exempt industries) are nothing more than environmental crazies who “oppose all sources of energy known to work, and they support only sources of energy proven to be inefficient.”

Yep! That’s us, all right. We love to spend all our time and money on things we know just won’t work at all because … because we’re … ah, you know, “green dreamers.” Yikes!

The Wall Street Journal article highlighted an interview with John Watson, Chevron’s CEO. The reporter wasted little time in blaming President Obama for following in the footsteps of his predecessors by “peddling an America free of fossil fuels” and “closing off more acreage to drilling, pouring money into green energy, pushing new oil company taxes, instituting anticarbon regulations,” asserting that “America is going backward on affordable energy.” The advantage of two-week-long visionary thinking….

Mr. Watson boasted of an unnamed Chevron oil field in the Bakersfield, California area which at one time was providing “only 10 or 20” barrels of oil for “every 100 barrels of oil ‘in place,’” and “thanks to a new technology called steam flooding, Chevron is now getting 70 to 80 barrels.” I’m guessing he was referring to the Kern River oil field, which as of a few years ago had an estimated reserve of approximately 475 million barrels of oil, and has been producing for more than one hundred years!

Unfortunately, the math portion of the explanation was omitted. World-wide, oil demand is about 85 million barrels per day. About 18 or 19 million of that is here in the U.S. Quick math: That field has about a 5 or 6 day world-wide supply, or less than a month’s supply if we kept it all to ourselves. No mention of how quickly Chevron can drain the field. Probably not an inexpensive undertaking, either. Facts! Who needs ‘em? (See this Oil Drum article for more information.)

The WSJ piece then proclaimed the wondrous fact that “Over the past 30 years, even as ‘peak oil’ was a trendy theme, the world’s proven reserves of oil and natural gas increased 130%, to 2.5 trillion barrels.” Space limitations probably prevented the writer or Mr. Watson from explaining anything about costs, efforts, time factors for production, ease of access, or the fact that for several decades now, we’ve been using several times more oil each year than is being discovered.

“Mr. Watson has little time for the Beltway fiction that America will soon be able to do without, or nearly without, fossil fuels. Yes, ‘we need all forms of energy.’ But the world consumes 250 million barrels of energy equivalent today, only a ‘tiny fraction of which’ is wind and solar—and even those ‘are not affordable at scale,’ he says.” I can only assume space limitations once again prevented the author or Mr. Watson from explaining just why that is. It would take a few extra paragraphs to explain how diligently the oil industry has fought attempts to devote investment dollars into alternative energy research or just how much they contribute to campaign coffers to ensure Big Oil occupies a large place on political radar screens and subsidy legislation.

“Bottom line: ‘We’re going to need oil and gas and coal for a long time if America wants to keep the lights on.’” Not exactly a solution, but if the nation’s leaders refuse to commit the resources needed to transition away from a declining, finite supply of fossil fuel, then Mr. Watson is correct in a perverse, lack-of-vision kinda way.

“As for soaring oil prices, Mr. Watson blames growing demand, tighter supply, Mideast uncertainty and inflation.” Hmmm … “growing demand, tighter supply?” Why, that sounds like signs of Peak Oil!

“That pretty much sums up the broader choice America faces on energy policy. It can listen to the Washington siren song on alternative energy, pouring scarce dollars into green subsidies, driving up the cost of energy, and driving out U.S. manufacturing and jobs. Or it can embrace our own fossil fuel resources, which are cheap and plentiful.”

“Cheap and plentiful?” Really? I suppose on a fact-free planet that’s true. And like the American Thinker above, it would appear that a massive expansion of research and production into alternative sources of energy would also presumably occur only as a result of job-free efforts by invisible gnomes and benevolent, tax-exempt industries. Geez! Just curious, but why haven’t these “cheap and plentiful” supplies been produced already, inexpensively and quickly (even during Republican administrations)?

“What I see are people who want affordable energy,” says Mr. Watson. “They want strong environmental standards—they want a lot of things—but first and foremost they want affordable energy. And if you want affordable energy, you want oil, gas and coal.”

By all means, let’s continue to ignore Peak Oil and do absolutely nothing to plan for alternatives. Affordable Energy No Matter What The Cost! would make a fine bumper sticker! We’re entitled to what we want because we’re exceptional. Let’s not forget that. Besides, if we’re lucky, we’ll pass that problem on to our children when they’re older, and then they can ignore it, too. Sounds like a plan!

