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Canada's Oil Sands - Part 1
Posted by Gail the Actuary on August 25, 2009 - 10:56am
This is the first in a two-part series about Canada's oil sands. In this post, I will talk about a recent American Petroleum Institute (API)-sponsored media trip I made to see Canada's oil sands, and give a little background on material being extracted. In the second part of the series, I will talk about future oil sands production and some issues related to future imports, including environmental questions.
I should mention that while I went on the trip with API, the sources I am using in these two posts are broader than just information on the trip. I will link to some of these sources as I go along. Arguably this post is mostly from the point of view of oil companies, but it seems to me our knowledge base regarding oil sands is so poor that we need to start somewhere.
The group that went on the trip was a mixed group of bloggers and a conventional reporter--Elizabeth Brackett from PBS. This is a photo of some of us.
Trip information
On our trip, we visited:
• Syncrude's open pit mining and upgrading operation north of Ft. McMurray. This is a joint venture involving several companies.
• ConocoPhillips Surmont's in situ project using Steam Assisted Gravity Drainage (SAGD) technology, south of Fort McMurray.
• The Oil Sands Discovery Centre museum in Ft. McMurray.
We also heard a talk by Don Thompson of the Oil Sands Developers Group called Setting the Record Straight.
After we got home, we talked on the phone with Robert Renner, Alberta's Commissioner of the Environment. A transcript and audio recording is available at this link.
Oil Sands--What is It?
Oil sands material is funny stuff. It reminded me of a very dark crumbly brownie, but smelled like asphalt.
According to this graphic, oil sands are a complex mixture of quartz sand, silt, clays, water, trace metals, and bitumen. In this mixture, each grain of sand is surrounded by a water mixture. Bitumen fills the space between sand particles and their water coverings.
What makes Canada's Oil Sands different from many other deposits of heavy oil is the water layer surrounding the sand, making them "water wet," or hydrophilic. Because Alberta's oil sands are water wet, the "bitumen can be extracted using relatively inexpensive hot or warm water processes" according to small print on the poster above.
When the bitumen is separated out from the oil sands mixture, it has somewhat the consistency of cold molasses. I touched some of it in a vial, and couldn't get it off my finger without using a solvent. The API gravity is 8.
Bitumen molecules are much larger than what one finds in conventional oil, containing as many as several thousand atoms. The ratio of hydrogen is similar to that of heavy conventional oil. According to J. G. Speight, hydrogen content of bitumen averages 10.4%, compared to a range of 10.0% to 14.0% for petroleum. Sulfur content averages 5%, making it "sour".
Methods of Producing Oil from Oil Sands
Mining--Illustrated at Syncrude
The oldest and still most widely used method of producing oil from oil sands is mining. This method is gradually being refined, to become more energy efficient, to use less water, and to have less environmental impact in general.
In the mining method Syncrude uses, the various surface layers are first removed and stored so that they will be available when needed for reclamation. Then large equipment is used to scoop the oil sands material out, and load it into large trucks.
Next, the material is transferred by truck to a station where it is mixed with water to form a slurry. Hydrotransport pipelines transport the slurry mixture from the mine to the extraction plant. The slurry is fed into a separation vessel where it separates into three layers--sand, water and bitumen.
The sand that separates out is trucked to its assigned location, based on a reclamation plan that Syncrude filed earlier with the province. Syncrude says that it plans carefully where each truckload of material goes, so it does not need to move material twice, and thereby increase its costs.
The water (including dissolved minerals, clay, and small amounts of bitumen mixed with the water) that separates out is transferred to tailings ponds. The water from these tailing ponds is then recycled, for use with a new batch of bitumen slurry. With recycling, the amount of water from Athabasca River that Syncrude uses has been decreasing, and now averages 2.03 barrels of water per barrel of finished product. Over 85% of the water used in this process is recycled.
The bitumen that separates out during the separation process is upgraded to form Synthetic Crude Oil (SCO), a light sweet crude oil that sells for about the same price as the benchmark crude, West Texas Intermediate (WTI). This upgrading takes place in a facility that in many ways resembles a refinery (cracks the molecules into shorter ones and separates out sulfur and other pollutants), but does not produce the finished products of a refinery.
Since the upgrading is at the same location where oil sands are mined, Syncrude can make use of the natural gas and other gasses produced in the upgrading process to provide some of the energy required for the energy needs of the facility. I was told that approximately two-thirds of the energy needs of the facility are internally generated, but I have not received written confirmation that this is the case.
Work on reclamation goes on at the same time as mining. Once sufficient sand has been added to reach the planned contours of the reclaimed area, the upper layers are put back and native vegetation planted, according to the plans filed with the province. These plans are updated from time to time to reflect changes in thinking regarding optimal revegetation.
Of all of the oil sands operators, Syncrude has the only parcel of land that has been officially been certified as reclaimed. It also has 4,600 hectares that would look to a passer-by as reclaimed, but has not passed the years-long process required by the province to show that reclaimed area fully meets the province's standard in terms of stability, plant growth, water areas, and wildlife.
I was told that the energy return of this process is 6:1, presumably all of the way from mining to production of Synthetic Crude Oil (SCO).
I was told that many of the processes are gradually being made more efficient, at Syncrude and more generally. For example, Syncrude invented low energy extraction which reduced the temperature required to extract bitumen from 80 C to 40 C. As techniques are refined to become more energy efficient, one would expect the energy return ratio to increase, and the amount of CO2 generated by the processes to decline.
I was also told that 92% to 94% of the bitumen in the oil sands is extracted in this process--a very high percentage, compared to conventional oil extraction. In some sense, what happens is that the oil sands material is scooped out, nearly all of the bitumen washed out, and the remaining material (mostly white sand) put back. Water to be recycled plus various impurities are put into tailing ponds. The material that cycles through tailing ponds doesn't get to its final location very quickly, and sometimes ends up where it is not wanted, so is a problem the industry and regulators are working on.
I might mention that workers who live in Ft. McMurray ride on company buses to work. The buses pick them up near their homes. Other workers live in a camp on site. I was told by a company employee how much he liked Ft. McMurray because of the cosmopolitan environment, with workers from around the world. A person I met who used to work in Ft. McMurray commented that drugs are a problem, since the area tends to be young and transient.
In Situ Production
While mining is still the largest source of oil sands production, in situ production is catching up. According to statistics of Canadian Association of Petroleum Producers (CAPP), a little over 40% of Alberta's Oil Sands production in 2007 was in situ or "in place" production.
In situ production has several advantages over mining:
• Less disturbance of the soil -- digging only for pipes, roads, buildings, and equipment;
• Less water use, and water that is used is sometimes from brackish sources;
• Little need for land reclamation. The material just stays where it is. The bitumen is in some way melted and drained out;
• Less (and in some cases no) tailings ponds.
The primary in situ approach in use today is Steam Assisted Gravity Drainage (SAGD) which I will discuss shortly. Cyclic Steam Simulation is also used to a lesser extent. In addition, there are several other in situ approaches under development, including electric induction technologies, in situ combustion, and vapor extraction process (similar to SAGD, but using a solvent other than water). See Oil Sands Story for discussion of some of these methods.
In SAGD operations, steam is injected through the upper (injection) well. The steam melts the bitumen, and the melted bitumen plus moisture are collected in the lower (producing) well.
Steam Assisted Gravity Drainage (SAGD) at Surmont
At the Surmont facility, the wells gathering the bitumen mixture are 1,000 feet deep, which is below the groundwater and a limestone cap. Each well is about 3,000 feet long. The surface area is mostly forested, except where equipment is located and where above-ground pipelines run.
Surmont uses brackish (salty) water from deep wells to generate steam. The water is heated to 200C, and piped to the injector wells (see diagram above). The steam escapes from holes in the injector wells and heats the area around the injector well. The bitumen melts, and the melted bitumen and water from the steam drip down and are collected in the producer wells, found below the injector wells.
Surmont estimates that it collects 60% of the bitumen in place using this process. The steam doesn't actually get everywhere--in the locations it does go, Surmont estimates it extracts 92% to 94% of the bitumen in place. In this process, the vast majority of sand and other materials are left in place, so there is much less material to process, and no need to worry about major land reclamation later.
Surmont recycles its water, so that 90% of the water it uses is recycled. The amount of additional brackish water that needs to be added averages 0.25 barrels per barrel of bitumen--much less than required for mining approaches. Since it uses brackish water, none of this water comes from the Athabasca River.
Before Surmont began producing bitumen in 2007, it drilled delineation wells to determine the extent of the resource and to lay out plans for where extraction would be performed. In drilling the delineation wells, it was necessary to cut down some trees. We were told that Surmont is now in the process of reforesting areas where delineation wells were drilled, under its faster forests program.
The bitumen that is produced at Surmont is too stiff to transport by pipeline, once it cools from initial extraction. To overcome this difficulty, Surmont buys SCO (perhaps made at Syncrude) and blends it 50% - 50% with bitumen to produce the petroleum product it sells--Western Canadian Select Blend.
I was told that the energy return of this process is also 6:1. Upon inquiring further, I found that this energy return is only based on the amount of natural gas the process uses--one cubic meter of natural gas to one cubic meter of bitumen. If other fuels were included, the energy return would no doubt be lower. Also, this energy return only relates to making bitumen to blend with SCO, so would seem to be less than the mining energy return.
It is clear to me that there are a lot of indirect energy costs that would be hard to count in any calculation. For example, Surmont is located an hour's drive south of Ft. McMurray, away from any town. All water for drinking is bottled water that is shipped in.
I was told that some of the other in situ sites are "fly in" sites, where the only access is helicopters. All of the pieces of buildings, pipelines, and processing equipment must be flown in to these sites. Housing and food service is provided at these remote locations, in the same way it would be on a floating oil platform.
More in Part 2 later.
