Consumers asked to join producers in tackling GHGs

Researchers call for better technology, re-balancing of climate change agendas

BY GARY PARK FOR GREENING OF OIL

The Conference Board of Canada had a few things to say about the Alberta oil sands the other day, ranging from its dirty image to its importance in the North American energy equation.

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In a publication entitled “Getting the Balance Right: The Oil Sands, Exporting and Sustainability,” the independent research organization made a case for not singling out the oil sands as the villain in Canada’s climate change performance.

Enough finger pointing occurred in December during the Copenhagen climate change summit, said co-author Len Coad.

“Since the majority of the related (greenhouse gas emissions) actually come when we burn the fuel to drive our vehicles, let’s focus on (consumers and producers) both,” he said, sticking with the board’s theme of “getting the balance right.”

No free pass for oil sands

Not that the report gave the oil sands a free pass.

It just looked for ways to achieve the sustainability of oil sands production and reduce the environmental footprint, while turning “significant and growing” exports of the resource to the United States into a “critical driver of Canada’s future wealth.”

At the same time, the board said a “sustainability agenda” must deal with environmental impacts from GHGs, other airborne emissions, and the use of land and water, along with economic and social impacts.

In a calm and clear fashion, a rare element in the oil sands debate these days, the board concluded that sustainable exports from the oil sands are achievable, provided there is ongoing investment by producers and governments in “improved technologies and a re-balancing of the climate change agendas.”

The board says the most logical approach over the near-term is to pursue market opportunities in the United States and elsewhere while working on new and enhanced extraction technologies that reduce GHG emissions.

“The climate change agenda will need to place more emphasis on reducing the global consumption of energy and related GHG emissions, even as we continue to search for new, cleaner production technologies,” the report said.

Policy tools, such as carbon taxes and urban re-design, needed

To that end, the full range of policy tools will have to be utilized, including carbon taxes, cap-and-trade systems, higher vehicle fuel standards, stronger energy standards for buildings, urban re-design, investment in public transit and other forms of intervention.

In building its case, the board also debunked several commonly-held views of the oil sands. It said:

• The existing GHG gap between the oil sands and conventional oil is not as wide as is often asserted.
  

Recent analysis based on a “wells-to-wheels” calculation of GHGs, shows per barrel emissions from the oil sands are 7 percent to 21 percent higher than the lowest-emitting crude oil currently refined in the United States.

In fact, the board said, mined oil sands production performs better than drillable output because it uses less energy for processing.

• Dealing with some moves to reduce or ban U.S. imports of “dirty fuels” from the oil sands, the board noted that both the United States (which already imports 60 percent of its oil) and Canada have to satisfy their needs from “somewhere.”
  

Although oil sands extraction costs are higher than those for most conventional sources, the oil sands require “very little exploration expenditures, very little exploration risk … and are a more stable and accessible source of U.S. and Canadian oil supply than many other global sources” (such as Venezuela, Nigeria or parts of the Middle East).

• While Canada and Alberta derived the major share of the economic benefits of oil sands production, the United States “benefits at many levels,” with suppliers of materials and equipment winning contracts for new production and pipelines; U.S. financiers provide some of the risk capital; U.S. refineries generate various end products; U.S. distributors deliver gasoline and other oil products to final users; and U.S. residents in general consume the products.
  

But the board cautioned that moves to build pipelines to tanker ports on the B.C. coast for export to Asia “may help temper extremes in U.S. policy.”
“Canada and the United States will continue to rely on oil products for the foreseeable future and the oil sands offer advantages as a preferred supplier for North America,” Coad said.

• The oil sands accounted for 5 percent of Canada’s GHGs in 2007 – a share expected to rise as output climbs from its current 1.21 million barrels per day -- while road transportation contributed 18 percent to those emissions.

That calculation was in sharp contrast to an assessment of the oil sands’ impact on land, water and air contained in internal Canadian government documents released earlier this month which estimated the oil sands sector generated up to 25 percent more GHGs than conventional oil in the production phase.

Taking issue with critics of oil sands exports to the United States, the report said some found it easier to “pursue and criticize a few private oil sands producers operating in a neighboring democratic nation,” by exaggerating the gap between energy-intensive production in Alberta’s bitumen region compared to less intensive production of oil in the Middle East.

Board puts forward some “inconvenient truths”

In getting to grips with the environmental impacts, the board laid out what former Vice-President Al Gore might view as “inconvenient truths.”

It said bitumen miners are on track to eventually eliminate the need for tailings ponds that currently hold an array of toxic byproducts from the extraction process, which have generated 540 million cubic meters from the Syncrude Canada operation alone.

“This step is long overdue and critics of oil sands development point – legitimately – to a need to accelerate the progress,” the report said.

Although current and approved mining projects require a volume of water from the Athabasca River that is deemed by the Alberta government to be surplus to “instream flow needs” and is thus unlikely to have a detrimental impact on the eco-system, operators are “examining off-stream storage and other options to ensure water is not a constraint to their winter production.”

While acknowledging oil sands operations have a significant impact on the land, the report notes that Alberta is developing integrated land-use frameworks, while numerous initiatives are underway to better understand what is needed by way of reclamation.

Drillable production requires water and energy for steam production, but the water is taken from below the water table and would not be considered fit for human consumption, the board said.

In addition, it said companies are successfully developing techniques to minimize the water and energy used to produce steam for extraction.

Describing the production of GHGs as the “perceived Achilles heel of the oil sands,” the board noted that production is increasing faster than emissions intensity is being reduced, adding to the overall volumes of carbon dioxide, which it said is a “reason why carbon capture and storage (CCS) technologies are a major focus of current technology funding.”

As conventional oil declines, reliance on heavy oil grows

In dealing with the question of whether the oil sands are “dirtier” than other sources of oil in terms of GHG emissions, the report said global reliance on heavier oil is growing as conventional output from many sources begins to decline.

“The big challenge for oil sands producers, in terms of environmental impact and reputation, will be to keep developing new and enhanced extraction techniques that reduce input energy requirements for drillable projects in particular, hence reducing the emission of GHGs,” the report said.

It said the future of CCS technology for in-situ plants and upgraders will “require significant cost reductions to be commercially successful.

“Nevertheless, private oil sands producers will need to constantly seek new ways to improve their operating efficiency and to minimize their production of GHGs as they continue to pursue their economic goals while producing oil efficiently and in an environmentally and socially responsible manner.”

One positive example of technological change cited by the report is the use of gas-fired cogeneration to generate steam for oil sands projects, while delivering the surplus to the Alberta electricity grid, thus reducing the need for coal-fired electricity in the province.

Link of interest

Conference Board of Canada: Getting the Balance Right: The Oil Sands, Exporting and Sustainability

Contact Gary Park via Kay Cashman at publisher@greeningofoil.com