And as for the good Senator from Alaska, (the senior Republican on the Senate Energy and Natural Resources Committee, no less), her Washington Post op-ed last week titled, “Setting the record straight on America’s oil,” should more accurately have been sub-titled: “Is Not Something I’m Prepared To Do.”

The Senator expressed her concerns about “some of the information presented about America’s energy potential. Left unchallenged, it will contribute to a mistaken belief that increased domestic production is not truly possible.” I’m not sure who might be making such claims, but … okay!

“The president said this month that ‘even if we doubled the amount of oil that we produced, we’d still be short by a factor of five.’ That’s simply incorrect. Doubling our production would trim imports nearly in half. Boosting production by a factor of five is not currently feasible, but if it were, it would make the United States the world’s largest producer.” And that’s relevant why? How? The United States peaked in oil production four decades ago. We now produce only about half of what we did at the peak. So arguing over the possibility of becoming the world’s largest producer is beyond meaningless. (But a good sound bite if you’re not paying attention!)

“Perhaps most misleading is his claim — also made by others — that the United States has ‘about 2, maybe 3 percent of the world’s proven oil reserves; we use 25 percent of the world’s oil.’ That line is crafted to make the audience think that America is both running out of oil and using oil at an unsustainable rate.”

Um … well, we’re not “running out of oil” (which Peak Oil proponents allegedly make all the time if you listen to the Right, a charge repeated by the Senator. They’re correct only if by “all the time” one actually means “never, at least by any credible authority on the topic”). But the “unsustainable rate” part … that’s actually a problem, and one that is only going to get worse as long as our national strategy is predicated on ignoring it.

Andrew Restuccia was nice enough to take some time after that op-ed came out to do some of that … whatchacallit? Fact-checking?

For starters, he addressed the Senator’s “2, maybe 3 percent” factoid:
“The EIA [Energy Information Administration] says the United States has 20.7 billion barrels of proven oil reserves as of 2009, the year with the most up-to-date data available….U.S. proven reserves are significantly smaller than countries like Canada (178.1 billion barrels), Venezuela (99.4 billion barrels), Saudi Arabia (266.7 billion barrels), United Arab Emirates (97.8 billion barrels) and Libya (43.7 billion barrels).
“Overall, based on those numbers, the United States has about 2 percent of the world’s proved oil reserves.”

Facts 1; Sen. Murkowski: 0

Next up, the Senator’s assertion of a “misleading claim” that “we use 25 percent of the world’s oil”:
“The United States consumes massive amounts of oil. The EIA says the United States consumed 18,771,400 barrels of oil per day in 2009. That’s higher than any other country in the world….
“In total, the United States consumed 6.85 billion barrels of oil in 2009 and 6.99 billion barrels of oil in 2010. That’s about one-fourth of the world’s oil.”

I hate math, but I believe that “one-fourth” would be within the margin of error for someone claiming “25 percent.”

Facts 2; Sen. Murkowski: 0

Moving on, the Senator then makes this claim: “Right now, America has an estimated 22.3 billion barrels of oil reserves. But that’s hardly the whole story. A recent Congressional Research Service report that I commissioned with Sen. Jim Inhofe of Oklahoma found that the United States’ recoverable oil resources are estimated at 157 billion barrels. That is seven times as much as our reserves and doesn’t even include the roughly 900 billion barrels of unconventional oil resources nearing commercialization.”

As an aside, relying on Sen, Inhofe for an impartial and fair assessment of any energy matter not entitled “Big Oil” is a lot like relying on Rush Limbaugh to deliver impartial and fair assessments about opposing political viewpoints … not gonna happen. Having said that, the report she mentions states the following:

“U.S. proved reserves of oil total 19.1 billion barrels, reserves of natural gas total 244.7 trillion cubic feet, and natural gas liquids reserves of 9.3 billion barrels. Undiscovered technically recoverable oil [my emphasis] in the United States is 145.5 billion barrels….[That’s later defined as follows]:
Undiscovered technically recoverable resources (UTRR). Oil and gas that may be produced as a consequence of natural pressure, artificial lift, pressure maintenance, or other secondary recovery methods, but without any consideration of economic viability. They are primarily located outside of known fields.” [1]

“Undiscovered” resources….Seriously? And “nearing commercialization” is as unspecific as one can get. What does that mean?