Note: Oil sands vs Tar sands. The province of Alberta and CAPP prefer oil sands, so that is the terminology I have used. Oil sands is also far more commonly used, according to Google.
Some previous oil sands / tar sands posts.
World Oil Exports; US Oil Imports; and a Few Thoughts on Canada - Gail the Actuary - Aug. 2009
EROI Update: Preliminary Results using Toe-to-Heel Air Injection - Dave Murphy – March 2009
Unconventional Oil: Tar Sands and Shale Oil - EROI on the Web, Part 3 of 6- Charles Hall guest post – April 2008
Tar Sands: The Oil Junkie's Last Fix, Part 2 – Guest post by Chris Nelder – September 2007
Tar Sands: The Oil Junkie's Last Fix, Part 1 -
Guest post by Chris Nelder – August 2007
Extracting Heavy Oil: Using Toe to Heel Air Injection (THAI) – Gail the Actuary – August 2007
Canadian Oil Sands Production Update – Sam Foucher – Oct. 2006
Contact
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For the sake of balance & fairness, TOD ought to have a representative of the Cree Nation, and other Native Canadians, give their perspectives on the exploitation of the tar sands, and the environmental & cultural impacts of this exploitation on their lands & peoples.
Environmental issues are in Part 2.
The oil sands are a big employer of Native Canadians. First Nation also has a company which raises tree seedlings for which are used by oil companies in reforestation. Oil companies are required by law to consult with Aboriginal Groups on their plans for their facilities.
This is a link to a large PDF which gives Syncrude's Aboriginal Review. Syncrude's website says:
http://www.opednews.com/maxwrite/linkframe.php?linkid=60478
But perhaps we should both let the Native Canadians speak for themselves.
I think a lot of the outcome of such a meeting would depend on whom was selected to be present. No-one will deny that there are bound to be some people dissatisfied with events, so then the question becomes how to evaluate such expressions. Perhaps consulting the treaty chiefs, or a democratic vote among all aboriginals in the affected areas..... ?
It's worth noting that the Indians in the oil sands areas own the mineral rights under their reservations, and that most of them work for the oil industry or related industries.
The fact that they get regular paychecks and their tribal governments get royalty checks means that most of them are onside with respect to oil sands development. In fact, some of the tribes have their own oil sands projects.
It's the Indians that don't have oil sands in their areas that are complaining.
The ones in British Columbia are complaining particularly loudly because the B.C. government refused to sign any treaties with them over the past 110 years. Nearly all of the tribes in Alberta signed treaties, and a number of them could loosely be described as rich as a result of the mineral rights they acquired.
Perhaps you should state up front what vested interests you represent.
I love that.
Perhaps you also, DD.
The interests I represent are those of ecosystem integrity and biodiversity. I oppose any & all human activities that compromise these interests.
I represent the Grumpy Old Men of the Mountains (GOMM). We stand around on high mountain peaks and give people the benefit of our vast wisdom. They don't always appreciate this, but that's their problem. When they get too annoying, we move to even higher mountain peaks where they can't reach us.
More specifically, I worked as a computer analyst, systems analyst, and business analyst in and around the oil industry for 35-odd years. I worked for Canadian, American, French and British companies. When I had more money than I ever needed, I retired. Now I live in the Canadian Rockies and wander around in the American Rockies, the Andes, the Himalayas, and other mountains as the whim hits.
In the past, I was involved in research on in-situ production in the Athabasca oil sands, and I designed heavy oil production management systems, hence my interest in this topic. I also did other things, but those are other topics.
Thanks RMG. I live in New Mexico. Am grumpy too. Have climbed extensively in the Rockies, Sierra Nevada & in Mexico; less extensively in the Andes & Alaska. Got invited to do Masherbrum once but couldn't afford it. All when younger. Am a biologist by inclination & education. Have seen the Peace & Athapaska country, & driven the Alaska Highway. Beautiful part of the world. Don't like the devastation exploitation of the tar sands entails. Don't like the environmental damage massive emissions of oxidized carbon causes.
Hey RMG and DDm, nice dialogue - that is the way I like to see discussions proceed.
Yes, the few Treaty 8 status Indians that are employed by oil sands developers, or who operate successful businesses dependent on oil sands developers, obviously support a certain level of development. Why not try to share in the prosperity? But not many derive much benefit from the miniscule value of the mineral rights beneath the even more miniscule amount of land alloted to Indian Reserves in the Treaty 8 area under the Indian Act.
Speaking of "no new approvals", that is also the stance of former Alberta Premier Peter Lougheed.
Actually, what he said was "Only build one new mine and one new upgrader at a time." The problem with constructing more than one $10 billion facility at a time is that it creates a horrendous manpower shortage and overwhelms the available infrastructure.
Gail -
A well-written and nicely done article, but I suppose one could get the same sort of information and the same slant from Syncrude's public relations department, including the same absence of anything critical.
A while back you also were invited by Chevron to tour their controversial operations in Ecuador, and as I recall there was also an absence of anything critical in your reporting of that visit. Do you suppose that what you have been shown in both instances was an orchestrated PR exercise designed to get people in the media to be more "understanding"? Sort of a bit like a modern version of Stalin's Ptomkin Village intended to fool visiting journalists as to the real horror of his regime.
Anyway, I can well understand your position. If someone paid for my entire trip all the way to Alberta or Ecuador, I'd feel a little guilty in writing anything that might show my ingratitude. You've really got to be on your guard against being co-opted. These people are very good at doing that.
And this is the part I like the best:
"Syncrude is one of 11 companies in Canada, and the only oil sands company, to be accredited at the Gold Level in the Progressive Aboriginal Relations (PAR) Program of the Canadian Council for Aboriginal Business. PAR measures corporate performance in Aboriginal employment, business development, capacity development and community relations."
If that isn't a perfect example or government/corporate sponsored fluff. Perhaps not quite as grotesque as something like the "Heinrich Himmler Gold Level in the Progressive Untermensch Relations Program", but still looking just a bit Orwellian to me.
No personal offense intended, but in my view going these energy-industry junkets puts one's credibility and objectivity at risk.
I was reluctant to go there out of regard for Gail's feelings but the truth of what you say is pretty obvious. It would sure be a shame if TOD degenerated into a mouthpiece for industry propaganda.
I asked the other editors to read the post before I put it up, to see if they felt it was biased, and they did not think so.
If one tries hard enough, one can imagine problems almost anywhere.
The part you quoted isn't out of the article--it is out of the response to one of the comments, based on something on the website. Sorry if it is PR--I wanted to give the link to the Aboriginal Business site so people could look at it.
In order to understand what is going on, one needs to see first hand. When one looks at the EROI calculations done in the posts linked at the bottom of the page, there are a lot of assumptions made. If one doesn't understand what is going on, and how the industry is changing, it is had to evaluate whether the calculation is at all representative of the current situation. I hope that by looking at things first hand, I can describe a little better what is going on. If I say they are using recycled water, and show a picture of the recycled water, it seems to me it adds something to the knowledge base.
It is pretty difficult to completely make up a story to pull over the eyes of someone--I really don't think they have done that. If you see something that you think they are lying to me about, why don't you point it out? The bloggers as a group are a lot more knowledgeable, and ask a whole lot more pointed questions than do the traditional press (who barely know oil from natural gas).
We have all kinds of articles by people who work in the industry they write about. Somehow, people have to get an understanding of what goes on.
If you think I would write only what API or Chevron would like, how do you explain that I fairly often print write things that readers on The Oil Drum don't like? Is it because The Oil Drum doesn't pay me enough? (Actually anything?) I think your whole line of reasoning falls down. If I wanted to be popular, I would just tow the party line, and say the popular thing.
Gail -
Well, I think it all gets down to content. What goes in and what doesn't. And who decides that.
I've noticed that you haven't gone on any paid junkets to wind farms or solar energy projects and written glowing reports on either.
Now why is that?
Maybe those people can't afford to do high-powered PR, or maybe you're not really interested because you don't think much of either, as you have time and time again expressed.
Credibility is indeed a fragile thing, and you've got to watch it carefully. You do good work and we all appreciate your efforts, but please don't let it get compromised.
When you get right down to it: everybody's got some sort of an agenda.
I don't think you folks have any idea how it works with me. I am a researcher by instinct. I did it for insurance organizations; I am now doing it on energy related subjects. (I have a sister who has done research in two different areas as well--biochemistry and ancient Hebrew.)
In doing the research, I have several things that most people don't have:
1. Time
2. Enough money that I can pay for sources I need, without thinking about it, if needed.
3. Lots of tips from readers
4. Ability to talk to practically anyone I meet, in any location, about the subject
5. Ability to use Google to find all kinds of things
Going on these trips is only a tiny piece of what I do. It happens to be the only part that is paid for by third parties, but I find it hard to see that it makes any difference at all. If I left it out, I would be left with the "free" information. It is becoming clearer and clearer to me that a lot of the free information we are getting is just plain garbage.
In order to learn about energy, coming from a background of insurance, it was/is necessary to be a walking sponge. I have done, and continue to do, a lot of investigation, most of it paid for on my myself (not the Oil Drum, or anyone else), or free over the internet. Some examples include
-I attended a conference on electricity (including Wind, CCS) at Georgia Tech.
-I attend a local permaculture group, and have visited various local organic gardens, nearby farms selling shares, and researched what some organizations more distant.
-I visited the Puna Geothermal Venture in Hawaii.
-I have gone to a number of conferences, including two EIA Conferences.
-I sat down and costed out what it would cost to replace my household electricity use with PV, before I first started writing on The Oil Drum.
-I subscribe to Renewable Energy Weekly, and have listened in (and asked questions on) some of their on-line conferences.
-I plan to talk with some folks at the National Renewable Energy Laboratory when I am in Denver for the ASPO-USA meeting.
