Canada’s tarsands (or oilsands)

Oilsands production

Bitumen occurs naturally in the Canadian State of Alberta in huge tarsands (or oilsands), which it is claimed hold some "initial in place" 1731 Gb (gigabarrels) of oil as bitumen. Although the size of the deposit is huge, the extraction rate is very low, yielding a low net energy contribution and carrying heavy environmental costs. The deposits consist of sands impregnated with bitumen, which are subject to “surface-mineable” or “in-situ” extraction methods.

The surface-mining recovery method involves massive excavation, needed to remove the overburden and reach the oilsand, which is then subjected to steam or hot water treatment and centrifuging to separate the bitumen from the sand. The water, sand, fine clays and unseparated bitumen are deposited in tailing ponds. The overburden and coarse sand from the tailing ponds is stockpiled for later reclamation or used to build pond dykes.

The deposits are not homogenous and subtle variations make a big difference to the extraction viability. So far the maximum overburden thickness that can be removed economically is about 50 metres and only the more favourable sites have been developed.

The in-situ recovery method is used where the oilsand occurs below 50 metres of overburden. This requires a technique of slant drilling two boreholes into the deposits, drilling through the overburden, then turning horizontally into the oilsand layer. One borehole allows steam injection from the horizontal section of the borehole into the oilsand to mobilise the bitumen for recovery through a second horizontal borehole below the first, bringing it to the surface. Natural gas is also injected to reduce the density of the bitumen as an aid to recovery through the return borehole. This is known as Steam-assisted Gravity Drainage (SAGD) and is being applied in four new locations. Other in-situ techniques under development are cyclic steam stimulation (CSS), pressure cyclic steam drive (PSCD) and pulse technology and vapour recovery extraction (VAPEX).  

Of the" initial volume in place" in the tarsands reserves only 7.5% is mineable and 66% of the cumulative production up to the end of 2008  has come from the mineable reserves, of which 82% remain. Of the 92.5% reserves requiring the "in situ" method, only 0.13% has been recovered, meaning that the majority of the bitumen reserves, if ever recovered, will be by "in situ" methods.  

The recovered bitumen has then to be diluted for pumping to plants in Canada and in the US for processing into synthetic crude oil. In Canada some of the diluent is recovered and re-used, but when pumped to US refineries it is incorporated in the products and is generally not returned. At the refineries the bitumen is “coked” or hydrogenated to obtain lower carbon molecules. It is then desulphurised to form a "sweet" crude for normal refining, then designated as synthetic crude oil (SCO). The diluents are pentanes comprising 30% of the blend and SCO or light crude oil comprising 50% of the blend.

The refineries in which the synthetic crude oil is blended with normal feedstock are connected to a network of pipelines serving both Canada and the USA. Crude bitumen is diluted with pentanes for transporting from the tarsands to the refinery at Edmonton and to markets outside Alberta, principally in the US, in which case the diluent may not be returned. In compensation some pentanes for dilution are imported from the US.

The surface-mining method leaves a devastated landscape requiring reclamation. One of the major producers, Syncrude, in its sustainability report for 2007 indicates that an area of land cleared totals 20,572 hectares of which only 4,556 hectares has been reclaimed, which at the end of the project will require considerable energy to restore, when none may be available. The Syncrude 2004 sustainability report showed that of the energy gained in the synthetic crude oil produced, 26% is used in the extraction process in the form of natural gas, coke, diesel, electricity,  jet fuel, petrol and propane. If the energy required to restore the unreclaimed land is taken into account, then in the excavation method around one-third of the net-energy in the synthetic crude oil is lost.

Syncrude alone has "disturbed" around 20,000 hectares of land and so far has reclaimed only 4,600 hectares, leaving a current backlog of over 15,000 hectares, which as the rate of reclamation fails to match the rate of disturbance by a factor of 1 in 4, may mean that most of the land to be "disturbed" will remain unrestored at the close of the operation. 

The in-situ steam-assisted gravity drainage recovery method also involves an energy loss. The recovery of the bitumen and its upgrading to synthetic crude oil requires an input of natural gas, which is used for steam generation and for the production of hydrogen for hydrotreatment.

To this must be added further gas for electricity generation, meaning that a total of around 30% of the net-energy in the synthetic crude oil is currently supplied in natural gas.

Both the mining and in-situ recovery methods require considerable quantities of water. (Three barrels of water are required to produce one barrel of bitumen.) The occurrence of droughts has required operators to re-use some for process hot water, but water supplies are likely to remain problematic. There is recent evidence that river water is being contaminated by overflowing tailings ponds and fish stocks are  harmed.