“Our consumption levels may seem high, but in fact they’re directly proportionate to America’s share of the global, petroleum-based economy.” That’s actually a big problem, Senator. Declining supply, increasing world-wide demand, and our insistence on getting whatever we want, when we want it, and at an “affordable” price goes to the heart of Peak Oil’s challenges.

Another frequent argument made by the Right is that increasing domestic oil production and “estimated X millions of barrels of oil” here compares favorably to Persian Gulf imports. The Senator tossed in her two cents: “Relying on reserves to depict America’s oil excludes all of the lands that have never been explored. My home state of Alaska, for example, holds an estimated 40 billion barrels of oil — the equivalent of more than 60 years’ worth of imports from the Persian Gulf.” That’s fine as far as it goes, if “estimated” is acceptable. For those who aren’t paying attention or don’t understand where we get all of our nearly 12 million barrels of imported oil each day, mentioning domestic potential in the same sentence as “Persian Gulf” sounds like the answer to all our fossil fuel prayers.

Mr. Restuccia pointed out more of those damned facts:

“The U.S. imported 11.7 billion barrels of petroleum a day in 2009, which comes to about 51 percent of the petroleum used in the United States. As of 2009, the country got 21 percent of its oil from Canada, 10 percent from Mexico, 9 percent each from Venezuela and Saudi Arabia and 7 percent from Nigeria.”

In other words, potential domestic supply measured against the Gulf is less impressive as soon as it becomes clear that the Persian Gulf isn’t exactly a huge supplier of oil for us (not that 9 percent isn’t a good chunk of our imports, but when one is left to think that Persian Gulf oil is the majority source of oil, it loses a lot of its effectiveness as a talking point).

Facts 3; Sen. Murkowski: 0

It’s also worth noting that the Senator of course neglected to mention any facts about how we increase our domestic production: what’s involved, how much it will cost, how long it will take, environmental concerns….It’s the by-now familiar tactic of the Right: make pronouncements which sound good and hope no one is going to ask for explanations.

Echoing a point made by many others (including a report from the Bush Administration), Mr. Restuccia sticks another pin in the balloon about the impact of increased domestic production:

“Even a dramatic expansion of domestic oil and gas drilling will have little effect on oil and gas prices, as they are largely set on world markets.
“Here’s EIA Administrator Richard Newell, in written testimony delivered to the House Natural Resources Committee March 17:
“‘Long term, we do not project additional volumes of oil that could flow from greater access to oil resources on Federal lands to have a large impact on prices given the globally integrated nature of the world oil market and the more significant long-term compared to short-term responsiveness of oil demand and supply to price movements.’”

Game. Set. Match: Facts.

Perhaps we need to start having different kinds of discussions … the kind where facts are important, where leaders are willing to be honest, and where we are ready to deal with the truths about fossil fuels.

Sources:

[1] Report for Congress: Prepared for Members and Committees of Congress – U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary by Gene Whitney, Section Research Manager; Carl E. Behrens, Specialist in Energy Policy; Carol Glover, Information Research Specialist – November 30, 2010.

I’m well aware that there is an unfortunately successful and all-too-often-employed strategy (lack of integrity aside) used most often in politics but certainly in discussions about Peak Oil and global warming, where the frequent repetition of any combination of lies, half-truths, misstatements, misrepresentations, and disingenuous propositions eventually leads to belief on the part of far too many people.

I’ve mentioned in prior posts (here and here, for example) that I think it’s important to challenge widely-disseminated examples of peak oil denial rather than letting the disingenuous arguments take root. The decline in oil production is a big enough problem as it is; creating doubt for reasons having no discernible value is at best questionable and should not go unchallenged is possible.

To that end, I came across two articles last week that caught my attention. Predictably, the same patterns of “explanations” and offerings cropped up there just as they have in other articles I’ve highlighted before. I guess if you cannot deal with facts, there’s not a whole of room for much creativity when addressing fossil fuel production. I’ll deal with the first article today, and save my discussion for the other one for an upcoming post.

First up is a piece from Jeremy Bowden, whose first paragraph touts one of the more popular terms in denial-land: the finding of “massive” oil fields. Whenever I read that, the antenna goes up and into full lock mode. Usually accompanying glowing exhortations about these magical fields where solutions to all our problems reside are phrases touting the wonder of technology and ingenuity. Bowden does not disappoint.