-I buy books on both sides of a subject. When I went to Canada, I bought Tar Sands by Andrew Nikiforuk; Stupid to the Last Drop by William Marsden; Alberta's Oil Patch: The People, Politics & Companies, by Timothy Le Riche; and the End of Energy Obesity by Peter Tertzakian (not about Canada)
-When there was a biofuel conference call from a renewable energy group, I was the Oil Drum staff member who agreed to do it, and I wrote a post about it. http://www.theoildrum.com/node/4439
-I am on the mailing list for Sierra Club, both individually and as an Oil Drum editor. They have been sending material about Canada Oil Sands. I looked through the web site, and printed out "Under-Mining the Environment: The Oil Sands Report Card" by the Pembina Institute.
-I also get a lot of e-mails from readers. This morning I got an e-mail that said:
When I did the report regarding Chevron, I did a huge amount of research myself. A large proportion of what I said wasn't what Chevron said, it was based on my research. (There is 100% probability Chevron will lose the case in Ecuador. That was known when I wrote my article. It is not a fair trial--the point of my post.)
I have a hard time seeing the various trips as other than a little piece that fits in the mosaic of information I get from a variety of sources, a lot of which I pay for myself. I don't understand why you might think I would favor oil companies over the others, just because they pay for the airline tickets.
The problem is that as I look at this, is that it is turning out that a whole lot of information that we get from so-call "green" sources is terribly distorted--something a lot of people have never even considered a possibility. These are supposed to be "good people" working for the good of the environment. But somehow, these people have their biases too. They want contributions; they want to make themselves known; and they have sympathy for people who have problems and want to help them solve their problems. They don't figure out when they are exaggerating.
Somebody needs to be telling the truth, whether or not it is popular, and that is what I try to do.
I don't think it was necessary for Gail to write this long reply in defence (which I haven't read).
Gail is obviously no naive fool who's going to be taken for a ride. And meanwhile there can be no worse place to put a propaganda exercise than here on TOD where its author would be certain to get their credibility torn to shreds. I hope the cynics above will graciously withdraw their misconceived (however honourably motivated) remarks. As said, what are the actual details that are distorted? And what more crucial part of learning about a process than meeting and asking those who run it?!
Bias of Green sources.... this is something I can sympathise with having been an environmental campaigner myself till I decided it wasn't achieving anything anyway. The thing is that once people think (rightly or not) that they are doing the important work of saving the planet from unscrupulous liars, then they see it as a matter of "what side are you on?" rather than "what is the truth?". And so they cease to present an unbiased case, but rather miss out anything that stands in the way of their established canon of thinking. A pathetic example: I read on the uk Green Party website that they endorsed promotion of housing co-ops. Having been on management of a housing coop for 20 years (and sec for many) I wrote to them about the great negatives of how I was harassed and corruptly evicted as per www.2020housing.co.uk. I got the reply that they were too busy to discuss these mere details and that they would leave their manifesto unchanged. What's the value of manifesto policies that don't bother to engage with soundly informed criticism?
Yes. And yours is....?
I think you're treating Gail very unfairly. Point out specific facts which she is distorting, with proof and credible references, or can it.
Am I mistaken in thinking that much of the economic viability of tar sands production comes from the use of stranded NG? Wouldn't the proposed pipeline facilitate the construction of a gas pipeline, thus lessening the attractiveness of the sand?
Some of the new methods use electricity, not natural gas. Also, if an upgrader is attached, the oil sands can generate some of their own energy--perhaps all of it if enough upgrading is done.
I am not sure if it is stranded natural gas that is being used. There certainly is natural gas being used. Recently there has been increased interest in drilling shale gas formations, in Canada as well as the US. If the increased natural gas from shale gas works out, this would seem to significantly reduce the natural gas problem--or eliminate it all together. At today's low natural gas prices, a way of turning natural gas to oil would seem to be something people would be looking for.
It should be noted that there is some controversy as to whether operators are kidding themselves about the economics of shale gas. See my post Are Natural Gas Reserves now Overstated?.
I don't quite understand how you think the proposed pipeline would lessen the attractiveness of the oil sand. Could you explain further?
To partially address this, there is currently a proposal by Bruce Power to build a nuclear plant to provide electricity and process heat.
I don't think anyone is considering using nuclear to supply steam to any SAGD operations. It's been determined definitively that steam cannot transport heat far enough to make nuclear heat viable there. Nuclear electricity however, would make sense IF electric heating itself makes sense, though the nuclear will need to compete with electricity from CHP natural gas installations, which would be very low-cost electricity indeed.
These are links (here and here) to an electrical approach under investigation. There may be other approaches I am not aware of.
Also, while visiting Surmont, the individual giving the lecture mentioned something about additional electrical use in the future. My impression was that they were planning to convert some part of their natural gas use to electricity.
The natural gas in the oil sands areas is no longer stranded, because there are pipelines connecting them to the continental gas network. However, it certainly is convenient - there are natural gas fields directly underneath the oil sands.
There is indeed shale gas not too far away, not to mention coal and uranium. There are even a couple of major undeveloped hydroelectric sites on the Slave and Peace Rivers. The area does not lack for energy alternatives.
The energy return on energy invested for NG fuel is something on the order of 6:1, so it makes economic sense, and some companies are developing facilities to do bitumen gasification, converting the heavy ends into fuel, which makes even more sense.
The downside for the U.S. is that this natural gas would otherwise be exported to the U.S. Canada doesn't care about this because Canadian needs are covered regardless.
The basic economic principle is to export whatever is expensive (i.e. oil and uranium), and use whatever is cheap yourself (i.e. coal and hydroelectric). Natural gas falls into the middle somewhere.
Here is a study on the use of natural gas in Albertan tar sands:
http://srb.stanford.edu/nur/GP200A%20Papers/adam_kreek_paper.pdf
Using comparatively CO2 free nuclear power to turn tar sands into syncrude is not only canceling out the climate change advantage of nuclear power but also thermodynamic suicide. Even Matthew Simmons is against it. If nuclear power, then why not use the electricity to run electric rail or, for those who think we still have time for electric cars, in EVs. The only justification for using nuclear power in the production of liquid fuels would be to use them to run farming machinery for food production, something which cannot be electrified. At present, the syncrude is mainly used to continue our car driven consumer society something which cannot continue anyway.
No matter whether we call it tar sands or oil sands, we are undoing the geo-sequestration which nature did for us during hundreds of millions of years. Watch these films here:
Crude - the incredible journey of oil
http://www.abc.net.au/science/crude/
But thanks, Gail, for going there to see the operation for yourself, and the report.
And this is the Master thesis from Uppsala University, supervised by ASPO President Prof. Aleklett
Canada's oil sands resources and its future impact on global oil supply
http://www.tsl.uu.se/uhdsg/Publications/Soderbergh_Thesis.pdf
Anothe thing that puzzles me is the time line for ramping up production.If water and ng are limiting factors now,why should they be more abundant ten years from now?
Incremental improvements is water usage are realistic, of course but by a factor of three or four?
The water usage of In situ methods is something like a tenth of water use of mining. If there is a large ramp up in production, it will likely be in situ, since the vast majority of oil sands can only be extracted by in situ methods--it is too deep for mining.
Also, in situ methods don't necessarily use river water. Surmont used brackish (salty) water from deep underground, and I don't think there is as much of an issue with shortages of that.
Regarding NG, there are several issues:
1. There are methods that don't use NG, including upgrading the end product, and using some of it. There are also electrical methods under development--see links elsewhere in these comments.
2. Shale gas developments may (or may not) improve future long term natural gas availability. It depends on who you talk to. For now, it is a big part of the reason why we have an excess of US NG production, and why shale gas developments are being planned in Canada. See this article and this one.
The fact is that water and NG are not limiting factors - this is a fabrication of Greenpeace, et al. There are huge amounts of both available in the oil sands areas.
Currently, about 98% of the water in the Athabasca River flows into the Arctic Ocean unused (compare this to 30% for the Saskatchewan river or 0% for the Colorado River). If water use increased by a factor of three or four, this would decline to 94% or 92%.
The limiting factor in oil sands development is manpower. There aren't enough people in the oil sands areas to develop the oil sands - at least, not fast enough to offset global declines in oil production. The most you can hope for is a slow but steady rise in Canadian oil production, and a slower decline in world production.
Syncrude produces a little less than a quarter of the total oil produced in the oil sands. It uses 0.2% of the water of the Athabasca River, and structures its usage to be highest when the flow of water in the river is highest. If all companies used the same amount, it would correspond to something less than 1% of water usage. I have seen maximum authorized usage numbers for all companies combined. If I remember correctly, they come to a little over 1% of water flow.
It is hard for me to understand the water usage issue that Greenpeace talks about--especially when folks in the US are talking about developing oil shale in Colorado, with water problems orders of magnitudes worse. I asked Shell what its water usage would be to produce oil from oil shale, and they said the best they could estimate now was 3 barrels of water per barrel of oil--higher than either Syncrude or Surmont use, and in a much more arid area.
Parts of Alberta are short of water but they're in the south, where agricultural supply is a significant issue. Water use and water sources in the oil sands area are both regulated by the Province and, as Rocky points out above, are an environmental red herring here.
I'd be a bit more worried about the effect of NG use on gas exports to the USA if NG was the primary energy source for all the planned expansions.
Dr. James Hansen (Climate Scientist and head of NASA Goddard Institute for Space Studies)
"We must draw down atmospheric carbon dioxide to preserve the planet we know. A level of no more than 350ppm is still feasible, with the help of reforestation and improved agricultural practices, but just barely – time is running out. Oil is used in vehicles where it is impractical to capture the carbon. But oil is running out. To preserve our planet we must also ensure that the next mobile energy source is not obtained by squeezing oil from coal, tar shale or other fossil fuels. Special interests have blocked transition to our renewable energy future.
CEOs of fossil energy companies know what they are doing and are aware of long-term consequences of continued business as usual. In my opinion, these CEOs should be tried for high crimes against humanity and nature."
