INSIGHT: Oil sands drive draws environmental focus

10 June 2008 17:38  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS news)--Does North America want to process increased quantities of ‘dirtier oil’ or indeed chemicals produced from tar/oil sands?

The question is not trite but one that is being asked with some urgency as Americans continue to thirst for fuel and the prospects of further exploiting Canada’s oil sands deposits increase.

Canada has vast reserves of oil sands that become viable sources of crude and, indeed, chemicals, as oil prices rise. But managing these resources effectively is proving to be a real headache.

Environmental groups last week raised the temperature of the debate, claiming that refining the crude extracted from oil sands could do untold damage.

Increased processing of oil from Canada’s oil sands would be like adding 16 new refineries dedicated to the resource, they suggested.

“It is hard to imagine what else it is that the US oil industry could do to go backwards further and faster than to rely on Canadian tar sands or similar resources in the US,” Environmental Integrity Project (EIP) director Eric Schaeffer said on publication of a report damning oil sands development.

“Not only would this mean significantly more pollution overall, but it would substantially boost the greenhouse gas emissions linked to global warming,” he added.

"The US government needs to get more involved in this situation to ensure that we do not end up with an environmental setback of truly staggering proportions."

“The tar sands project is the most destructive project on Earth,” added Matt Price of Environmental Defence Fund Canada and a contributor to the report.

“Nowhere else are we talking about ripping up an area the size of Florida, creating massive toxic lakes you can see from space with the naked eye, and giving off three times the greenhouse gas emissions to produce oil when compared with conventional crude,” he said.

The trouble with these statements is that with the colour of their language they draw attention away from rational debate.

Canada already produces more than 1m bbl of much needed oil. Necessity breeds invention and it is North America’s seeming unslakeable thirst for crude that will drive further development of Canada’s deposits and possibly, something the EIP protagonists believe could be even worse, extraction from shale oil deposits in Colorado, Utah, Wyoming and elsewhere in the US.

Extracting useable hydrocarbons for oil sands and oil shale deposits has not been and will not be easy. It will push extraction technology and the requirement for strict environmental control to the limit.

Energy giant Shell, which has its own oil sands business, has discussed with Canadian leaders how to balance the economic opportunities with long-term preservation of land use, communities and the environment.

The “well to wheels” emissions of the oil it is producing from Alberta’s mines is 189g/km, some 15% more than conventional gasoline, but not twice or three times as much, it says.

Shell says it is committed to reducing those emissions by up to 15%. Carbon capture and sequestration projects will be key to future development.

Shell’s executive in charge of oil sands, Rob Routs - who also runs oil products and chemicals - says the company won’t exploit deeper reserves, which would require more energy and emit more CO2, on a large scale until it can do so efficiently.

Oil sands exploitation also soaks up water. Between two and four barrels of water are needed to mine one barrel but Routs maintains that even at the industry’s aspiration levels of 2.5m bbls/day this would equate to only 2-3% of average regional river flow.

Shell is committed to a ‘reclaim as we go’ policy which would help disturbed ecosystems recover within 15 years, he says.

But if Shell is doing the right thing then so must others. All extractors and refiners will be under pressure to spend heavily on the environmental controls needed to process heavier crude cleanly.

But taking heavier deposits out of the equation currently is hardly an option. Fundamental supply/demand issues are driving global oil prices as much as speculation. The era of cheap, and indeed peak oil, is past.

Hence the need not simply for tough decisions but more rational debate, which factors in the opportunities that will present themselves to help make science and technology work better to help us exploit difficult sources of hydrocarbons and, indeed, new sources of energy.

Canada’s tar sands are part of that equation and will be developed further as global demand for hydrocarbons continues to increase.

The point is that they need to be exploited cleanly and effectively.

To discuss issues facing the chemical industry go to ICIS connect

By: Nigel Davis
+44 20 8652 3214

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