Under scrutiny - challenges for Alberta oil sands mines
Simon Walker, Principal of I.E.T.S Ltd, in Charlbury, UK, explores the current challenges for oil sands mines in Alberta, Canada.
Having struggled for decades to compete with conventional oil, valued at what today seems ludicrously low prices, Canada’s oil sands miners have benefited from a major turn-around in their fortunes since the late 1990s. The original big players in the field – Syncrude and Suncor – were joined by the Shell-led Albian Sands operation in 2003, with a raft of other projects at various stages of design or development.
Yet the enthusiasm that was so apparent 10 years ago has been tempered by the reality of the massive costs involved in bringing new projects on stream. The bevvy of junior companies that were busy promoting their projects at that time has been whittled away, and even the majors seem to have had second thoughts when faced with multi-billion dollar capex requirements in tight financial times.
Two factors have been influential – the remoteness of the Athabasca Basin oil sand resources in northern Alberta, Canada, and the shortages in skilled labour in the trades that are needed to build new mines, bitumen-processing plants and refineries. Even in the 1990s, producer companies had to organise their investments sequentially in order to secure the construction labour they needed, as they faced competition within the industry and from other demands in energy-rich Alberta and elsewhere in western Canada.
To compound these challenges, the oil sands industry has been faced with increasing pressure from the environmental lobby over its impacts in terms of CO2 and dust emissions, and the seepage of contaminants into major waterways, such as the Athabasca River, which flows through the resource area. Responding to criticisms voiced by academia and in the media, and through films such as Dirty Oil, both the provincial and federal governments have stepped up research into the industry’s emissions.
That is not to say, however, that research into the potential environmental impacts has been lacking in the past. Research programmes into land, water and air emissions have been under way since the 1970s, but critics argue that these have not delved deeply enough and that overall governmental control of the industry has been inadequate.
An area of reclaimed minesit, near Syncrude’s main operations, which has been turned into pastureland for the company’s showpiece bison herd. (© Simon Walker)
What are the issues?
To anyone who has been to the industry’s hub, Fort McMurray, and out into the operations, or has flown over the area on a regular flight from Europe to Edmonton or Calgary, the immediate impact on the landscape is pretty obvious. Oil sands mining is big business, not only from the investment perspective, but also in physical terms. The open-pit mines operated by the main producers are extensive, as are the ponds that hold tailings generated by hot-water bitumen recovery.
Upgraders take the bitumen and transform it into synthetic sweet crude, resulting in more byproducts, such as sulphur and petcoke, plus CO2 and other atmospheric emissions from a wide range of outlets. While much of the process water required is recycled from the tailings ponds, make-up is abstracted from the Athabasca River and other sources. And, of course, there is the climate – the winter cold contrasts strongly with the potential for dust generation as the relative summer warmth softens the sands, while also increasing natural runoff along waterways.
One of the fiercest criticisms aimed at the industry is that it generates more CO2 per barrel of oil than conventional producers do. Another focus has been on the alleged effects of its atmospheric and water-borne emissions on local communities. While the industry has been able to offer counterarguments on the CO2 issue, the question of health effects has spurred new governmental studies that are ongoing.
The industry’s response
In its 2009 Sustainability Report, Syncrude pointed out that ‘about 20% of the greenhouse gas emissions from a barrel of oil are created during the production, refining and transportation to market of the product, while 80% comes from consumption of the oil, mostly through the tailpipes of vehicles’.
Furthermore, studies suggest that oil sands oil does not necessarily generate more CO2 during production than other sources. A report – Oil Sands, Greenhouse Gases, and US Oil Supply: Getting the Numbers Right – published last year by the US-based energy consultancy IHS CERA, demonstrated that oil sands oil is by no means ‘top-of-the-pile’ when it comes to production of greenhouse gas emissions. While Saudi light oils result in lower production emissions, some US and Middle Eastern heavy oils, for example, generate more CO2 during the process of getting the oil from the well-head to the petrol pump.
Bearing in mind that the producer companies are just as badly affected by rising energy prices as consumers, there is an incentive for them to improve their energy efficiency. Again quoting Syncrude, the company claims to have cut its energy use per barrel of oil by 39% between 1982 and 2009, with a further 11% targeted by 2013. The company also claims it will reduce its sulphur emissions in a CAD1.6bln project scheduled to come on stream this year.
As far as claims of water contamination are concerned, the industry’s long-term view has been that natural seepage from the resource has caused the higher-than-background levels of various elements. However, a study published last year in the Proceedings of the US National Academy of Sciences on the distribution of ‘priority pollutants’ and polycyclic aromatic compounds (PACs) spurred the Alberta provincial government into establishing a committee to review previous investigations. In particular, the group was tasked with probing why the results released by the University of Alberta differ from those carried out by the Government, which have identified little impact on the Athabasca River from the oil sands operations.
In its evaluation report, the group ‘generally agreed with the conclusion of Kelly et al [from the University of Alberta] that PACs and trace metals are being introduced into the environment by oil sands operations. We think that Kelly et al’s study....has been important in pointing out deficiencies in current monitoring programs in the oil sands area’.
The group has recommended better monitoring, more rigorous scientific analysis and new objectives in order to gain a better understanding of the industry’s environmental impacts.
Oil sands tailings present a particular challenge, with all of the producers working on techniques to improve settlement times and produce better tailings consolidation. Suncor announced last year that it has successfully completed surface reclamation on one of its earliest tailings ponds. (© Simon Walker)
Where the truth lies
As with any situation where positions have become entrenched, it is often difficult to establish where the truth lies. Critics claim that the industry has much to hide, while the industry presents data that show compliance with statutory requirements. Critics slate the authorities for being too lax in their approach to monitoring and enforcement – the provincial and federal governments deny this.
Further obfuscation is provided by the inaccuracies and innuendo of various single-interest groups that have the common objective of highlighting the sector’s perceived shortcomings. The more extreme seek to have the oil sands mining shut down. That clearly is not going to happen, since its output is vital to the Alberta, Canadian and US economies. However, greater scrutiny will be inevitable in future, while the pressure to reduce emissions of all types can only increase.
Simon Walker, Principal, I.E.T.S Ltd, Lowe’s Cottage, Hixet Wood, Charlbury OX7 3SB, England. Tel: +44 (0)1608 811414. Email: firstname.lastname@example.org