The discussion of this and related topics is in Part 2.
Though Dr. Hansen does have a point, I'll still support use of oil sands petroleum as a transition to a completely renewable-based economy IF the alternative is an economic colapse back to dark ages level subsistence. A LOT of the explicit path issues need to be clarified before I will decide either way....
Targetting oil sands just doesnt make sense at the moment, when there's so much coal being burned for simple electricity.
Can't say that enough times. As long as people persist in burning coal for power, there's no need or use at all to even care about other CO2 emissions.
About half of U.S. power generation is coal-fired. China is building one or two new coal-burning power plants per week which is why their CO2 emissions now exceed those of the U.S. Those two countries combined account for nearly half of global CO2 emissions.
In Canada, the five top corporate emitters of greenhouse gases are electric power utilities, most of them provincial government owned. (Syncrude and Suncor are #6 and #7.) The federal government cannot impose controls on provincial power utilities because the Canadian constitution unequivocally gives provincial governments control over electric power.
The largest single emitter of CO2 in North America is Ontario Power's Nanticoke power plant. It's also a particularly bad emitter of sulfur dioxide and fly ash. Ontario's strategy was to replace it with nuclear power, but now that they have priced out new nuclear plants, their strategy is to... hold hands and sing "Kumbaya", I guess. Bring your own candles and respirator.
Hi RMG,
It appears coal's contribution is on the decline, at least in North America. In 1995, just over half of the electricity generated in the United States was coal-fired; in 2008, it was 48.5 per cent and in the first five months of 2009, 45.4 per cent.
Source: http://www.eia.doe.gov/cneaf/electricity/epm/table1_1.html
New renewable resources and ongoing improvements in the operating performance of nuclear power facilities will slowly chip away at coal. Public opposition is likewise growing and the regulatory and financial environments have turned decidedly negative, so the future of coal is looking rather dim.
The situation in Canada appears to be more or less the same.
See: http://www.canelect.ca/en/electricityincanada/electricity_in_canada_snap...
See also: http://www.canelect.ca/en/Pdfs/Electricity_08_en.pdf
Cheers,
Paul
I thought nuclear was already pretty much 24/7. Are there other ways more performance can be squeezed out?
Hi Gail,
Nuclear reactors can be "uprated", as described below.
See: http://www.nrc.gov/reading-rm/doc-collections/fact-sheets/power-uprates....
See also: http://www.nrc.gov/reactors/operating/licensing/power-uprates.html
Cheers,
Paul
Thanks! I never ran across that before. Looks like they average 5% or so.
You're welcome, Gail. Of the 127 plants for which power uprates have been granted to date, the average increase is 4.83 per cent, so your estimate is dead on. These upgrades represent 5,695 MW of added capacity. Another 943 MW is currently under review and the NRC anticipates 40 more applications will be filed between now and 2012.
Of course, the other critical consideration is capacity factor and this has been steadily increasing over the past thirty years, i.e., from 58.6 per cent in 1974-76 to 90.1 per cent in 2004-06.
Source: http://www.ans.org/pubs/magazines/nn/docs/2007-5-3.pdf
Cheers,
Paul
The problem in Canada (as distinct from the U.S.) is Ontario's failed electricity strategy. Although this is a regional problem and has little to do directly with oil sands, I'll go over it for the benefit of the U.S. audience:
Over 60% of Canada's power generation is hydroelectric, and most provinces have lots of undeveloped hydro sites. However, Ontario (Canada's most populous province) ran out of hydro sites decades ago.
Note that the Ontario government owns most of Ontario's power generation. Its strategy was to build nuclear power plants and at one point 50% of its generating capacity was nuclear. Unfortunately the Canadian nukes proved unreliable, and many of them have been shut down. This effectively bankrupted the Ontario power industry, but since the Ontario government owned it, it just bumped up taxes to pay for it.
Ontario's fallback strategy was to build quick-and-dirty coal power plants - e.g. the Nanticoke plant, the biggest coal-burner in North America. However, Ontario does not have its own coal, the U.S. coal it buys is high in sulphur, and the plants lack pollution controls.
Since the air quality deteriorated, Ontario came up with a new fallback-fallback strategy to shut down the coal plants and build new nukes. However, a couple of months ago they discovered they could not afford the new nukes, so they canceled the program.
So, at this point in time, Ontario's strategy is to 1) shut down the coal plants, 2) shut down the old nukes, and... 3) I don't know what.
Ontario could buy Alberta natural gas to supply new gas-fired plants, but since Alberta's NG is running low, Alberta's strategy is to cut off Ontario (after first cutting off the U.S.) and make sure Alberta's power plants (and oil sands plants) remain comfortably supplied with NG.
Hi RMG,
For a good overview of Ontario's future supply mix, see: http://www.ieso.ca/imoweb/pubs/marketReports/ORO_Report-Dec2008.pdf (Table 1, page 20, in particular). New natural gas plants/industrial co-generation + expanded renewables + nuclear refurbishments + increased hydro-electric imports from Québec and Manitoba + aggressive energy conservation/DSM should allow Ontario to phase-out coal within the next five years.
The 18-month short-term outlook released earlier this week is particularly upbeat:
See: http://www.ieso.ca/imoweb/pubs/marketReports/18MonthOutlook_2009aug.pdf
Cheers,
Paul
I haven't had a chance to read your links yet, but will. RockyMtnGuy's comments sound to me like they have some sense behind them, at least for the long term, although perhaps there are some short-term mitigating factors.
When you put problems with electricity / natural gas together with oil problems, Ontario is in somewhat of a "bad way".
Hi Gail,
It's hard to say; I don't think Ontario will fair any better or worse than its counterparts should energy resources become severely constrained (e.g., 80 per cent of the homes in Nova Scotia are heated with imported oil and, likewise, 80 per cent of our electricity is generated by way of imported coal and oil).
Electricity demand in Ontario is flat and will likely remain so for the foreseeable future (it's forecast to decline 5.5 per cent this year and then increase by just 0.2 per cent in 2010). On the supply side, between now and 2013, 10,000 MW of new capacity will come online -- 3,000 MW of refurbished nuclear plant, 5,400 MW of new natural gas generation/co-generation and 1,400 MW of renewable and DSM; to this, you can add whatever else is obtained through the OPA's Standard Offer Agreement.
The Province is working hard to reduce electricity demand and conservation targets were recently raised. Between 2004 and 2010, the Ministry of Energy estimates peak demand will be 1,380 MW less than it would be otherwise due to "naturally occurring conservation" (direct investments made by electricity consumers). During this same period, a further 1,350 MW of demand reduction will be achieved through various Ministry, OPA and LDC initiatives, i.e., "influenced conservation". By 2025, Ontario expects its DSM initiatives will save 40 TWh a year (that's nearly four times the amount of electricity consumed by this province).
Cheers,
Paul
I looked at the links. I think the big advantage you have over most of the US is that you actually have some co-ordinated group looking at this. My impression in the US is that there are a huge number of pieces involved, and getting co-ordination is difficult at best (even though there are some groups involved in doing this). It seems to take forever to get things done in a co-ordinated way. Ontario seems to be doing much better in this regard.
I think long-term, we are all going to have to get along with less electricity. If you can keep say, 75% of electricity going, you may be doing fine.
Hi Gail,
Electricity in Canada is sold at throwaway prices; if we need to quickly curtail consumption due to a disruption in fuel supplies or reduced generating capacity, then we simply increase its cost and/or adopt a tiered rate schedule similar to that used in California. I think the more worrisome scenario is that electricity demand will turn negative in response to rising costs, and that utilities saddled with high debt loads and declining revenues will enter into a classic death spiral.
Cheers,
Paul
Interesting. It doesn't sound like Ontario is the optimum site for post peak living.
No, particularly considering Ontario's largest industry is automobile manufacturing, I don't think it would be a really good place to be living in a post-peak world. They've already had a lot of nasty shocks, and I think they're going to experience more.
OTOH, looking around my own home here in the Canadian Rockies, I see that there's a cozy little 100 MW hydro plant on the stream which runs past my house, a 22 MW one lower down, I'm surrounded by forest and have a wood-burning fireplace, my basement footings are sitting on a coal seam, and there are natural gas fields not too far away. If I can't get fuel for the car I can walk downtown, and the Canadian Pacific Railway runs through the middle of town. So I think I'm okay.
Canada's bloody oil
http://www.guardian.co.uk/commentisfree/2009/aug/24/climate-camp-canada-...
In case you miss this in part 2 ...
As a person living in a world where one is still forced to carry a passport, I carry a Canadian one and find your heading offensive. Every polity on earth is doing some things which can be criticised, though I suppose given your sanctimony I would be correct to assume that the UK is simply leaving their petroleum under the North Sea in the ground?
edit: added - From presentation summarizing reports parepared for AERI (Alberta Energy Research Institute) by independent analysts. Agreed AERI's not independent, but the reports look credible and I've seen no credible contradictions. I suggest you must present same to continue that smear campaign.
•
With some overlap, oil sands pathways generally have 10% higher emissions than conventional crudes
•
GHG emissions from oil sands crudes are comparable to conventional crudes when potential cogeneration credits are considered
http://eipa.alberta.ca/media/39695/aeri%20lca%20presentation.pdf
Links to the full reports are available here: http://www.aeri.ab.ca/
What is the definitive report on which George Poitras bases his statement "The greenhouse gases emitted are contributing to climate change globally – extracting oil from these sludgy deposits produces three to five times as much CO2 as conventional oil."? I will generaously presume he may be referring to the extraction process itself compared to eg. self-pumping light sweet from the North Sea, rather than the GHG's produced thereafter by burning of the oil in autos. Or is he simply dreaming up figures? How about the electricity generated with co-produced Natural Gas to operate the North Sea platforms? Is that counted in his figures? Subsequent shipment of Middle East oil to N America? Averages across entire production, or development of new sources, to which oil sands should be compared?
