Oil sands: Full of energy?

The Cree Indians around Lake Athabasca used the gobs of tar they found there to waterproof their canoes. The potential of this mundane stuff to yield oil was gleaned early in the 20th century, and Athabasca in Alberta, Canada sits on the world’s richest petroleum resource: more than 2 trillion barrels, as much as all the remaining recoverable conventional oil in the world.

Of those 2 trillion barrels, however, only 170 billion are technically and economically recoverable. And of these, only 35 billion are near enough to the surface to be recovered through mining. Deposits deeper than 75 metres pose different problems and require different solutions.

One method is “cold flow”, in which oil and sand are brought to the surface together and the oil is filtered out afterwards. Another is to inject steam into a network of wells. The steam heats the bitumen, which in its more fluid state can then be extracted. This method is the most widely applicable, but alternative ways of heating bitumen are being tested.

In its raw state, bitumen is hard to transport to refineries. Since most buyers are only equipped to refine traditional crude, the bitumen must be upgraded. Upgrading plants apply intense heat to the bitumen to turn it into lighter “synthetic” crude. But the process is expensive, requiring tens of thousands of dollars of investment for every barrel per day of capacity. Reducing these costs is essential to make synthetic crude more attractive to buyers.

Oil sands production has raised concerns about the environment. Alberta’s oil sands underlie some 140,000 km2 within Alberta’s 381,000 km2 of boreal forest. So far, only about 600 km2 have been exploited. Some of those areas have been reclaimed and reforested. As of 2009, 67 km2 had been reclaimed and more than 7.5 million tree seedlings planted. Carbon dioxide is another worry. Emissions from oil sands production are 5-15% higher than those of conventional oil on a “well-to-wheels basis” (an assessment of total energy consumption, including emissions). However, Alberta is fairly active on this account, being the first jurisdiction in North America to legislate greenhouse gas reductions on large industrial facilities. Since 2007, the province has cut emissions by over 17 million tonnes, although part of this was due to the 2008-2009 economic crisis.

Canada began to exploit oil sands in the late 1960s. But it was not until reserves were quantified in the 1990s and the government provided incentives that oil sands development took off. By 2010, Alberta was exporting 1.4 million barrels per day (mb/d) of crude to the United States–15% of its crude imports–and reaping CAN$3 billion in royalties from oil sands projects.

More than 80 oil-sands projects were operating in Canada in early 2010, with a raw bitumen capacity of 1.9 mb/d. The International Energy Agency (IEA), a sister organisation of the OECD, predicts that current construction projects will increase capacity by another 0.9 mb/d by 2015. If all projects proposed were to get underway, it would add another 4.5 mb/d.

This would certainly help to quench the thirst for crude in a world slow to adopt more sustainable energy systems. The IEA projects that by 2035 “unconventional oil”, including Canada’s oil sands, will meet about 10% of global oil demand. “Regardless of what governments do,” says Christian Besson, energy analyst at the IEA, “unconventional oil is set to play an increasingly important role in world oil supply in 2035”. With accessible reserves dwindling and the costs of exploring remote ones, like deep offshore drilling, rising, Canada’s oil sands may lack refinement, but they look more dependable than their crude cousin.


References

IEA (2010), World Energy Outlook, see www.worldenergyoutlook.org

See Government of Alberta: Energy at www.energy.alberta.ca/OilSands/793.asp


©OECD Observer No 284, Q1 2011




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly


Online edition
Previous editions

Don't miss

  • “Nizip” refugee camp visit
    July 2016: OECD Secretary-General Angel Gurría visits the “Nizip” refugee camp, situated between Gaziantep and the Turkish-Syrian border, accompanied by Turkey’s Deputy Prime Minister Mehmet Şimşek. The camp accommodates a small number of the 2.75 million Syrians currently registered in Turkey, mostly outside the camps. In his tour of the camp, Mr Gurría visits a school, speaks with refugees and gives a short interview.
  • OECD Observer i-Sheet Series: OECD Observer i-Sheets are smart contents pages on major issues and events. Use them to find current or recent articles, video, books and working papers. To browse on paper and read on line, or simply download.
  • Queen Maxima of the Netherlands gives a speech next to Mexico's President Enrique Pena Nieto (not pictured) during the International Forum of Financial Inclusion at the National Palace in Mexico City, Mexico June 21, 2016.
  • How sustainable is the ocean as a source of economic development? The Ocean Economy in 2030 examines the risks and uncertainties surrounding the future development of ocean industries, the innovations required in science and technology to support their progress, their potential contribution to green growth and some of the implications for ocean management.
  • OECD Environment Director Simon Upton presented a talk at Imperial College London on 21 April 2016. With the world awash in surplus oil and prices languishing around US$40 per barrel, how can governments step up efforts to transform the world’s energy systems in line with the Paris Agreement?
  • Happy 10th birthday to Twitter. This 2008 OECD Observer interview with Henry Copeland said you’d do well.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Once migrants reach Europe, countries face integration challenge: OECD's Thomas Liebig speaks to NPR's Audie Cornish.

  • Message from the International Space Station to COP21

  • COP21 Will Get Agreement With Teeth: OECD Secretary-General Angel Gurría on Bloomberg

  • The carbon clock is ticking: OECD’s Gurría on CNBC

  • If we want to reach zero net emissions by the end of the century, we must align our policies for a low-carbon economy, put a price on carbon everywhere, spend less subsidising fossil fuels and invest more in clean energy. OECD at #COP21 – OECD statement for #COP21
  • They are green and local --It’s a new generation of entrepreneurs in Kenya with big dreams of sustainable energy and the drive to see their innovative technologies throughout Africa. blogs.worldbank.org
  • Pole to Paris Project
  • In order to face global warming, Asia needs at least $40 billion per year, derived from both the public and private sector. Read how to bridge the climate financing gap on the Asian Bank of Development's website.
  • How can cities fight climate change?
    Discover projects in Denmark, Canada, Australia, Japan and Mexico.
  • Climate: What's changed, what hasn't, what we can do about it.
    Lecture by OECD Secretary-General Angel Gurría, hosted by the London School of Economics and Aviva Investors in association with ClimateWise, London, UK, 3 July 2015.

  • Climate change: “We should not disagree when scientists tell us we have a window of opportunity–10-15 years–to turn this thing around” argues Senator Bernie Sanders.

  • In the long-run, the EU benefits from migration, says OECD Head of International Migration Division Jean-Christophe Dumont.
  • Is technological progress slowing down? Is it speeding up? At the OECD, we believe the research from our Future of ‪Productivity‬ project helps to resolve this paradox.
  • Is inequality bad for growth? That redistribution boosts economies is not established by the evidence says FT economics editor Chris Giles. Read more on www.ft.com.
  • Catherine Mann, OECD Chief Economist, explains on Bloomberg why "too much bank lending can slow economic growth".
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at www.oecd.org/careers .

Most Popular Articles

Poll

What issue are you most concerned about in 2016?

Unemployment
Euro crisis
International conflict
Global warming
Other

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2016