This article of necessity raises the specter of OPEC’s role in world production: “It is the technical expertise and project management skills of the most dynamic multinational and independent oil companies that hold the key to these new hard-to-get-at reserves, rather than the whims of Arab dictators or the level of OPEC budget deficits.” Always good to have an enemy to whip out at a moment’s notice (not that I’m an OPEC fan, mind you.)

I’m still not entirely clear on why quotes like this are supposed to be persuasive, but they do frequent writings which dispute peak oil:

“James Burkhard, a managing director at energy consultancy IHS CERA, says the recent upstream developments mean oil and gas will continue to be pillars of global energy supply for decades to come. ‘The competitiveness of oil and gas and the scale at which they are produced mean that there are no readily available substitutes in either one year or 20 years,’ he added.”

He’s absolutely correct. There are no readily available substitutes, but that’s the problem! Saying that oil is currently our one and only is not even a bit helpful. All it does is to emphasize how utterly dependent we are on this finite resource—a resource that by all reasonable indications peaked several years ago and will continue a steady path along a not-always smooth or linear slope of decline … and we are woefully unprepared. (This recent post is only the latest in a lengthy list of concise and easily-understood explanations about Peak Oil.)

So what comfort does it offer us to indicate that all we have is all we have, when more of it is being demanded and less of it is being produced?! That math just doesn’t work.

Bowden also points out that Canadian oil sands now provide us with more oil that does Saudi Arabia. And….?

Saudi supply is being counted out by many other nations whose fossil fuel demands are only increasing; Saudi production is also being increasingly diverted to and for its own uses, and its fields are not immune to the same rates of depletion as are most other older fields, so … what’s the point here? Like most other articles which promote Canadian tar sands as the Great Salvation, no mention whatsoever is made here of the environmental degradation; the poisonous tailing ponds left behind; the immense demands on water; the costs, effort, and/or time involved in extraction, or the fact that production rates aren’t all that spectacular to begin with!

But why deal with any of those facts? They simply get in the way of a good insincere argument. (And Bowden also makes it a point of stating that U.S. oil production increased “for the first time in decades.” Our production peaked more than forty years ago! A slight one year uptick—from shale, which has its own set of environmental, cost, effort, and resource usage issues, also conveniently overlooked—is not exactly encouraging.)

Speaking of U.S. shale production, Bowden points out the following:

“… the Bakken shale field is now the country’s fastest-growing major oil field. Production has reached about 350,000bpd, from 100,000bpd a decade ago. In a recent report, consultancy firm PFC Energy projected production would climb to 450,000bpd by 2013. ‘The technology producing these resources has absolutely made the difference,’ Mr Marvin E Odum, President of Shell Oil, said. ‘It’s the same with the Arctic, with the shale oil, all over the world. Technology is the key.’”

Give or take a bit, the United States uses somewhere in the neighborhood of 7 billion barrels of oil per year … billion with a “b”. I’m definitely not a math whiz, but my trusty calculator tells me that 450,000 barrels per day times 365 days equals an impressive-sounding (approximate) 165 million barrels per year. I’m pretty certain that 165 million is a whole lot less than 7 billion. Rounding up to the approximate 20 million barrels of oil this nation uses each day, that means we’ll soon be producing enough to get us through sometime next week! Fantastic!

Another forty or so examples like that and we’re all set (and to hell with the rest of the world and their needs or demands).

This author also made it a point of using the same vague, subject-to-multiple-interpretations stock language others employ is discussing the magic of potential future technology, including this:

“A recent forecast produced by Shell suggests that Arctic production from North America, Europe, and western Russia – much of which will be deep offshore – could make up a quarter of global production within 20 years, provided that remaining technical, political and environmental challenges are met.” [My emphasis]

“… provided that remaining technical, political and environmental challenges are met”? Seriously? That’s what we’re supposed to derive great—or any—comfort from? And within 20 years? Wow! That’s not asking for too much, is it? A few pesky “technical, political and environmental challenges” met and we’re good to go!

And there’s this:

“Advances in directional drilling allow well operators to steer and carve through hard shale to expose more and hard-to-reach rock, and it also makes possible drilling under cities or into environmentally-sensitive areas….
“Faced with falling reserves and barred from acquiring fresh production in areas such as the Middle East, [nice to just skip past this – my comment] international oil majors began to search for new large deposits in the deep waters of the Gulf of Mexico….Exploration and drilling below 10,000ft of water and through miles of hard rock, thick salt and tightly-packed sands required the development of supercomputers and three-dimensional imaging techniques as well as equipment that could withstand the heat and pressures common at such depths, not to mention submarine robots to make repairs.”