And that's a good choice. My wife just signed the documents for a Brit who got his Canadian citizenship and the next day applied for a Canadian passport. He still has his British citizenship, but the places he goes (he's a professional photographer) it's a lot safer to be traveling on a Canadian passport than a British or American one. Canada is one of the few major countries that has never started a war with another country (although it has finished a few).
The U.K. is heading for a bit of a sticky wicket - their North Sea oil production peaked in 1999, and they are on the verge of becoming a major importer of oil and natural gas. This is going to be something of a problem for them, and I don't think they're at all ready for it.
I did a back-of-the envelope calculation of how many windmills it would take to supply all their electricity from the wind, and I think that they would have to cover the entire island with windmills. I don't think they're ready for that, either.
(moved down)
There are a few problems with this article.
The first problem is that Fort Chipewyan is a small native community of 915 people. With small communities a major epidemic is three people, so you run into a mathematical issue called "statistical clustering" - random events do not occur at a steady rate but happen in clusters. Cancer is a statistical process, so in these communities, three people developing a rare form of cancer looks bad in percentage terms, but it's highly likely to occur at random. If you study it, nobody else will develop the same cancer for 50 years, another statistical process called "regression to the mean". Health authorities hate this kind of thing because they spend a lot of money studying problems that go away by themselves. It's obvious that government health authorities think this is a problem with statistical clustering. In general, the people there are healthier than average.
The second problem is that Fort Chipewyan is getting its water from the Athabasca River downstream from the oil sands. Oil from the sands has been leaking out of the banks into the river for millions of years, and as a result, the river is naturally contaminated with heavy oil. A secondary problem is that there are naturally occurring deposits of heavy metals such as arsenic and mercury in the riverbed. The fish at the top of the food chain are concentrating these minerals in their bodies, so people shouldn't be eating large amounts of fish out of the river. The people should be getting their water from the other sources available and limiting their consumption of local fish.
And the third problem is that Fort Chipewyan is too far north of the oil sands for people to commute to work there (and there are no roads, anyway). The native people actually living in the oil sands are making large amounts of money working there, so they are less concerned about environmental issues.
Fort Chipewyan is about 225 km north of Fort MacMurray, east of Wood Buffalo park and (according to Georges own statements in the article) upstream of any oil sands activities.
I lived with my family 5 blocks from the petrochemical refining complexes at Sarnia for several years. Does that mean I get to blame them for any illnesses which occur to us, without any proof?
I understand that there has also been uranium mine generally in the area--now closed. One wonders what the impact of that has been.
Again, proof should be required. We can't simply agree to "shut down all oil sands production" as George demands, simply on unsubstantiated accusations, else we'd next be shutting down all industry, transport and farming in the whole country. Pretty much every human activity has someone who doesn't like it.
He does say upstream, which is pretty puzzling to me. The Athabasca River flows north out of the oil sands area into Lake Athabasca, where Chipewyan is located.
I'm also given to wonder how representative of his community is George? Does Mayor Melissa Blake agree? Perhaps not publicly I know, but I'd still like to see the majority of that community on the record before taking George's rant a meaningful.
http://www.syncrude.ca/users/news_view.asp?FolderID=5690&NewsID=136
Thanks for posting this Gail. I'm very interested in the discussion to follow.
In Alberta, a quick and dirty method to determine one's opinion of the resource was, for a time, to see listen to which phase was used. "Oil sands" generally indicated pro-development, and "Tar sands" was generally against it. That seems to have faded in the last year or two though, IMO.
I found tar sands in some older scientific literature as well.
The objection raised by Alberta and CAPP is that tar is a manmade substance, derived from coal. Oil at least is related to the end product made from bitumen, when an upgrader is present.
One thing I have wondered about is how the bitumen molecules with thousands of elements could be formed. They aren't something found in either oil or coal. Someone I talked to suggested bacteria being involved. Bitumen is different from oil, but seems to be fairly closely related, based on the similar mix of elements involved.
I've never come across a definitive explanation of kerogen formation either. I've heard of bacteria being involved too, but it wasn't fleshed out much beyond that.
Hopefully someone here can shed some light...
Kerogen is a waxy substance apparently produced by the compression of organic mud.
The mud apparently formed at the bottom of seas under anaerobic conditions, in which plankton which died fell to the bottom were not consumed by bacteria or other creatures because of the absence of oxygen. These conditions were not common, but where they did occur they sometimes occurred on a large scale over long periods of time - hence the concentration of major oil fields in only a few places.
The mud mixed with plankton built up in thick layers. As it deepened, the bottom layers were compressed, the mud turned to shale, and the plankton was converted to kerogen. The process is not well understood but it was fairly common. For that matter, it is still going on in some places.
Later, when the kerogen shale (aka oil shale) was compressed even more, it was converted into crude oil by the temperature and pressure and started migrating into oil fields (or escaping). This process is well understood and has been duplicated in the lab.
The formation of the oil sands is not as well understood, but is believed to be a result of the building of the Canadian Rocky Mountains. The exact details are a matter of some conjecture. They don't really matter because the source of the oil sands is nowhere near their current location, and the oil is no longer in the source.
I did some research into the origins of the phrases.
The earliest explorers (Peter Pond, Alexander Mackenzie) called them "bituminous sands". This is actually the most accurate phrase. They were looking at it as a replacement for pine tar, for waterproofing their canoes.
Later researchers sometimes called them "tar sands", but this was after the manufacture of coal gas had produced large amounts of coal tar as a by-product. They were aware that it was not tar, but felt that it could be used as a tar replacement.
And even later, people started calling them "oil sands", because they were a very heavy form of oil and could be refined into the same products as oil - particularly asphalt, albeit with more difficulty.
The bitumen in the oil sands is just an extremely heavy grade of crude oil and can be used to produce the same products - it just does not flow through a pipeline very easily.
The oil sands are basically an incomplete oil field, with no cap rock, allowing most of the oil to escape - but the original oil volumes were enormous, and what has not escaped yet is huge in quantity. What is found in the oil sands is crude oil from which the light ends have evaporated, and the remainder has been partially biodegraded by bacteria. It's not a good grade of oil, but it can be refined into products with a bit more difficulty than lighter grades of oil. And the reserves are enormous in scale.
My impression is that it is orders of magnitudes easier to extract bitumen from oil sand than oil from oil shale. The resources available to extract it and refine it are also better--especially water, but also nearby natural gas and electricity sources.
You have it backwards.
Anyone can make oil from oil shale(or kerosene from cannel coal).
It's very low tech.Just heat it up and it flows out.
They were making oil from shale 100 years ago in Scotland.
http://www.geos.ed.ac.uk/homes/harvieb/bing.html
OTOH, Making oil from bitumen is really challenging. It requires hydrogen as petroleum coke does in a refinery.
Syncrude converts bitumen oil into hydrocarbon streams – Naphtha, Light Gas Oil that ranges from 30 to 40 carbon atoms per molecule and Heavy Gas Oil which is on up from 40 carbons to about 70 atoms – that are blended to create the high quality, light, low sulfur crude oil known as Syncrude Crude Oil. The conversion requires two steps.
Primary Upgrading begins with diluted bitumen fed into the Diluent Recovery Units a process of separating the already formed oil out from the remaining bitumen, which has been reduced to a solid. Water is removed and the naphtha is recovered to be recycled through an extraction system. The solid bitumen is fed to cokers where heat cracks it into fractions of naphtha, the light gas oil and heavy gas oil for further processing. Syncrude also uses an LC-Finer, a continuous hydrocracking process, which breaks the bitumen down through adding hydrogen over an expanded ebullating catalyst bed to produce a lower boiling product. The Vacuum Distillation Unit is a Vacuum tower in which gas oils are flashed off and sent to hydrotreaters, bypassing cokers and LC Finer. Just how the choices are made for what bitumen goes where seems to be proprietary.
Secondary Upgrading is where the cleaning of impurities such as sulfur and nitrogen are removed from the naphtha, light and heavy oil products. The treated gas oils and naphtha are then blended together forming Syncrude Crude Oil and shipped to downstream refineries.
http://newenergyandfuel.com/http:/newenergyandfuel/com/2009/08/12/making...
The author of the New Energy and Fuel article you link to was on the same trip I was. He has a much stronger technical background in things like refinery operation than I do. I suggest reading his post if you would like to learn more about Making Syncrude.
I also see Brian from New Energy and Fuel has other posts up as well:
At ConocoPhillips’ Oil Sands Site (about Surmont)
Solving the Energy Issue in a Nutshell
The Problem at the Athabasca Oil Mines
His focus (and biases) are somewhat different from mine.
Gail,
I am delighted that you took the time to go to the oil sands area. From a position of some little knowledge, I can say I was impressed by your article.
In general I don't now comment on oil sands on the internet because most threads on the subject are either ill-informed or bigotted or both. It upsets me because people can make ill-informed criticism and justify inaccuracy on the basis that they are trying to save the planet. Yet they impugn the motives of others.
However the way that oil sands will become less of a target for the critics is for people to realise that roughly 80% of the resource requires in situ recovery and that approx. 15% of the bitumen that comprises the asphaltenes is able to be turned into a gas to provide much of the steam for the SAGD, the hydrogen for the upgrading process and the electricity for running the various processes. The company that is most advanced in that area is able to be found at www.opticanada.com
That positively affects EROEI - Still doesn't address CO2 discharge - but I suppose that is work in progress and Opti seem to be on the right track.
I will look out for your next article with interest.
You're underestimating the difficulties somewhat. You have to pyrolyze oil shale at about 500°C to get the oil out. By contrast oil sands separation involves agitating it in hot water at 80°C (I think they now can do it at 40°C), which causes the oil to float to the top and the sand to sink the bottom. The latter is a lot easier to do, but in both cases the devil is in the details.
