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As the recession fades from the Canadian oil sands and projects delayed amid months of uncertainty score a second chance, criticism has still not simmered down over how these pockets of crude sully the surrounding land in the country’s picturesque province of Alberta.
The United States and other nations see the rich deposits as an alluring energy supply but Canada, a country not widely viewed as especially offensive on the world stage, was slammed at a December climate-change conference held in Copenhagen for spewing dirty oil from its prairie province.
A well-known environmental writer in the United Kingdom, George Monbiot, called Ottawa the “real villain” -- rather than Washington, one of the usual suspects for jeopardizing the chances for a new climate-change pact.
International scorn aside, the Canadian government knows it sits on an energy windfall. The second-largest petroleum reserve in the world after Saudi Arabia lies beneath Alberta in an area about the size of Florida, according to the Pembina Institute, a Calgary-based sustainable energy think tank. The region boasts about 175 billion barrels of crude bitumen, notes the think tank.
“We’re certainly not against the idea of responsible oil sands development,” argued Simon Dyer, the institute’s oil sands program director. “The only problem is the current approach epitomizes unsustainable development.”
No plan or real attempts have been made to tackle the built-up environmental damage development has caused, a shortfall which “actually gets lost in a lot of the debate,” Dyer told OilPrice.com. Opponents are reeling from the lack of hard-hitting federal greenhouse-gas laws, which is why Dyer urged the Canadian government to put in caps protecting the nearby Athabasca River and shelve new expansions until it gets its act together.
Yet industry champions have countered that northern Alberta is not some kind of no-holds-barred playground for oil companies.
The rules are clear -- most of these mining projects must be “reclaimed,” argued Greg Stringham, vice president of the Canadian Association of Petroleum Producers in Calgary, referring to rebuilding the land after drilling. And companies lack free rein to simply dirty the nearby water, he said.
The negative picture often portrayed does not mesh with reality, as underground oil sands drilling projects are like typical drilling efforts and leave a “much smaller footprint environmentally” by drilling horizontally for long distances, he said.
Industry’s other strides cannot be discounted either, Stringham said, pointing to the 30 percent to 33 percent cut in carbon dioxide emissions. He did concede, though, that the “eyes of the world” are trained on the sheer size of the oil deposits, a reality begging for “significant environmental improvements” to ensure the reserves last.
But besides the surrounding damage, critics also noted, siphoning oil from Alberta is no cheap feat.
The province’s coveted resource is the “most expensive oil you can produce,” said Dyer. With some of the new projects, “you’re talking about a break-even price in the region of $80-$85 a barrel,” he said, “and that’s even before you start factoring in the cost of environmental improvements and carbon capture and storage. . . .
This is an extremely difficult extraction process.”
While techniques like open-pit mining and truck technology can squeeze out about 20 percent of the estimated 170 to 175 billion barrels of oil, the rest is too deeply buried and calls for more traditional methods, Stringham told OilPrice.com.
The price tag attached to this energy source varies, he noted. Though underground drilling tools produce heavier oil, lowering recovery costs, it must then be upgraded to a lighter variety to make gasoline and other types of energy products, he said.
Last year’s crawling economy in Canada’s oil heartland pared back some aspects of the overall recovery cost, which moves up and down with the price of natural gas, steel and labor, said Stringham.
Across the border, the U.S. government has joined the ongoing tussle over the thorny oil issue. Some American government officials, including a group of Northeastern governors, are beckoning for a low-carbon fuel standard that would stem Canadian crude oil from spilling into the United States, said Travis Windle, spokesman for the Washington-based Consumer Energy Alliance. The non-partisan group, which advocates wise energy use, is pushing a national advertising campaign about the low-carbon fuel standard.
On the whole, the United States is bent on beefing up its oil ties, Windle noted, adding the reserves account for 20 percent of American energy. Last August, the State Department gave the go-ahead for a pipeline called the Alberta Clipper to carry crude from Canada to U.S. refineries in Wisconsin.
Despite the administration’s enthusiasm, Pembina’s Dyer dismissed the rosy outlook of Canada’s potential to help quench its southern neighbor’s oil demands -- citing opposition, including lawsuits, which “you’re seeing on the ground both in Alberta and more broadly in Canada.”
The oil sands produce 1.3 million barrels a day, two-thirds of which flows to the United States, he said.
“It’s not going to solve America’s energy needs by a long shot,” warned Dyer, because, as of now, stakeholders behind that much-lauded Alberta energy windfall have failed to demonstrate how these reserves will “survive or prosper” in an era where industry’s liberal dumping of carbon into the sky doesn’t cut it.
By Fawzia Sheikh for Oilprice.com
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Energy 