Others have also pointed out these types of impressive displays of innovation and truly astounding technology. But why is this a good thing? That anyone has to go to these lengths and expenses and risks to find oil shouldn’t require any advanced technical degrees to understand that we’ve got some problems!

It would be nice if even some of the energy and effort expended in trying to prop up the dismal truths of oil production could instead be directed to conveying a more accurate and complete picture of what we face now and will have no choice but to deal with in the years to come. That might be a bit more helpful.

There’s always hope….

An interesting news item this past week concerning Royal Shell’s Athabasca Valley oil sands project. I spoke about the Athabasca tar sands in my January 20 post (here).

As reported by the Financial Times and in its lengthy Q & A session with Royal Dutch Shell chief executive Peter Voser, that company’s planned expansion of its existing tar sands project has been “clearly scaled down.” The previously-planned quintupling of growth (in stages) from the Athabasca project will now proceed “very much slower”.

At current trading prices, the profit margin is apparently too thin for Royal Dutch Shell to proceed. The Times referenced the development project as being a “costly distraction” for Royal Dutch Shell, and an increase to an eventual 255,000 barrels of oil per day is about all that can now be expected, rather than the 770,000 barrels per day originally envisioned by the expansion.

It’s hard to see this as anything but a blow to those who continue to claim that these tar sands and oil shale are the key, great solutions to the continuing decline in the availability of conventional oil resources worldwide. Merely mentioning “trillions of barrels of oil” underground doesn’t get it from there to here for free, or easily, or quickly—if at all.

Sources:

http://www.investorschronicle.co.uk/Companies/ByEvent/TradingNews/Analysis/article/20100127/5c1d623a-0b44-11df-8109-00144f2af8e8/Shell-forced-into-oil-sands-Uturn.jspShell forced into oil sands U-turn. Created: 27 January 2010 Updated: 28 January 2010 Written by: Daniel O’Sullivan

http://blogs.ft.com/energy-source/2010/01/26/shells-ceo-peter-voser-interview-transcript-on-canadas-oil-sands-jobs-acquisitions-us-gas-iraq-nigeria-copenhagen-and-more/  – Shell’s CEO Peter Voser interview transcript: on Canada’s oil sands, jobs, acquisitions, US gas, Iraq, Nigeria, Copenhagen and more.  January 26, 2010 by Ed Crook

As was also reported in today’s Energy Bulletin (see the link in my Blogroll), Canada’s new Energy Minister has indicated a shift in his country’s previous policy advocating essentially unlimited growth in the tar sands projects.

Ron Liepert has stated that Canada

needs to examine ways to moderate the pace of oil sands development … [and he] wants to make sure future oil sands development does not again overstretch the capacity of the province’s infrastructure.

An interesting political development….I’ll keep you posted

You can read the entire article here: http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/alberta-to-study-pace-of-oil-sands-growth/article1431612/

Looks like Shell Oil’s stockholders are not unanimously in favor of the company’s investment in the tar sands of Alberta, Canada.

As noted in this article (http://www.guardian.co.uk/business/2010/jan/18/shell-shareholders-fury-tar-sands):

A coalition of institutional investors has forced a resolution onto the agenda calling for the Anglo-Dutch group’s audit  committee to undertake a special review of the risks attached to the carbon-heavy oil production at Athabasca in Alberta

Good to know that profits aren’t always investors’ most important concern. Kudos to this group

There are estimates suggesting that the tar sands of Alberta, Canada may contain more than 1.5 trillion barrels of synthetic crude oil in an area roughly the size of New York State. Given that the citizens of this planet consume about 30 billion barrels of oil per year, it seems that Peak Oil is another fallacy consigned to the proverbial dust bins of history. At that annual consumption rate, 1.5 trillion barrels will last a good long while! It’s an awe-inspiring number to say the least….

Of course, what the deniers of Peak Oil neglect to mention (facts can be so annoying!) is that perhaps 10% of that total will ultimately be produced, and that will take many decades if not centuries. This estimated reserve nonetheless represents the second largest resource on the planet, exceeded only by Saudi Arabia. But it is, sad for the deniers, not the solution to our energy woes.