A bitumen upgrader is really just the front end of a heavy oil refinery, and the technology is basically the same. A heavy oil refinery can take bitumen all the way to products, but the challenge is getting the bitumen to the refinery since it doesn't flow through pipelines without being heated or diluted with solvents. However, oil shale doesn't flow at all.
The bottom line is that oil sands extraction is currently about half as expensive as oil shale extraction. The former has been in large-scale commercial production for 40 years, whereas the latter has yet to go commercial on a significant scale.
And, as Gail pointed out, the necessary resources, particularly water and natural gas, are much more available near the oil sands than near the oil shales.
The oil shale regions of Colorado, Wyoming, and Utah are rather deficient in water, whereas Northern Alberta has some huge rivers. People who talk about water limitations to oil sands development don't seem to realize how much water is flowing through the oil sands regions.
There's a global atmospheric circulation system called the Ferrel cell that moves surface moisture from the region of 30° latitude (around the oil shales in the U.S. and Australia) to the region 60° latitude (around the oil sands in Canada). That's why most of the world's deserts are in the region of 30° and most of its boreal forests are around 60°.
All you are saying that oil shale requires high temperatures.
Again, they recovered oil shale in Scotland(1905) and ran it in cars without vacuum distillation towers, catalytic crackers(which operate at very high temperature BTW), etc.
The main difference here is that shale mine produces a lot less less oil than an oil well. The largest mine in the western hemisphere, Black Thunder produces 65 millions tons of coal per year. If this were oil shale that would amount to 120,000 barrels per day the production of just ten typical Saudi Aramco oil wells do per day.
What's interesting is that oil sands contains 24 gallons of nasty bitumen per ton of mined sand, where as the better deposits of oil shale contain +34 gallons per ton of mined rock of 'premium value' refinery feedstock.
http://fossil.energy.gov/programs/reserves/publications/Pubs-NPR/40010-3...
So why oil sands? Simply stated, the Canadians put incredible effort into developing the technology and making the investments to make it a reality. But instead everyone is blming EROEI or the climate or vast water resource(baloney--the Syncrude dam is the 2nd biggest in the world, or does anybody think the built the dam because it looked cool?)
http://en.wikipedia.org/wiki/Syncrude_Tailings_Dam
I'm saying that retorting oil shale requires a minimum of 300°C and gets the best yields around 500°C. Those are the kind of temperatures the Scots used in their retorts. At those temperatures, you get thermal cracking of the oil. And I'm sure the Scots extracted the gasoline using distillation equipment - they were well known for their engineering abilities, after all.
The first oil sands extraction technique, in comparison, was developed using a domestic washing machine filled with hot water and a little lye. The sophisticated refining processes were developed by others mainly to get high-octane gasoline out of low-grade crude oil.
Such is true. Billions of dollars in research and tens of billions of dollars in capital investment, plus 40 years of fine-tuning the processes after the start of commercial production.
Now, the thing is that the U.S. is not even at the point of having a commercially viable process developed. It would take 10 to 20 years to build the first 50,000 bpd commercial operation, and another decade or two to work the bugs out of it. Canada has already been through this and has worked its way up to 1.2 million bpd - but it took a long time to get there.
The U.S. would need about ten times that to become energy independent - and can you imagine what the reaction of the environmental movement would be to something ten times the size of the Canadian oil sands operations?
Are you kidding?!
In order to put goo into one end of the pipe and get WTI grade crude out the other end is more than a matter of putting lye into a washing machine. You have to chemically breakdown molecules(cracking at +700 degC).
In an oil refinery, they must thermally crack heavy oil at much higher temps than to cook oil shale in retorts at 400-500 degC.
http://en.wikipedia.org/wiki/Cracking_(chemistry)
Shell's in-situ process cooks at 360 deg C but this is actually easier than it sounds. The Colorado oil shale is mixed with clays and limestone with the thermal characteristics of fire bricks, meaning heat that goes into strata cannot easily leak out( it also means a lot of heaters need to be spaced together).
In Venezuela they mix their extra-heavy oil with water to get Orimulsion which I think is only burnt in oil fired electric power plants and never for cars.
I think the US could easily produce 1 mbpd IF THE WILL IS THERE.
(It's total lacking to do anything)
Shell's method(Mahogany) produced 1700 barrels in 40x30 foot test patch plus 850 boe of natural gas. So to cover 1.2 mbpd you would need to heat about 19 sq mi. per year or 12160 football fields per year. Alberta's oil sand mines cover about 150 square miles.
I'm suggesting that oil shale would be comparable to tar sands.
The US has large and higher grade tar sands deposits(12-20 Gb) in Utah. The technology is just across the border but no development.
http://ostseis.anl.gov/guide/tarsands/index.cfm
There is no amount of oil anywhere to support US profligacy and the need to radically reduce oil use is imperative. However,
the Colorado oil shale resource(400 Gb) is twice Canada's oil sands(200 Gb). I suggest we need both in the future as we squeeze down consumption well below half of what we use today.
I think limiting CO2 emissions is a good way to do that. Oil is too important to be burnt in cars as we use it for plastics and other products.
I'm pretty sure he's talking about extraction and not processing.
You don't get WTI grade oil out the other end. What I was talking about was separating the bitumen from the sand, which, yes, can be accomplished with a washing machine, hot water, and a bit of lye.
WTI, or even sweet, light Arabian crude is getting to be a rare commodity. What is available on the world market is increasingly heavy, sour, and contaminated with metals - differing from Alberta bitumen only in degree.
The old teakettle refineries that could only handle WTI are relics of a bygone age. Refineries nowadays do some very aggressive processing to cope with low grades of crude oil and maximize their output of gasoline and diesel fuel.
The fundamental problem with oil shale is that it does not contain oil (and it's not shale, either). It contains kerogen, and kerogen cannot be separated from the rock without a lot more processing than agitating it in hot water. The retorting process does upgrade the kerogen to a better grade of oil. Not WTI however.
The hot water process does not work with the U.S. tar sands because they are oil-wetted rather than water-wetted. Sorry, but you have to develop your own technology.
200 billion barrels (or 170 Gb or 350 Gb, pick a number) is just the portion of the Alberta oil sands that is economically recoverable using today's technology at today's prices. The actual resource is more like 1.7 trillion barrels, and that does not include the carbonate trend, which is an even bigger mess of bitumen trapped in carbonate rock around the oil sands. Nobody knows how to extract it, but Shell has taken out a lease and is doing research on it.
Gail says syncrude is equal to WTI.
I actually share your skepticism--there's some sulfur in that Syncrude.
And I do understand that Alberta 'bitumen' is not all bitumen but it's got twice the asphaltene of crude oil and that has to be cracked.
That just means Utah's resource is richer per ton than Alberta's.
The problem in the past was only a small percent of Utah's tar sands are mineable so in-situ methods needed to be developed, and have been developed in Canada in the 1990s (VAPEX with SAGD)--SAGD with propane solution.
http://tiny.cc/tdkhR
http://www.netl.doe.gov/technologies/oil-gas/publications/EP/NT15569_QTR...
The Ferrel Cell Theory leaves me wondering about the great deserts east if the Mississippi. Must be many other factors involved.
But actually the Ferrel cell accounts for most of it. In addition to doing a south-to-north transfer of moisture, the Ferrel cell is responsible for driving the prevailing westerly winds.
The prevailing westerlies drop their moisture from the Pacific on the western slopes of the mountains, leaving the plains to the east exceedingly dry. Then they pick up moisture from the already dry land west of the Mississippi and deposit it east of the Mississippi.
I lived in Ft. Mac for a year back near the start of this decade, as an employee of Suncor. Of course, being a young pup back then, I really had no awareness of the issues surrounding oil and extraction.
What I did see, however, convinced me to leave. The tailings ponds are terrible deathtraps for wildlife, the open-pit mines are a scar on the land, and the Athabasca is being used as a dumping ground. Nevermind the native folks in Ft. Chipewyan and the alarm bells raised about certain cancers and other irregularities being found (and hushed).
I don't believe it's worth the cost, especially as the oil is mostly being pumped to the USA. More resource colonialism, with a completely complicit provincial government. Converting natural gas and water to syncrude is what is happening, essentially. Folly, absolute folly, developing this.
Did enjoy the bus rides to work, however, and employees were treated well.
Hi Gail,
Thanks for an extremely informative post. Great pictures.
Dave
Glad you liked it.
These organizations don't give a whole lot of tours. You have to be part of an organized group. It was interesting finding out about the places.
I also do a lot of reading (local newspapers and books), and make it a point to interview lots of folks I run into (in airports, at breakfast in the restaurant, whenever I stand in line).
Here's my Hubbertian hundred year forecast for Canadian Tar Sands http://sep.stanford.edu/sep/jon/tarsand/
Enjoy!
PBS sucks!
And Elizabeth Brackett in particular totally blows!
In 2007, she ran a PBS story about oil sands(which she continuously referred to as oil shale) syncrude coming to the BP Whiting Refinery in Indiana.
Whiting is on Lake Michigan and BP(an infamous polluter) proposed to dump ammonia, silty water with heavy metals in it and cooling water into the lake and it was immediately approved by Mitch Daniels Indiana's conservative governor. The public reaction was intense. People in the Midwest are desperate to keep the world's largest body of fresh water as clean as possible. There are legal arrangements between Michigan, Illinois, Indiana, Wisc, etc. to do this and not to drain the lakes either. Inside conservative Indiana JOBS trump environment every time but neighboring states are bitterly opposed.
So Brackett comes on to 'explain the issue' with HER expert, Dave Skyuta of IPC who smilingly tells how important it is for the economy and how harmless the discharge will be and how nobody can interfere with Indiana's approval. As I remember, a Save the Lakes enviro was on be were literally attacked by the 'skeptical' moderator, Brackett.
