• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Oh, Canada! Oil Companies Pursue a Fuel's Paradise

Posted on: Thursday, 27 October 2005, 06:00 CDT

AURORA MINE, Alberta _ A Canadian grandmother named Nancy Denton just might save your lifestyle.

Denton drives a 400-ton dump truck filled with oil sands at this vast strip mine owned by Syncrude Canada Ltd. Along with her husband, Allan, and a brace of other drivers, she moves half a million tons a day of black, sticky earth to crushers, washers, pipelines and coking towers that turn it into crude oil.

"You're part of an elite group when you get to drive one of these," she shouted over the roaring engines as the huge vehicle bounced like a boat breaking through waves. "This is fantastic."

Beneath her wheels is something equally fantastic, in the view of energy companies trying to supply a thirsty United States: The petroleum-drenched sands of Alberta, the greatest oil deposits in North America.

As oil output falls in some parts of the globe and unrest threatens production in others, these deposits are attracting fresh interest from producers who had long sought a profitable way to separate oil from earth.

Rising prices have finally brought economic viability to 175 billion barrels of thick oil laced through a Florida-sized area in northern Alberta. It costs $12 to $18 a barrel to make crude oil out of the sands. Today, oil sells for more than $60 a barrel.

Environmental concerns, a labor shortage and small towns' alarms over a wide-open oil rush all are possible constraints for this new boom. But the prize is rich _ for oil companies, for a government eager for tax revenue and for motorists eager for any price relief.

When the U.S. Department of Energy recognized the oil sands reserves last year, it ranked Canada second only to Saudi Arabia in oil supplies. And the sands are key to Canada's hopes to boost its position as the largest energy supplier to the United States.

"It's the biggest deposit on earth, right next to the biggest market on earth," said Neal Camarta, senior vice president at Shell Canada Ltd.

Americans' love affair with the automobile is a key driver for global gasoline demand. Each man, woman and child in Dallas, for example, travels an average of 28.3 miles by car every day, according to federal estimates. Add surging consumption from China and elsewhere, and the pursuit of new oil reserves is white hot.

Companies working the sands have tripled production since 1999 and now produce 1.1 million barrels a day, nearly all of it for U.S. markets in the Midwest and Rocky Mountain states.

An additional million barrels a day will be in the market within five years. By 2015, the rate could rise to as much as 3 million barrels a day; by 2030, as much as 6 million.

Indeed, the extraction of oil from the sands is now so vast that it has become Canada's biggest source of greenhouse gases. The strip mines from which the oil-soaked dirt is removed are a spreading bruise on the landscape and in the skies. They gobble up miles of forest and prairie with sulfur piles, pipelines and tailing ponds.

"Industry and government are kind of going on a hope and a prayer ... that we don't cross the tipping point of ecological destruction," said Dan Woynillowicz, an environmentalist with the Pembina Institute in Calgary.

The federal and provincial governments, however, say environmental regulations won't block expansion, despite Canada's pledge to cut emissions under the Kyoto Protocol global warming agreement.

"There is not a minister of the environment on earth who will stop this oil from getting out of the sand. The money is too big," Canada's environment minister, Stephane Dion, has said.

Alberta's environment minister, Guy Boutilier, is more positive. "We can do it in an environmentally sensitive manner," he said.

Oil is typically produced by drilling deep into rock and sand to release liquids and gases that shoot to the surface under tremendous pressure.

The Alberta oil sands lie close to the surface. When separated from the sand, the tarry substance known as bitumen flows with a consistency somewhere "between ketchup and peanut butter," said Rick Gallant, manager of Imperial Oil Ltd.'s Cold Lake project.

Today, most of the oil from the deposits is strip-mined. But four-fifths of the oil sands are too deep for that.

At Cold Lake, steam injection is used to soak the bitumen for several weeks before oil and water are pumped to the surface. Such techniques have a much smaller environmental footprint than the strip mines.