Canada is already the United States’ leading supplier of oil, and about half of that comes from the tar sands in Athabasca Valley. The tar sands (some prefer the more benign term “oil sands,” as if we’re discussing beach sand that one just scoops up with a shovel and then wrings the oil out) are actually a mix of ingredients including bitumen, which is a dense congregation of heavy hydrocarbons (think paving material). At room temps bitumen is so thick that it does not flow, and fifteen or twenty degrees cooler than that, it’s as hard as a hockey puck.

One does not require any technical expertise to realize that converting thousands of tons of hockey pucks each day to liquid oil is a wee bit energy-intensive. And when the facts about extraction are made known (forests are first leveled, then tons of earth are excavated, then the bitumen from those tons of earth are heated to several hundred degrees by a high-pressure steam process known as Steam Assisted Gravity Drainage to liquefy the tar sands—all produced via natural gas at levels which some suggest are enough to heat 3 million homes per day—resulting in carcinogen-laced waste water left in nearby “tailings ponds” which currently cover an area greater than 50 square miles!), it quickly becomes clear that we have some energy-related and environmental issues of considerable magnitude.

It’s been stated that every barrel of synthetic crude produced originated from more than two tons of tar sands dug up and separated by the above-referenced steam process, which itself requires two barrels of fresh water for every barrel of oil produced. Think about that for a moment … this is what we have to do to obtain oil?

Leaks from the tailings ponds and resultant contamination of ground water are of immense concern to the residents of the area, and the significantly greater incidents of cancers among residents have been sources of dispute for years. Thousands of birds and animals have reportedly died from exposure to these contaminant-laden ponds. One Canadian report suggests that for all the efforts to contain those ponds, several million gallons of the polluted water leaks out every day. Not a single one of the tailings ponds have been reclaimed in accordance with the licenses granted. Once the mining stops, what happens when the ponds are left completely untreated and unattended?

(And I’m not even discussing the greenhouse gas emissions caused by this incredibly energy-intensive process, which are estimated to be anywhere from 15% – 40% per barrel higher than conventional oil production. I’m also skipping any discussion of the huge investments in specialized oil refineries needed to process synthetic crude, and the pollution potentials arising from the pipeline networks for transporting that fuel from Alberta to the Great Lakes region of both Canada and the United States.)

The deniers, as they are so skilled at doing, tend to gloss over those pesky truths and instead issue their pronouncements about the trillions of barrels of oil at the ready. They also conveniently neglect to inform that the current rates of oil production from tar sands aren’t even enough to keep pace with annual depletion rates from conventional oil fields. Omitting those facts makes it seem as though we just have all of these billions or trillions of barrels of “extra” oil just waiting for someone to lay claim. The truth is far different.

After thirty years of investments to the tune of several hundred billion dollars and thirty years of production efforts, the Canadian tar sands are producing less than 1.5 million barrels of oil per day … that’s it! In fact, Canada’s energy forecast was recently trimmed, pushing out the estimated higher rates of production by several more years. This past November, the Canadian Energy Research Institute (CERI) released a study showing tar sands production increasing to 4.5 million b/d by 2030 and growing toward a peak of 5.3 million b/d in 2041. Actual production in 2008 was 1.3 million b/d. [1] It seems we have a ways to go….

Even the most optimistic boosters of the tar sands expect no more than 3 million barrels of synthetic crude oil per day in the next 15 – 20 years, and with worldwide consumption rates of approximately 85 million barrels per day, 3 million won’t make much of a dent. It will make even less of a difference once increased demand, depletion rates, and an inability to keep pace via new discoveries are all factored into the mix. Facts truly are annoying at times!

Worse for advocates of tar sands as the solution to end all solutions, the current recession and price volatility in the oil markets have adversely impacted Canadian investments as well. It’s been reported that projects which were expected to deliver more than a million and a half barrels of this synthetic crude per day were cancelled or placed on hold indefinitely [2]

Our industrial needs dictate that we get all the oil we can. But at some point, we need to ask: At what cost? Let’s hope we have the collective wisdom to ask it a day too soon rather than a day too late.

Next: An Intro’ To Oil Shale

Sources:

[1] http://www.energybulletin.net/node/50971 Canadian Oil Sands Misses Unrealistic Projection – Issues Another
Published Mon, 12/14/2009 by ASPO-USA
[2] http://www.newscientist.com/article/mg20427375.900-extreme-oil-scraping-the-bottom-of-earths-barrel.html?full=true Extreme oil: Scraping the bottom of Earth’s barrel 02 December 2009 by David Strahan