Production in 2007 was 0.482 Gb of bitumen, 5% more than 2006, of which 60% was surface-mined and 40% was in-situ. From the bitumen 0.251 Gb of synthetic crude oil was produced, 4.6% more than in 2006, the balance being sold as bitumen. Production in 2008 was down 1% on 2007 at 0.477 Gb of bitumen, while from the bitumen 0.239 Gb of synthetic crude oil was produced, down 4.8% on 2007.

The operators have included crude bitumen in their production statistics; in reality only around half of the figures can be claimed as synthetic crude oil. In 2008 the production of synthetic crude oil totalled 0.239 Gb, 29% of the total Canadian crude oil consumption of 0.838 Gb, but only 0.78% of global consumption of 30.8 Gb, compared to that produced by Saudi Arabia of 12.8%.   

Oilsands reserves

The Alberta Energy Resources and Conservation Board (ERCB) estimates that "initial established reserves" of 177 Gb of bitumen remains, from which with a yield of 85% around 150 Gb of synthetic crude oil is recoverable, from claimed ultimate potential “recoverable” reserves of 315 Gb. This has ranked Canada second only to Saudi Arabia, which claims reserves of 264 Gb.

However, the synthetic crude oil produced from the recoverable bitumen will be limited by the amount of natural gas available. Of the energy in the synthetic crude oil produced 30 % is required in the extraction of the bitumen and for its upgrading. If this energy is obtained solely from natural gas (as it is at present), the recovery of 150 Gb of synthetic crude oil from 177 Gb of bitumen would consume 30% of its energy in natural gas, which is around 8.52 tm³ (trillion cubic metres).  

North American natural gas reserves 

Canada’s natural gas reserves and its production and consumption of the same are inexorably linked with the USA and Mexico by a gas pipeline network. This is illustrated by the following table:-

The above shows the fragility of Canada’s natural gas supplies, with half of its production crossing the border to supply the USA. Demand for natural gas in North America is set to rise in line with economic growth, bringing the future of gas supplies sharply into focus.

This is leading to a growing dependence on imported liquid natural gas from projects such as Shell’s Sakhalin venture in Eastern Russia, now majority owned by Gazprom. The project involved an overland pipeline from the gas field to an ice-free harbour to the South of the island, cryogenic liquefaction for transport in special gas tanker ships and off-loading and gasification facilities on the American West coast. This overspent project is hoped to provide 9.6 million tonnes (0.0132 tm³) of gas per annum, but this represents only 2% of the US consumption. Since its inception in its first year, the plant   supplied 5.5 million tonnes (0.0076 tm³) of gas to Japan, South Korea and others in the East. The US may rely more on indigenous shale gas than imported LNG, but the recession has reduced demand.

In consequence of this complexity, the delivery costs will raise the price of networked gas when supplemented by liquid natural gas. But of more significance is that as supplies of crude oil decline, natural gas might be better employed in producing liquid fuels directly in gas-to-liquids processes. 

The global industry is turning to natural gas for synthesis of petrol, diesel and jet fuel. Indigenous gas production will be supplemented by importing liquid natural gas: to use some of this to extract bitumen from underground and upgrade it to synthetic crude oil for subsequent refining into liquid fuels, rather than convert the gas directly to liquid fuels does not seem to be optimal.

Assuming that 10% of the USA and Canada’s remaining natural gas could be earmarked for oilsands synthetic crude oil extraction, i.e., 0.89 tm³ - only some 15 Gb of synthetic crude oil could be extracted from the oilsands reserves by its use. For comparison, the USA, Canada and Mexico together consumed 9.13 Gb of crude oil in 2007 - i.e., the recoverable oilsands synthetic crude limited by gas availability would provide only 1 ½ year's crude oil consumption in the North American market.

Because of the increasing awareness of the significance of natural gas usage in tarsands exploitation, there are proposals for the building of a nuclear power plant to provide steam and electricity for the production of hydrogen by electrolysis of water as a substitute. It is also hoped that a proposed Mackenzie pipeline will provide additional gas from Canada's North West territories to feed into the North Western Alberta pipeline system to increase its availability for tarsands synthetic crude oil extraction.

The way forward may be to use more of the bitumen as a source of heat. Another in-situ recovery method utilises the direct underground combustion of the bitumen. Oxygen or air is injected into the oilsands layer to burn some of the bitumen in order to bring other bitumen to the surface. There would still be the need for hot water for separation from the sand and for hydrogen (from methane) for upgrading to synthetic crude oil. This method is under development. 

The upgrading of Canada’s reserves to rank it second in the world is therefore unwarranted. In any case, if synthetic crude is included in the oil reserves figure, global natural gas proven reserves should be reduced by 8.35 tm³ (from 185.02 tm³ to 176.67 tm³) to take into account the energy loss associated with the production of 147 Gb of synthetic crude oil. 

John Busby Revised 18 February 2010

Title page of  The Busby Report