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Oil sands and water — a bad mixture Pressure builds to curb usage in a thirsty region; fees considered; industry opposes ban on projects; hopes for tech solutions Gary Park For Petroleum News
The Alberta government has sent a nervous tremor through the petroleum industry by warning that it may start charging for water, a lifeline to oil and gas producers, especially oil sands operators.
Environment Minister Guy Boutilier said the province will decide by March 2007 whether fees will be imposed to curb usage in an increasingly parched region.
In the meantime, he said no one should assume there will be a do-nothing strategy.
Quoting Mark Twain, he said: “Whisky is for drinking, but water is for fighting over.”
By 2007, Alberta will have a new premier, succeeding Ralph Klein who has resisted any attempts to impose stringent water-consumption limits on the industry.
But the pressure to act has been building, with recent studies forecasting that Alberta is heading for drought conditions in the next 10 years, after a prolonged period of above-average rainfall and because of a population explosion in the province, generated mostly by the oil and gas sector.
Report calls for moratorium In a new report entitled “Troubled Waters, Troubling Trends,” the Pembina Institute for Appropriate Development renewed a call for a moratorium on new oil sands projects until the government decides how much fresh water companies should be able to take.
Failure by the government and industry to act could see Alberta run out of fresh drinking water long before it runs out of bitumen deposits, said Pembina senior policy analyst Mary Griffiths.
“A freeze on fresh water would provide companies with an incentive to maximize efficiency and to seek opportunities to eliminate or reduce water use,” she said.
The warning signals have not been confined to environmentalists.
Former Alberta premier Peter Lougheed has predicted the province is heading into an era when water is more valuable than oil.
Report conclusions The Pembina report reached the following conclusions on water usage by the industry:
• Producing one barrel of oil from the oil sands requires two to four and a half barrels of water.
• In 2005, water withdrawn from the Athabasca River, the major waterway through the oil sands region, for oil sands mining and production was double the water use in the City of Calgary, with a population of about 1 million.
• In situ oil sands projects, which inject steam to melt deeply buried bitumen deposits, used 27 million cubic meters of water in 2004 — two to three times greater than the Alberta government predicted in 2001.
• Projections made in 2001 showed the overall industry reaching the 2004 level of water use in 2015, with the 2020 level not much higher.
Producers association troubled The growing clamor for restrictions troubles the Canadian Association of Petroleum Producers, whose President Pierre Alvarez told reporters his industry already pays indirectly for water through royalties, giving the province a “tremendous economic return.”
Although flatly opposed to water fees or a freeze on oil sands development, he emphasized the industry is making considerable efforts on its own and in cooperation with the government to use more recycled and non-drinkable water.
“Do we recognize that we have to improve our water use? Yes. Are we going to keep working on it? Sure we are,” he was reported as saying by the Canadian Press.
“Do we feel that a moratorium is in order? Certainly not.”
Alvarez pointed out that growing communities and the agriculture industry use more water than the oil and gas sector, asking whether the Pembina Institute was singling out the industry.
The industry is currently licensed to divert 359 million cubic meters, double Calgary’s annual consumption, but received only 7 percent of Alberta’s total water allocation in 2004.
The argument that new technologies are under development is not accepted by the Pembina Institute, which said “no major breakthroughs” relating to water use in oil sands mining are expected before 2030.
“It is unlikely that (any) reduction in water use per unit of production will offset the rapid growth in oil production and hence gross demand for water,” the Pembina study said.
The study also said Alberta does not have a good grasp of its groundwater resources.
“Monitoring is required to determine whether the long-term, cumulative withdrawals are sustainable,” it said.
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