Exxon Mobil Corp. owns 69.6 percent of Imperial; Imperial owns 25 percent of Syncrude.

At 160,000 barrels a day, Cold Lake is Imperial's biggest producing field.

To convert millions of gallons of water into high-pressure steam, Imperial burns enough natural gas to heat a city the size of Austin. Cold Lake bitumen is diluted with natural gas condensate and piped to refineries outside Edmonton, Alberta's capital, and Chicago, where much of it is used for asphalt.

Syncrude, Shell Canada, Suncor Energy Inc. and others strip-mine the oil sands and convert bitumen into synthetic crude oil, which refiners make into gasoline and other products.

It is this heating and upgrading that spew out the carbon dioxide blamed by many governments for a warming global climate.

The oil companies have greatly reduced the pollution created in producing a barrel of oil from the sands. But with oil output increasing quickly, overall emissions are on the rise.

"We are going to be more efficient per unit of production, but if you try to cut back on an absolute basis, it means you don't grow the industry," said Jim Carter, Syncrude's president and chief operating officer.

And it's clear that global energy companies are betting heavily that this industry will only keep growing. The companies are planning $61 billion in spending on oil sands projects. Workers needed

Yet for all of the new technology being employed to capture oil once thought to be unreachable, one of the biggest challenges is one of the oldest in business: finding a labor force.

"We manufacture oil," said Shell executive Camarta. "If we're going to get to 3 million barrels a day in 10 years, we'll have to hire 40,000 construction workers, and that's a real stretch."

Wages are rising an average of 8 percent a year for the 12,000 workers working on the big projects in northern Alberta.

Still, the oil companies are hard-pressed to find welders, plumbers, project managers and other skilled workers. Canada's labor unions help the companies recruit across the country but are now training craftsmen in the United States.

The northward rush of laborers _ and their paychecks _ exacts a toll on the small, remote communities that are closer to the Arctic Circle than to Toronto.

"People will not come here to teach or work in the stores, because they can't afford the rent," said Bruce Taylor, associate pastor of the Fellowship Baptist Church in Fort McMurray. "You could live in other places and drive a cab and have a decent life, but it's not that easy in Fort McMurray."

The city hardest pressed by the oil boom, Fort McMurray expects to reach 100,000 people by 2010 _ nearly triple its population in 1995. Mayor Melissa Blake and the oil industry are pressing the Alberta government for more land for housing, more roads, schools and public safety facilities.

New residents like Denton, the truck driver, are finding jobs that can pay six-figure salaries.

Denton and her husband were longtime financial planners in the eastern province of New Brunswick but grew weary of that line of work.

They took three-month courses in heavy industrial machinery at a Fort McMurray college and found jobs soon after graduation. They now drive house-sized trucks for six days at a stretch in 12-hour shifts _ three in the day, three at night _ and then get six days off.

"We used to be on call to our clients all the time," she said. "Compared to that, this is an easy work environment."

Prime Minister Paul Martin argues it's also easier on the environment.

The Bush administration, the Canadian leader says, should put aside its quest to drill for oil in the Arctic National Wildlife Refuge along the Alaska-Canadian border.

"Our nation is already your number one supplier of imported energy," he told the New York Economic Club this month.

"Add to this the Alberta oil sands _ with at least 175 billion barrels of recoverable supply, which represents more than two-thirds of Saudi Arabia's equivalent reserves _ and our vast, unexploited hydroelectric resources, and there is no reason why, as joint stewards of the environment, we can't cover whatever potential output might have otherwise come from ANWR."

___

(c) 2005, The Dallas Morning News.

Visit The Dallas Morning News on the World Wide Web at http://www.dallasnews.com/

Distributed by Knight Ridder/Tribune Information Services.

_____

PHOTOS (from KRT Photo Service, 202-383-6099): CANADA-OIL

GRAPHIC (from KRT Graphics, 202-383-6064): 20051027 CANADA OIL

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

Source: The Dallas Morning News

More News in this Category