As I arrive at the airport in Edmonton, I am immediately reminded of Pittsburgh. In the international terminals baggage area are signs of the sports culture. Instead of the Pittsburgh Steelers and Penguins, there are statues and signs promoting the Edmonton Oilers (hockey) and Eskimos (football). As I exit, I see snow still on the ground (not that way when I left Pittsburgh, but there was snow just a week ago) and the temperatures are cold (14 degrees F). As my taxi drives me to my hotel in downtown Edmonton, I cross a major river filled with ice and a bridge – just like I do every day in Pittsburgh! (though again the ice has disappeared for the moment). Their mountain is not as big as Mt. Washington (so no tunnel) and thus begins the differences between the two cities.
In Pittsburgh, discussions focus on a daily basis on shale gas from the Marcellus. In Edmonton, the focus is instead on oil sands, also know on tar sands. These tar sands have been getting a great deal of publicity in the United States because the goal of the Keystone XL pipeline is to carry the result of processing these sands to the Texas Gulf Coast. Both hydraulic fracturing of shale and the “steam assisted gravity drainage” of oil sands use horizontal drilling. While shale in the Marcellus is “fractured” with a combination of high-pressure water, silica, and chemicals in a single pipeline to produce shale gas, tar sands instead uses two parallel pipelines for what is called the “in-situ method.” The top pipeline is steam. This steam heats the tar sands with the result of producing heavy oil that is then taken to the surface by the second pipeline. Both processes use high volumes of water, primarily recycled. Oil sands can also be mined, but industry has been transitioning to the newer technology.
During the first day of the Pan Prairie Energy Tour, we heard from representatives of the government, industry, and an environmental group. A few factoids first as summarized in Canada’s Energy Markets Fact Book 2013-2014, and as provided by Canadian government representatives(s) during the briefing:
· Canada is 3rd in the world in proved crude oil capacity (behind Venezuela and Saudi Arabia)
· Canada is 5th in world in exports with 99% of those exports going to the United States.
· Canadian crude oil accounts for 28% of U.S. imports and 16% of U.S. refinery crude oil intake.
· The chief environmental challenges of oil sands are water use, greenhouse gas emissions, and land.
o In-situ uses 1 barrel (BBL) of water per BBL of bitumen, while mining uses 3-4 BBL.
o Oil sands producers recycle about 75% of the water used in mining and 90% under in-situ.
o Greenhouse gas emissions from oil sand operations are 7.8% of Canada’s total greenhouse gas emissions (1% globally).
o Approximately 22% of the Lower Athabasca Region (where the oil sands are located) is comprised of conservation areas.
The following “points to ponder” struck me as I listened to the presentations:
· While in Pennsylvania, shale is primarily in private lands so negotiations are between individual homeowners and companies, the same is not true in Canada. In Canada, the oil sands are viewed as public lands owned by the Province of Alberta (similar to a US State; Alberta is the size of Texas). So the model here is public ownership with private investment with royalties paid to the province for oil production. How does this change political decision-making?
· The environmental group representative brought up a thought-provoking issue given the concern about impact on ecological reserves: “What level of oil sands development is appropriate?”. This has not been an issue so much in Pennsylvania.
· Greenhouse gas emissions seem more of an issue here than in Pennsylvania and there is a price put on carbon. However, the environmental group also expressed concern that it is not sufficient. What price of carbon would be appropriate?
· The difference between shale oil production in the United States (in North Dakota and Texas) is that it produces light oil while the oil sands produce heavy oil. This heavy oil is needed in Texas for production of goods. How much heavy oil is needed by this industry and is the Keystone XL pipeline the optimal way to obtain that oil?
Today we are off to see the oil sands region. So more to come tomorrow!