Whenever a controversy with any corporate interest happens, Brackett is there to provide one-sided 'balance'. PBS staff journalists(as opposed to investigative journalists) are desperate for corporate grants.
If TOD is receiving funding from the oil companies they should clearly state how much and from whom. Then IMO they can report whatever they please with a clear conscience. If this disclosure would cause funders to cancel I would like to know that also.
As far as the article goes, I couldn't find on where in-situ was responsible for 40% of tar sands production in the Canada atlas.
It seems quite high.
Regarding PBS, I understand CNN wanted to go along too, but asked too late. There were already as many as could be accommodated in a manageable group.
The Oil Drum doesn't get funding from oil companies.
The 40%+ figure sounds high to me also. It is based on figures shown on PDF page 36 (Table 2.5a) of the CAPP Statistical Handbook. That page indicates production in 2007 for mining of 40,344 thousand cubic meter, and for in situ of 29,230 thousand cubic meters.
If you find a better source, let me know.
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I've always wondered -- If this process IS similar to an oil refinery, why don't they go all the way to finished products like diesel, gasoline, etc instead? I would assume that having to heat this stuff up twice (in two different "refining" steps) would be less energy efficient than refining it all the way to final products at one time.
Or is there something about pipelining a single variety of crude oil out of the boondocks that is simpler and more efficient than running multiple finished products through a pipeline?
I checked with Syncrude, and they say it is because the SCO is actually divided up among the different owners to do with as they choose.
We were told somewhere along the line that the Syncrude check book balance is $0 at the end of each day. Each day, they charge each of the owners their share of the costs, and when production is finished, they give each owner its share of the finished product. This is a list of owners.
The most efficient way would be to do the entire process in the oil sands - oil sands in the front, gasoline and diesel fuel out the back. However, this involves the expensive step of constructing a new oil refinery, and Fort McMurray is an expensive place to build one. Companies who already have enough refineries don't like to spend money they don't have to.
Some companies who have refineries in the Edmonton area, e.g. Suncor and Shell, are building upgraders integrated with their refineries to get some synergy in the process. Edmonton is close enough to pipeline bitumen without a lot of difficulty, but the Western Canadian market they serve is not that big.
The major market for syncrude is the refineries in the U.S. and Canada who no longer have a supply of domestic crude oil as a result of declines in U.S. production and conventional Canadian production. These refineries can run syncrude without modification.
Other companies have modified their refineries to run extra heavy oil from e.g. Venezuela, so processing nonupgraded bitumen is not that difficult for them. The hard part is getting bitumen to them, but pipelines are being constructed as far south as the Texas Gulf Coast.
Hello All ... v.interesting article & comments ... hope the following points add to the discussion:
>wrt. electricity to heat and mobilize the bitumen, you should know that there have been various proposals floated reasonably recently to build a nuclear power plant to service the Athabaska; but I suspect that this is politically highly unlikely
>various posts mentioned the use of 'natty' to fuel the steam in the SAGD process ... at the moment there is a ton of supply (shale gas) in N.America, & I suspect (given the early stage nature of this play), we will find a lot more of this type of tight, or unconventional gas, once demand develops ... alternatively, Canada has a monster amount of stranded gas up north awaiting the building of the MacKenzie Valley pipeline ... so 'hatty' supply is unlikely to be a problem ... I would however agree with the comments on energy EROI ... it seems kind of dumb to burn so much energy to produce so little oil
>in my opinion, a far better idea (if it can be proven up) is the in-situ combustion process known as THAI (Toe & Heel Air Injection) ... the company that owns the intellectual property on this idea is PETROBANK (PBG) ... for the record, folks, I do not work for or with these guys, and I am not recommending anyone purchase their stock ... however they have an excellent company website with the whole history of the idea (in and of itself quite fascinating), and with detailed explanations of the process ... their address is: http://www.petrobank.com/ ... PBG currently has a pilot project (Whitesands) in operation, has applied for additional phases, and is signing JV.s w. various other E&P companies ... I hope THAI is proven up as it seems to me to be potentially far more efficient, and far more environmental than current technologies
>great work TOD ... really enjoy reading the posts
>j.
THAI, does anybody have a finger on its pulse? I know there was a TOD post (January ?, too impatient to find it myself, I'm on a modem at a blazing 26.6 kbaud) and it looked attractive to my neophyte eyes. IIRC a sizable pilot test just ended and production in force was to commence soon. EROI looked really good (conditionally depending if you counted in situ bitamen spent as an energy input, or not if you just shrink the reserves accordingly).
Petrobank seems to be keener on the Bakken play, shale gas, and South America these days. The decline in world oil prices may have dampened their enthusiasm. Their numbers were down except in South America.
My experience with similar in-situ combustion processes (I helped design the computer monitoring and control system for one) has been that you tend to lose control of the fire front, damage the formation, and blow up the oil wells. It's a lot of fun as long as you don't don't have any money invested in it and aren't standing too close when a well blows.
As it says in their disclaimer:
Read it carefully and realize that their lawyers made them put that in. It may have some potential but don't bet your entire retirement savings on the process.
The pipeline running from Alberta to Chicago runs near my house ... well, as near as anything can be in NW Wisconsin.
I worry about leaks and degradation of the pipeline, and how it might affect water quality.
Mostly irrelevant anecdote, I grew up near some bitumen in Ky. It was quarried from about 1922 to 1947 mostly for road materials (Ohio Valley Asphalt Company), lots of help for the smallish community during the depression. It was smallish in extent, a few hundred acres at the most, but it was a boon to the smallish community. Still lots of piles of grey sandstone there, rocks not exposed are black. When they heat in the sun tar still oozes from the rocks. I camped in the quarry some as a youngster, you could put a circle of rocks around the campfire and tar would ooze out and catch fire. There was another quarry close to nearby Hudson (I think, I vaguely recall that ThatsItTimeOut is near there now). Another was not far to the South in a place called Kyrock, it is larger, about 78000 acres in extent. I saw a local news article when oil prices were high last summer that some equipment was being moved in to Kyrock to mine it for fuel. Haven't seen anything since last summer.
Gail, thanks for posting. Nice to get some information straight from the coal-face as it were rather than forming an opinion based on poorly researched rhetoric.
Couple of top-line questions;
Any sense for breakeven price of oil for these operations? Is it falling as process efficiency and technology improve?
Any feel for how far overall production levels can be ramped up and whether there is an issue with declining EROEI as the more easily accessible stuff gets exhausted? Time-frame?
I'm asking because these are areas where you see widely different quotes depending on the source and bias of that source!
Thanks
TW
I talk about break-even price in part 2. It is up in the $80 + range. If the finances of Alberta go downhill, I could imagine an increase in royalties, and that might raise the break-even further.
I think there are two different issues with respect to declining EROEI. One is concentration of ore, and I don't think that will be a problem for a while. My understanding is that most everyone is working with oil sands that are 10% to 12% concentrations of bitumen by weight right now. At some point, some necessary input will run out or they will have to move to lower concentrations, and that could reduce EROEI, but it seems to me that that is likely a long ways out.
I think what might be more of a factor in declining EROEI is the fact that the resources get to be farther and farther away from built infrastructure. If you have to helicopter people and all resources in, it adds to your costs. If you have to build housing for all of your staff, besides the housing they have with their families, that adds costs. If you have to build miles of pipelines to get to anything reasonable, that adds costs also. I think these things are already hitting some of the in situ sites. In general, in situ seems to be more expensive, and I suspect that this is one of the reasons why.
This is all well and good as far as extending fuel supplies, but the bottom line is right here:
"I was told that the energy return of this process is 6:1, presumably all of the way from mining to production of Synthetic Crude Oil (SCO)."
6:1 just doesn't replace crude oil today, currently around 20:1 EROI for imported oil. While tar sands may help continue to supply petroleum, it doesn't do anything to replace the economic function of petroleum; that of the provision of relatively inexpensive transportation fuels. We will fundamentally still be paying a premium for energy.
It's my sense that we should focus our efforts on prioritizing those technologies and strategies that have the highest EROI while emitting the lowest feasible amount of carbon dioxide. I would much prefer to see resources directed to find alternatives to petroleum in particular and fossil fuels in general, or the creation of an all-electric transportation infrastructure, or hydrogen-based infrastructure, to help reduce our usage. While these techniques may not provide the immediate relief we seek, they will eventually help stabilize the EROI of our energy sources and provide a more stable energy foundation for our economy while, hopefully, helping to stave off the harmful affects of anthropogenic climate change.
Our priority needs to be how to sustain prosperity indefinitely, not for the next few decades, and I would sooner tolerate higher energy costs for a decade or two as a down-payment on future prosperity than continue to consume resources we know to be limited as well as ecologically destructive in their use.
I think our problem now is that we are dealing with a whole lot of resources that are borderline or below our threshold for acceptable EROI. You will see in Part 2 that I am not forecasting much of an increase in oil sands production, because of high cost (which comes back to EROI issues).
I think the catch is that we are reaching the point where there really aren't good alternatives, or very good ones as least. Natural gas might be the best there is, if companies can really keep wells producing as long as they say they can, but as Arthur Berman has pointed out, it is possible that companies are being overconfident in their estimates of how long production can be maintained with fracking, and thus they are kidding themselves about the true cost of natural gas.
I really don't think electric is going to work out either, although it certainly would be nice if it would. The wind EROIs are based on very narrow assumptions--and sometimes I suspect pumped even beyond that. I am still trying to get answers as to why some wind EROI numbers in scientific papers look ridiculous, alongside what we know in the real world. At best, they are cherry picking, and not adding the huge impact of changing our infrastructure (including new electric cars) at the same time.
I don't think comparing EROI's across technologies is all that helpful, in part because the boundaries mean different things for different technologies. To me, cost is a better measure, taking into account infrastructure changes as well as the fuel.
I don't think we can really sustain prosperity indefinitely, but it would be good if we could forestall a crash (population and other) for a while, and keep some sort of life going afterword.
The longer the inevitable crash is forstalled the harder it is going to be.
The more that carrying capacity is exceeded the more it becomes degraded. The more carrying capacity is degraded the fewer that can be supported following the crash. The fewer that survive the crash the more likely that genetic & demographic stochasticity pulls the population down to the absorbing boundary of zero. All of this is elementary population biology Gail. Surely you can see the folly in attempting to prop up BAU for awhile longer via temporary & ultimately futile technological fixes.
Thank you Gail, for the well thought of article. I am working on a Canadian oil-sand presentation for my local Transition Town upcoming meeting. This helps me better understand the other side of the argument.
For those who are concerned about the article’s credibility and objectivity:
I am sure it’s not easy to strike the right balance on difficult topics. However, after many years of Gail’s invaluable contribution to TOD I believe she earned our trust and support. The article is up for discussion. You are very welcome to make your contributions and fill in the blanks.
Gail, a wonderfully informative post! The best you've done. Completely objective and educational. I never knew most of what you described.
David W.
Gail, thank you for your efforts and sharing your knowledge. It is a valuable contribution to the readers of The Oil Drum.
I was interested to see in following references, a proposal from CN Rail to substitute rail trains fo pipelines to transport Oil Sands crude to markets. Their arguments made some sense, eg. a 2MM bpd pipeline from N Alberta to Texas would have a capital cost in the range of $25 billions, take years to construct if environmentalists ever even allowed it, and require pre-commitments for full capacity for 20+ years. A 600 M bpd pipe to th west coast would cost $6 billion.
http://www.cn.ca/en/shipping-north-america-alberta-pipeline-on-rail.htm
I was just speculating on the capabilities. A train of 100 cars each carrying 100 tons would move 40,000 bbl. To move 600,000 bpd would need 15 such trains per day. To move 1.5 MM bpd to Texas would require 37 trains per day, or one every 40 minutes. Hmmm. perhaps feasible after all, though with a 7 day one way trip that would need 520,000 new 100 ton railcars and 5,200 new locomotive sets. I wonder if a train could be made up of a single large flexible pipe 1 mile long on wheels? Easier to load and unload, I'd think. Probably top-loading hopper cars would make more sense?
Are suppliers getting too nervous about markets to make 20 year commitments to pipelines?
These are a couple of articles about it. CN is talking potentially large capabilities quickly.
CN's Pipeline On Rails
Oils sands: Canada to China, Japan, India not US
It seems like there must be multiple reasons--the length of time it takes and the capital investment to lay pipeline; difficulty in agreement on the specifics of pipelines; the need for flexibility in who one supplies to; the problem of declining production being less than pipeline minimum operating capacity (less of a problem with oil sands).
CN Rail likes this idea because it already has the infrastructure in place. CN has rail lines running from the oil sands in Northern Alberta to the Gulf of Mexico, and from the Atlantic Ocean to the Pacific Ocean. (No other railroad can make that claim.) It also interconnects with all the other North American railroads, so it can deliver tank cars to anywhere in NA with a rail line.
Shipping by rail has the advantage that it can deliver bitumen in heated tank cars without the need to dilute it with solvents to get it to flow through a pipeline. A potential shortage of diluent is probably the biggest resource constraint on oil sands expansion. Water and natural gas are solvable problems.
Scalability is probably CN's biggest advantage. As they indicate, it is economic at 10,000 bpd, and they can scale it up to 4 million bpd using their existing lines. It will be a lot harder to build the production facilities for 4 million bpd than to build the tank cars to deliver it.
This is the curve ball in the game. In addition to its already heavily used main line to Vancouver, CN has a high quality but underutilized rail line to the Northern B.C. port of Prince Rupert. If the U.S. causes any difficulties, this is where the output will go - to Prince Rupert and then on to China and India. The Chinese are taking advantage of the economic downturn to buy up the world's oil resources, and they are already involved in the oil sands. They are shopping around in places like Nigeria and Iraq, but given the chance they will buy up the oil sands too.
Canadian railroads can move one hundred-car train per hour in each direction on a single track line. That gives 24 trains per day in each direction. 24 trains of 100 cars each (i.e. 40,000 bbl per train) could move 960,000 bpd, i.e. close to a million barrels per day on a single track line.
If they used double track line they could probably run the trains 15 minutes apart, which would give them closer to 4 million bpd. That's probably how they arrived at their 4 million bpd figure.
However, it wouldn't cost $25 billion to construct a 2 million bpd pipeline from Alberta to Texas, because they would just reverse the existing pipelines from Texas to the Midwest. They're mostly sitting idle, anyway. There's already 2.2 million bpd of capacity from Alberta to the Midwest, and the pipeline companies just got approval for a 450,000 bpd expansion (the Alberta Clipper project), which they expect to complete next year. The environmentalists complained but were largely ignored.
Similarly a 600,000 bpd pipeline wouldn't cost $6 billion because there's already 300,000 bpd of capacity running from Alberta to Washington State. It would be a simple matter of looping the pipelines to double the capacity. If they wanted to get it further south, they could reverse the pipelines from California to Washington.
Of course, they might go and spend another $6 billion on a direct pipeline, anyway. 600,000 bpd of oil at $50/bbl would be $30 million per day or nearly $11 billion per year. It doesn't take long to pay for a pipeline at that rate.
4 million bpd at $50/bbl would be $73 billion worth of oil per year - now do you understand CN's enthusiasm for shipping it by rail?
You can't just run rail trains '15 minutes apart'. These trains are over a mile long and need a lot of space between then to stop. The tracks that are there now have to be rebuilt, with pre-stressed concrete rail ties installed where wooden ones exist now. Gradings have to be reinforced etc. It would surprise me if they needed a multi-billion dollar upgrade to do this.
David
Why not? I don't think there's any law against it.
Let's do some simple math. A train moving at 60 mph covers 1 mile per minute. If it is one mile long, it takes 1 minute to pass any particular point. That leaves 14 minutes between trains. It can stop in a couple of miles, which closes the gap by 2 minutes and leaves 12 minutes for the next train to stop.
Trains use centralized traffic control systems which control their location and speed. If you're not part of the system, they don't stop if you get in their way, so don't ever get in their way. Remember, an emergency stop takes two miles.
Now, you can argue that freight trains shouldn't go that fast, but recently I was driving across Wyoming at 75 mph (the Interstate speed limit) and a freight train passed me like I was standing still. The standard speed limit for freight trains is 90 mph.
CN replaced the wooden ties on most of its main lines with concrete ones decades ago.
Last I heard, a heavy freight needs "about" 2 miles to stop. 15 minute intervals at 50 mph means the trains would be running 12.5 miles apart, front to front. Actually, I'd suspect that the companies might prefer 30 minute intervals, so probably 2 sets of twin tracks needed for 4 MMbpd capacity. Make sense, as no-one would want that much as a single destination, and it couldn't possibly all originate at a single point. Perhaps they might also join two trains together, keeping 1/2 the locomotives in the middle to reduce coupling stresses.
Thanks for all your insights on this.
I think you slipped a decimal point there. 37 trains by 7 days by 2 ways works out to 518 trains. Call that 520 trains to simplify the math. That's 52,000 tank cars and 520 locomotive sets. If heated tank cars cost $100,000 each, that would be $5.2 billion; and two 6,000 hp locomotives per train at $2.5 million each would be 1,040 locomotives costing $2.6 billion. The tracks are already in place so that's not a new cost. Capital cost $7.8 billion, which is not bad compared to a pipeline.
Now, let's look at fuel costs. A tank car weighs 100 tons and let's say it is 5,000 miles to Texas. A train might get 500 ton-miles per gallon, so that's 1,000 gallons of diesel to move each tank car. If diesel costs $2/gallon, that's $2,000 per tank car of 400 barrels, or $5/barrel for fuel costs, ignoring returning the empties. Still not too bad.
1.5 MM bpd is 547.5 MM bbl per year - call it 500 MM bbl/year. If CN charged $10 per barrel, they would gross $5 billion per year. Subtracting $5/bbl for fuel, that leaves $2.5 billion/year to pay for the tank cars and locomotives - which would take a bit over 3 years
So, they're generally playing in the right ballpark with this idea. Of course, if the price of oil goes down to $10/bbl they'll run out of sidings to park the idle tank cars. However if it goes over $100/bbl and stays there, they'll have a license to print money.
Now, you might argue, "what if diesel fuel becomes too expensive", ignoring the fact that CN has first dibs on Canada's diesel production. Dead simple - they string electric wires over their tracks, rip the diesel engines out of their diesel-electric locomotives and go all-electric, the oil sands operators upsize their cogen plants to supply the power, and life is good for CN (but not necessarily for you.) I just thought I'd toss that out to preempt the "people are yeast" crowd.
.. So the take-away points of all this, to summarise, are -
canadian 'wet' oil sands processing
- can operate with water in-place, not practically limited, for now
- can operate with gas in place or nearby, or convert (at some expense) to nuclear or further-refined self-produced heating fuel.
- can concievably suppy downstream at high rates
Last time I looked, the output ramp-up rates were in the order of a few percent per year, and there seemed to be questions around the ability to deliver sufficient quantities of NG at the increasing flow-rates to sustain output growth.
It'll be interesting to put the known projects' timetables into the megaprojects database and see where that leaves us - with a big global warming hangover ?? ;)
The "natural gas input" problem is simply one of economics. Water-shift reactors using "waste" petcoke from an upgrader could supply all the H2 for upgrading at a considerably higher capital cost, and there should be other fuels available for steam generation there than N Gas if the gas gets too expensive. The worst problem they have is sourcing and supporting skilled labour for construction. Perhaps the Chinese companies could make some suggestions regarding ramp-up rates? (Though it must startle some SINOPEC managers to see pay rates typical in that area in a boom period).